27th Mar 2017

McCreevy locks horns with Swedish unions

The European Commission has spoken out against Scandinavian style collective wage agreements saying they breach EU laws on free movement.

During a visit to Stockholm on Wednesday (5 October) internal market commissioner Charlie McCreevy said that he would speak out against such agreements in a forthcoming European Court of Justice (ECJ) case where the principle is to be tested for the first time.

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  • Commissioner McCreevy will defend Latvian workers in court (Photo: European Commission)

The commissioner hit out at how the Swedish government handled a conflict between a Latvian construction company and a construction trade union last winter.

The Latvian construction company, Laval, was hired to build a school in the city of Vaxholm, but the Swedish construction trade union, Byggnads, pressured Laval to sign the Swedish collective agreement on wages and conditions for the sector.

However, Laval refused claiming it worked under a Latvian agreement.

The conflict escalated until finally a series of Swedish trade unions put the Latvian company under blockade forcing the company into bankruptcy.

The "Vaxholm case" was brought before the ECJ on behalf of the Latvian construction company as well as by the Swedish labour court in April, to test its compliance with EU freedom of movement law.

Mr McCreevy said he would argue against the Swedish trade unions – and the government – before the EU court.

His position is highly sensitive for the Swedish government, which has strongly supported trade union Byggnad’s position.

The Swedish trade minister, Thomas Ostros, has already announced that the government will defend collective agreements.

"There cannot be a service directive, unless there is also a protection against social dumping", he said.

Scandinavian-style collective agreements are established annually between both sides of the industry.

They are treated as having the same force as market rules in other EU countries that use legislation rather than handshakes for labour matters.

However, critics of the agreements say that formal EU member states' laws on minimum wage should be the only benchmark that foreign service providers need worry about.

Latvian finance minister Krisjanis Karins said a few weeks ago that the Scandinavian collective agreements – Denmark has a similar system – create artificially high pay levels.

"The service trade in the EU is limited, and it is a form of protectionism. If we should protect the Swedish model, we should look at the social model of the whole of EU", Mr Karins said.

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