EU judge backs unions over foreign workers’ rights

A senior EU judge has backed the Swedish unions over the terms under which employees from other European countries are employed there.

In a non-binding opinion, advocate general Paolo Mengozzi said that the Swedish unions were within their rights to force Latvian construction firm Laval to employ workers at local pay levels.

The so-called Vaxholm case, named after the Swedish town where Laval was contracted to renovate a school, has become a litmus test for what is one of the European commission’s flagship policies.

EU rules on the posting of workers broadly state that employees can be transferred to another EU country on the terms and conditions – including salary levels – of their home country.

But many countries, especially those in western Europe, fear that these rules could lead to so-called social dumping – using low-cost workers from the new member states to undercut firms in the west.

This was essentially what happened in the Vaxholm case, with Laval arguing that its Latvian workers were subject to their own pay agreements, not those agreed in Sweden.

The Swedish unions, backed by the government, disagreed, and picketed the building site, eventually forcing Laval’s Swedish unit into bankruptcy and prompting the Latvian firm to take the unions to court for what it called illegal industrial action.

The case took a further twist when internal market commissioner Charlie McCreevy appeared to criticise the Swedes for failing to implement EU rules correctly by letting employees and employers agree the terms of their contracts – in essence protecting Swedish workers unfairly.

But Mengozzi’s opinion states that the unions were acting within EU law in attempting to force Laval to agree a new collective agreement in Sweden.

And, he said, Stockholm’s ‘hands-off’ approach to such agreements did not amount to incorrect implementation of EU rules.

“It is in particular by granting trade unions the right to take collective action to compel a service provider to subscribe to a rate of pay determined in accordance with a collective agreement which is applicable in practice to domestic undertakings in a similar situation, that Sweden ensures that the objectives of the protection of workers and equal treatment between undertakings are achieved,” the opinion reads.

Mengozzi also said that in cases, such as this one, where there is no explicit national rule stating that local collective agreements must be applied to posted workers as well, unions still have the right to try to impose such a rule.

But, he warned, any industrial action must be proved to be to the benefit of the posted workers as well as local ones – and not merely an attempt at protectionism.

Fighting against social dumping is, however, a justifiable excuse for taking industrial action, Mengozzi’s opinion states.

The opinion, should it be followed by the court – as is the case most of the time – would have major implications for the working of the single market, with many observers concerned that it will open the door to protectionism.

Richard Ashworth, British centre-right MEP, said the case highlighted a “‘free markets, but only when it suits you’ mentality”.

“The court must not allow trade union blockades to dictate the terms of the EU single market,” he said.

Noting that Sweden, along with Britain and Ireland, was one of the few countries to allow completely unfettered labour market access to workers from the new member sates in 2004, Ashworth said that the influx of cheaper workers had been beneficial for all.

“If we are to achieve our goals of more jobs and higher economic growth, we need to encourage competition, not force foreign companies to agree to collective agreements they never actually agreed to,” he said.

“This case has nothing to do with social protection. Swedish unions are simply protesting because their labour market cannot compete with the new member states.”

But others welcomed the judge’s opinion. “[This] is an important step for preventing social dumping in the EU,” said Elisabeth Schroedter Green MEP and rapporteur on the application of the posting of workers directive.

“The recommendation recognises the need and obligation to guarantee posted workers the same employment conditions and minimum wages as local workers and thus protects workers from the threat of social dumping.”

“The recommendation confirms that the way some European countries regulate their labour market by means of social partnership is perfectly in line with the posting of workers directive and EU internal market legislation.”

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