Court boosts Swedish war on low wages

The European Court of Justice (ECJ) yesterday (23 May) moved marginally in favour of Swedish trade unions in a preliminary opinion on the case of a Latvian building company forced into bankruptcy after industrial action.

It had been expected that Advocate-General Paulo Mengozzi’s opinion on the closely watched ‘Laval un Parteneri’ case would provide strong legal clarity on interpretation of the 1996 directive on the posting of workers, which attempts to set guidelines for setting the pay and conditions of workers temporarily sent to second EU countries.

The case, which became a focal point for the debate surrounding the services directive, was referred to the ECJ by a Swedish labour court in 2005. Latvian firm Laval submitted its initial complaint in 2004 after being prevented from carrying out building work on a schoolhouse by a union blockade.

Byggnads, the Swedish building workers’ union, had claimed to be acting in the interests of Latvian workers contracted to carry out the work for a fraction of the hourly rate determined by Swedish collective bargaining procedures.

The Swedish court said that Byggnads’s blockade had been justified, a ruling that was contested by Laval. The latter claimed that the union’s actions had been in contravention of EU law and launched an appeal.

The advocate-general’s opinion that companies from second EU countries should be compelled to follow local rules on pay and conditions set by collective bargaining was tempered by the caveat that collective action be "proportionate and in the public interest".

"The advocate-general recognises the right to strike as a fundamental part of EU law," said Ulf Öberg, Byggnads’s legal representative. "It also recognises strike action as a means to prevent social dumping. The Swedish labour model is deemed as being in conformity with EC law."

Advocates of greater freedom of movement for workers remained hopeful that a final judgement in line with yesterday’s opinion could help to curb the perceived excesses of Swedish unions. "There’s no element of proportionality in the Swedish court. It’s either full thrust or nothing at all," said Jorgen Ronnest, director for social affairs at employers’ lobby BusinessEurope.

Observers are keen to see whether the European Commission will be influenced by the opinion in guidelines on the posting of workers directive to be released next month (6 June).

A Commission source was doubtful. "The question of Laval was whether a trade union in Sweden can command that their collective agreement [apply] when there is another collective agreement in Latvia," the official said, denying a link with the overall application of the posting of workers directive.

The European Court of Justice (ECJ) yesterday (23 May) moved marginally in favour of Swedish trade unions in a preliminary opinion on the case of a Latvian building company forced into bankruptcy after industrial action.