Thursday

22nd Oct 2020

EU court upholds trade unions' rights

The European Court of Justice twice indicated on Wednesday (23 May) that it thinks there are limits to applying the principles of the internal market in the European Union.

In a highly anticipated opinion concerning the Swedish system of collective bargaining which sees industry and trade unions fix wages each year, the advocate general suggested trade unions have the right to take industrial action to compel companies from other member states to pay their workers the same wages as domestic workers receive under the collective agreements.

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According to the court's top advisor, the bloc's internal market rules on the freedom to provide services do not prevent "trade unions from attempting, by means of collective action, to compel a service provider of another member state to subscribe to a rate of pay."

But the opinion cautions that the industrial action must "be motivated by public-interest objectives, such as the protection of workers and the fight against social dumping" and must be "proportionate."

The advocate general's opinion is not binding but in the majority of cases the final ruling, expected in the coming months, is similar.

The case concerned Latvian construction company Laval which in 2004 was hired to build a school in the Swedish city of Vaxholm. But the Swedish construction trade union, Byggnads, pressured Laval to sign the Swedish collective agreement on wages.

Laval refused saying its workers were operating under Latvian conditions, with lower wages. The conflict escalated with the Swedish trade unions putting the Latvian company under blockade and forcing the firm into bankruptcy.

In 2005, the "Vaxholm case" - brought by the Latvian company - was referred by the national court to the European Court to rule on questions of EU law.

The case was seen as test case for a deeply divisive issue in the EU - whether internal market rules should take precedence over rules seen as integral to a country's social model.

At the time, it prompted rash statements from both sides of fence with the internal market commissioner Charlie McCreevy saying that the collective agreements were against EU rules while the Swedish authorities insisted they were essential to the Swedish social model – regularly putting the country at the top of the league for both competitiveness and social inclusivity.

Some already see the opinion as a blow to the internal market.

"The court must not allow trade union blockades to dictate the terms of the EU single market," said British Conservative MEP Richard Ashworth.

"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 added.

However, green MEP Elisabeth Schroedter welcomed the opinion saying "the advocate general has indicated that cross-border service provision cannot result in a race to the bottom in terms of wages."

Finnish case

In a separate, less publicised, case the court on Wednesday delivered a similar preliminary view on collective action.

This opinion involved a Finnish ferry company which reflagged its vessel to Estonia in order to take on more Estonian workers for lower wages than their Finnish counterparts.

The advocate general in this case said that trade unions may take collective action to dissuade a company from relocating within the EU in order to pay staff lower rates of pay.

He also suggested that public interests relating to social policy and fundamental rights may justify certain restrictions of movement "as long as they do not go beyond what is necessary."

Both opinions will be followed by the final court verdicts in the coming months.

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