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15th Apr 2024

EU trade unions condemn court for minimum wage ruling

  • The case puts free movement of services over existing labour regulations, said John Monks (Photo: ETUC)

European trade unions have strongly criticised the latest EU court judgement on the right of member states to set minimum wages for foreign workers saying it is an "invitation to social dumping."

The judgement, delivered on Thursday (3 April) by the bloc's highest court, concerned

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a Polish subcontractor of German company Objekt und Bauregie which paid employees only 46.5% of the minimum wage prescribed by Lower Saxony for work on a public site.

The court found in favour of the company on grounds of the freedom to provide services, one of the core principles of the EU's internal market.

It argued that Lower Saxony's law on the awarding of public contracts, which states they may only be awarded to companies which promise to pay their employees the minimum wage for the sector concerned and promise to impose that obligation on sub-contractors, breached an EU law on the posting of workers to other member states.

The court concluded that the argument that the Lower Saxony law was aimed at the protection of workers was not justified given that it restricted the freedom to provide services through its collective wage agreement.

The judgement has been roundly condemned by left wing politicians and organisations.

The European Trade Union Confederation (ETUC) said "this is another destructive and damaging judgement."

"[It] underlines the need for urgent action by the European authorities to confirm that the EU is not just an economic project but has as its main objective the improvement of living and working conditions of its populations (…)."

\"Legitimising social dumping\"

Trade unions are still smarting from a recent EU court ruling in a Swedish case with similar implications. Known as the Laval case, the Luxembourg-based court in December found that Swedish unions cannot force a foreign company to observe local pay deals.

"The EU must improve peoples living conditions, not reduce them. Politicians ought to put their feet down and clarify the rules to change the practice of the Court," said Wanja Lundby-Wedin, head of the Swedish Trade Union Confederation.

"We want to see an open Europe, not a Europe that risks creating hostility towards foreigners and demands for closed borders," she continued.

French MEP Francis Wurtz, leader of the left wing GUE/NGL faction in the European Parliament, characterised the decision as "scandalous" and called on the court to stop "legitimising social dumping."

Leaders of the socialists, German MEP Martin Schulz, said that European employment law should be changed.

Affecting the Olympics?

Meanwhile, Britain's largest trade union Unite has said the ruling has implications for the construction of the London Olympics to be held in 2012, meaning the infrastructure may be built using workers who are paid very low wages.

"This decision effectively means that foreign companies working here in the UK, or in any other European country, can flout domestic laws and collective agreements with regard to pay," said Derek Simpson, joint secretary general of Unite.

"This is a recipe for disaster and, if applied here in the UK, will cause massive industrial unrest and threaten the delivery of major infrastructure projects including the Olympics site."

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