Unions frustrated at Court ruling on posted workers

The EU Court of Justice judgement in the landmark Laval case has upset trade unions, who argue that the ruling questions collective bargaining agreements. Trade unionists and politicians say the ruling opens the door to “wage dumping” in the EU. 

Contrary to the Advocate-General’s opinion, the Court ruled, on 18 December 2007, that the blockage of a building site in order to force a foreign service provider to enter into negotiations on pay and sign collective agreements is illegal under EU rules on the freedom to provide services. It argued that the action can be justified in cases where the public interest of protecting workers prevailed. According to the Court, however, this was not the case in the Laval situation. 

The Court stressed that the Posting of Workers Directive does not impose an obligation on foreign service providers to respect any working standards beyond the minimum standards as set in the directive. It added, however, that such companies may be forced to respect member states’ rules on minimum pay. 

It went on to point out that collective action such as the one taken by Swedish trade unions to force Laval into a collective agreement are likely make it less attractive, or more difficult, for such a company to carry out construction work in Sweden and that it therefore constituted a restriction on the freedom to provide services. 

The Court conceded that the blockade of Laval building sites served the purpose of protecting Swedish workers against possible social dumping, which “may constitute an overriding reason of public interest”. 

It argued, however, that Swedish provisions, in particular on minimum pay, are not precise and accessible enough. Therefore requiring Laval to respect them would have raised a barrier to the company’s entry on the Swedish services market. 

The European Trade Union Confederation (ETUC) expressed its disappointment on the "challenge" that the judgement "poses to the very successful flexible Swedish system of collective bargaining and those of certain other Nordic countries – the models for flexicurity currently being promoted by the European Commission". 

ETUC added: "It will necessitate reviews in those countries of the implementation of the posted workers directive. There could be negative implications for other countries' systems from this narrow interpretation of the posted workers' directive. There could also be implications for unions' ability to promote equal treatment and protection of workers regardless of nationality and there will also be concern that unions' ability to guarantee these objectives is threatened by the free movement of services principle."

Danish MEP Poul Nyrup Rasmussen, President of the Party of European Socialists (PES) said he was "deeply frustrated by the ruling": "Europe has shot itself in the foot today - how can the court spread so much uncertainty on such a fundamental question? On the one hand they recognize the right to collective action by trade unions, on the other hand the Court creates uncertainty on which agreements should be respected. This is not a ruling for a social Europe, this is a foggy day which could provide cover for bad employers and wage cutters." 

Rasmussen added that the message that the ruling risks sending to citizens is "that Europe is more interested in competition between workers than in raising living standards for all families". 

He urged the Commission to take action "to avoid negative consequences from this unclear ruling. [...] I have a feeling that this will be important for the ratification of the new Treaty in many national parliaments, and for the referendum in Ireland."

MEP Philip Bushill-Matthews, employment spokesman for the UK Conservatives, said: "It is good to see the European Court of Justice upholding a key principle of the single market: the trade union movement should stop trying to block progress in this area but should learn from this judgement to move with the times."  

UK Green MEP Jean Lambert said: "Today's ruling by the ECJ opens the door for wage dumping in the EU and is a blow for workers' rights. Wage agreements are legitimate and effective instruments for guaranteeing minimum working standards in many EU countries. However, the ECJ is basically saying that these agreements can be ignored and that trade unions which have entered into these agreements have no means of ensuring they are enforced. This ruling strikes at the very heart of employment rights in the EU. The ruling could lead to a race to the bottom in terms of wages and makes a mockery of a commitment to social partnership. Workers will question whether there is any security in this so-called 'social Europe'."  

In the Laval case (also known as the Vaxholm case), Latvian company Laval un Partneri posted several dozen workers from Latvia to building sites in Sweden. Their work included refurbishing a school in the Swedish town of Vaxholm. Swedish unions took action against Laval over the company's refusal to sign a collective agreement and to respect Swedish legislation on working conditions and minimum wages. The Swedish Labour Court referred the case to the European Court of Justice. 

Presenting his conclusions on the Laval case on 23 May, Advocate-General Paolo Mengozzi argued that "where a member state has no system for declaring collective agreements to be of universal application", the Posting of Workers Directive "must be interpreted as not preventing trade unions from attempting, by means of collective action [...] to compel a service provider of another member state to subscribe to the rate of pay determined in accordance with a collective agreement which is applicable in practice to domestic undertakings in the same sector". 

In the related Viking case, the Court held last week that trade unions' right to take collective action may be limited by employers' right to freedom of establishment (see EURACTIV 12/12/07).

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