[Comment] Vaxholm case could lead to EU crisis of confidence
WANJA LUNDBY-WEDIN
02.11.2005 @ 10:35 CET
EUOBSERVER / COMMENT - A case currently before the European Court of Justice has all of Sweden and much of the rest of the EU on tenterhooks.
Which ever way the court rules is likely to have profound implications for what it means to live and work in Europe.
To summarise, a Latvian company, Laval, was refurbishing a school in Vaxholm outside Stockholm using its own "posted" workers.
The EU is not just a market (Photo: LO)
The Swedish Building Workers' Union (SBWU) demanded a collective agreement with exactly the same conditions as Swedish building firms normally sign. Laval refused and referred to a Latvian collective agreement instead.
According to the company, the workers were paid about half of what Swedish construction workers would get, but the labourers themselves claim they were paid only a third. On top of this, the workers were not adequately insured.
As it was a clear case of social dumping the SBWU, with the support of other unions, initiated industrial actions.
Self-regulation by social partners is a cornerstone of the Swedish industrial relations system. There is no legislation on minimum wages, nor are there any governmental mechanisms or legislation that extends the effects and scope of application of a collective agreement as in many other countries in the EU. Monitoring the observation of collective agreements is therefore a task of the social partners exclusively.
Collective agreements are normally negotiated and concluded between the employers' organisation and the trade unions within each sector. The agreements are valid for all companies belonging to the employers' organisation and for all employees and workers in the company, whether unionised or not.
To include companies that are not members of an employers' organisation in the scope of a collective agreement the trade unions concerned must sign an individual agreement with each company. The right to take industrial action is crucial in order to support the demands for a collective agreement.
Was blockade justified?
Laval argues that the industrial actions taken in Vaxholm were not in compliance with EU law and brought the case to the Swedish labour court, which decided to ask for a preliminary ruling by the European Court of Justice (ECJ).
The first question the ECJ has to answer is if an industrial action, in this case a blockade, to support demands for a collective agreement is in compliance with EC law, notably article 12 of the Treaty on anti-discrimination and article 49 on freedom to provide services as well as the posting of workers directive.
Industrial actions are by their nature obstacles to the activity of a company and free movement. But the right to collective action is, together with freedom of association and the right to negotiate and conclude collective agreements, recognized as a fundamental right in international conventions, such as the Charter of Fundamental Rights of the EU and in the constitutional traditions common to EU member states.
Should Laval win the Vaxholm case, self-regulation by social partners would be undermined. The Swedish industrial relations model which, as the other Nordic models, has been very successful would have to be fundamentally changed. Social dumping would have to be met with legally-binding minimum wages, and/or extension of collective agreements by law and introduction of a system of public labour inspectors to monitor compliance. Would that create a more effective model? I doubt it.
Unusual message from Commission
But it was this kind of change that internal markets commissioner Charlie McCreevy advocated at his now notorious press conference in Stockholm, when he criticized the Swedish implementation of the directive on posting of workers. More legislation, less self-regulation - this is not what we are used to hear from the commission when it talks about better regulation.
If the ECJ finds that the industrial action taken in Vaxholm is against EU law it would have serious consequences and not only for the Swedish and Nordic industrial relations systems. What until now have been regarded as fundamental rights of workers in all democratic states would be undermined in the name of free movement. That is why the whole European trade union community is alarmed and mobilised by the case.
The case is also closely linked to the heated debate on the services directive. The question being, whether or not social and labour standards of the country of destination can or must be applied to employees of a service provider.
In the proposed directive, labour law, collective agreements and the right to take industrial action have so far not been clearly excluded from the scope of the country of origin principle. In addition, a member state is not allowed to require a service provider to have at least a representative and some documentation in the host state.
This makes it virtually impossible to sustain efficient labour market models on wages and working conditions on the basis of the principle of self-regulation by social partners.
EU not just a market
The promises from the commission that the proposed directive would not lead to social dumping and a race to the bottom in terms of pay and conditions were never very convincing. After the declaration by commissioner McCreevy in Stockholm that he supports the employer in the Vaxholm case and will argue against the Swedish government in the court, it is clear to which approach he is prioritising
But the EU is not just a market. It is also a community of values, a social and political community. This has been confirmed by the ECJ in other cases. We are therefore confident that the court will take a more balanced view of the Vaxholm case than commissioner McCreevy.
If not, there will be an extremely serious crisis of confidence in the EU coming from us citizens both in and beyond the Scandinavian countries.
The author is president of LO, the Swedish trade union confederation, with 1,918,800 members. She is also vice president of ETUC, the European trade union confederation