6th Dec 2022

Swedish trade unions lose EU labour case

  • The Nordic states say the collective system is the basis for their highly successful social model (Photo: EUobserver)

The EU's highest court has delivered a blow to the Swedish system of collective bargaining – seen as underpinning the country's highly successful social model - by ruling that Swedish unions cannot force a foreign company to observe local pay deals.

In a keenly awaited judgement, the court said that a trade union blockade which forced a Latvian company using cheaper Latvian labourers into bankruptcy was illegal.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"Such action in the form of a blockade of sites constitutes a restriction on the freedom to provide services, which, in this case, is not justified with regard to the public interest of protecting workers," said the court.

The case arose in 2004, shortly after eight central and eastern European states with cheaper and more flexible labour forces, joined the European Union and was seen as a testing ground for member states with a more rigid and socially protected workforce.

The dispute centred around wages with the trade unionists urging Latvia's Laval - building a school in the Swedish city of Vaxholm - to pay higher Swedish construction sector wages to its Latvian workers.

The company refused leading the unionists to block the site eventually forcing Laval to leave.

But the court said that while such collective action can sometimes be justified under community law to protect against social dumping – using workers with less social rights and lower wages - it cannot be used to force a company to enter into negotiations on pay where it is not clear what the outcome will be.

"Collective action cannot be justified with regard to the public interest objective of protecting workers where the negotiations on pay (…) form part of a national context characterised by a lack of provisions," said the court.

The court also said that union action forcing foreign companies into wage negotiations of "unspecified duration" is liable to make it "less attractive or more difficult" for a company to carry out construction work and "therefore constitutes a restriction on the freedom to provide services."

The freedom to provide services is a key pillar of the EU's internal market rules.

In a more positive note for trade unions, it said that if collective action is aimed at giving workers rights, which are already defined in national law, then it is justifiable under EU law.

The Nordic social model

The Nordic states say the collective system is the basis for their highly successful Nordic social model, which sees high employment and high social protection.

Reacting to the case, Danish MEP Soren Sondergaard said it was a "catastrophe for the Nordic model, where trade unions have the right to protest against employers to secure decent collective agreements."

The Laval case stirred an impassioned debate in the EU as it was seen not only as a fundamental dispute between 'old' and 'new' member states but also whether the EU's internal market rules would trump rules on social protection.

At the time, internal market commissioner Charlie McCreevy caused outrage in Sweden by saying that he would argue against the country in the court case.

Reacting to the judgement, the commission on Tuesday said it was a "very nuanced" ruling and that it would analyse it "very carefully."

But it drew attention to what is set to be a key part of the ruling which states that organisations in one member state must take into account collective wage agreements of a foreign company "irrespective" of their content, or risk breaching EU law.

EU countries struggle to crack Hungary's vetos

Hungary will be in the spotlight on Tuesday as EU governments struggle over suspending EU funds to prime minister Viktor Orbán's government — despite rule of law concerns — and unlock key EU policies which Budapest has been blocking.


Bad Karma

While the European Union openly criticises China for abusing its the mostly Muslim Uyghur population, the EU turns a blind eye to the way India treats its own Muslim minority — because it wants India as a strategic ally.


Serbia now has no choice but to join EU sanctions on Russia

Vladimir Putin himself is somewhat suspicious of Serbia's leader, as are most who deal with the opaque Aleksandar Vucic. The Russian president has preferred to keep his Serbian counterpart compliant, via a tight rein of annually-reviewed gas pricing.

Stakeholders' Highlights

  1. Nordic Council of MinistersCOP27: Food systems transformation for climate action
  2. Nordic Council of MinistersThe Nordic Region and the African Union urge the COP27 to talk about gender equality
  3. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  4. Friedrich Naumann Foundation European DialogueGender x Geopolitics: Shaping an Inclusive Foreign Security Policy for Europe
  5. Obama FoundationThe Obama Foundation Opens Applications for its Leaders Program in Europe
  6. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos

Latest News

  1. EU countries struggle to crack Hungary's vetos
  2. Frontex expanding migrant route-busting mission in Balkans
  3. EU ministers in fresh battle on joint debt, after Biden subsidies
  4. EU: 'We'll see' if Moscow actually stops selling oil over price-cap
  5. Bad Karma
  6. Serbia now has no choice but to join EU sanctions on Russia
  7. Hungary's funds showdown in focus This WEEK
  8. EU must break Orbán's veto on a tax rate for multinationals

Stakeholders' Highlights

  1. European Committee of the RegionsRe-Watch EURegions Week 2022
  2. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  3. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  4. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  5. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  6. European Centre for Press and Media FreedomEuropean Anti-SLAPP Conference 2022

Join EUobserver

Support quality EU news

Join us