Free movement of labour and effects of European Court ruling in the Laval-case
Trade union conference, 19 February 2009, Stockholm

What are the consequences for the Nordic labour market model of the European Court ruling in the Laval-case, and how are they to be tackled on a national and European level? That was the overriding question for a conference organised in Stockholm on 19 February 2009 by the Council of Nordic Trade Unions, NFS. About 45 trade unionist from all the five Nordic countries attended the conference.

All the four speakers also came from NFS affiliated organisations.

Finnish views on the Laval judgement

First speaker was Jari Hellsten from the Finnish SAK. He emphasised the Finnish trade unions positive experiences of generally applicable collective agreements. This system, which in various forms is used in several EU-countries, means that a collective agreement at branch level is made in to law and then applies to all enterprises in the branch regardless if they are member of the employers organisation that signed the contract.

In the Finnish case trade unions can apply to a special board to make an agreement generally applicable. The board then examines if the requirements for such a decision are met. For this to be so at least 50 percent of the workforce in that branch concerned must be working in enterprises belonging to the employers organisation having signed the agreement. Since 2001 180 such applications have been treated, and 154 have been accepted. No generally applicable agreement has lost this status.

Due to this system the Finnish trade unions do not consider the Laval judgement to have a more profound impact on the Finnish labour market. Therefore, the Finnish trade unions have not asked for any change in national implementation of the Posting Workers directive. Neither is any such initiative foreseen by the Finnish parliament or Government.

An important part of the Laval judgment is that companies with posted workers cannot be obliged to pay more than the minimum wages laid down in collective agreement. This is not, at least not yet, seen as a problem. The agreement most concerned, covering building workers, has six different wage-groups and posted building workers are not placed in the lowest of these groups but normally in the middle.

Trade unions in Denmark and Sweden are traditionally sceptical to the system of generally applicable agreements. Fear of weakening the incentives for both workers and employers to organise is one reason amongst others for this. However, the Finnish trade unions claim that this risk has not materialized in Finland.

The Danish initiative to meet the Laval judgement

Next speaker was Stephan Agger from LO Denmark, who explained that the Danish situation is quite very different. The Laval judgement had a direct impact on the labour market, when the judgement came LO and its member organisations had 30 conflicts going on against foreign companies posting workers in Denmark and had given notice on 150 conflicts coming.

It was at once clear to all that changes in the national law implementing the Posting Workers directive were necessary. A commission of inquiry, comprising the social partners, was appointed by the Government.

The group rapidly agreed that the challenge was to give the right to take industrial action a clear judicial ground in connection with the Danish law on posting workers (that is, the law that implemented the EU Posting Workers Directive).

The main proposal made by the group was that the collective agreements agreed upon by the “most representative social partners” and with a national coverage should be the base for discussions with companies posting workers in Denmark. It must be clear from the agreements mentioned what is the wage that should be paid. If posted workers do not receive the wage and working conditions stipulated by the agreements the unions are free to take industrial action against the companies employing them. The proposals coming from the commission was late agreed upon by the Danish parliament, Folketinget, without any changes.

Swedish Views

Clas-Mikael Jonsson from LO Sweden then presented the situation in Swede and his organisations views on how to meet the challenge of the European Court judgements.

In Sweden no decision has yet been taken by politicans on how to react to the Laval- and Viking judgements. However, a (one man) Commission of inquiry has presented proposals for changes of the Swedish law implementing the Posting Directive. There has been dialogue with the social partners.

LO Sweden se to overriding problems with the Laval- and Viking judgements. The first one is that unions can not take industrial action to demand wage levels in line with what Swedish workers earn for posting workers. The second is that the Posting Workers directive is changed from a minimum directive to a maximum directive, meaning that the areas in which unions can demand equal treatment for posted workers can never go beyond what is mentioned in the legislative text.

The first problem will to a large extent be solved if the proposals of the Commission are turned into law. A new Swedish law implementing the posted workers directive would make it possible to take industrial action to force companies posting workers in Sweden to pay “minimum wages” according to collective agreements. It also makes it possible to define minimum wages not as the lowest hourly wages paid to workers following that agreement (a salary that often is paid only to young workers who are new in the trade), but states that factors like experience, competence and extra pay for working evenings and overtime can also be added. It is up to the social partners to define what this adds up to in a concrete situation. If they fail the question can be settled by the Swedish Labour Court

The second problem, however, can only be dealt with at the European level by changing the Posting Workers Directive.

At the moment it is unclear when these proposals will be discussed in Parliament, or what the Governments position on this is.

Last speaker in the Confeence was Thomas Janson, working both for Swedish TCO (white collar workers) and European Trade Union Confederation, ETUC.

He highlighted the report on the Laval Case that was adopted by a very large majority in the European Parliament. The report is, among other things, emphasising the following points;

• The need to safeguard and strengthen equal treatment and equal pay for equal work for all workers in the same in the same workplace.
• That the Posting Workers Directive gives both public authorities and social partners the right to lay down more favourable working conditions than those mentioned in the directive.
• The EUs economic freedoms cannot be interpreted as giving undertakings the right to circumvent national laws and practices in the labour market.
• That a partial review of the Posting Workers Directive may be necessary to ensure that these principles are upheld after the Laval Judgement of the European Court.

Thomas Janson also emphasised the danger that support for European integration among broad layers of wage earners will be undermined if the kind of wage dumping that the Laval judgement can give rise to is not stopped. He presented figures from a Swedish poll showing that 73 percent of Swedes thought it important that Swedish laws and collective agreement also should be applied also for foreign companies doing work in Sweden.

If the rules for posting workers allow wage dumping we also risk to see an increase in contradictions between groups of workers and a rise in xenophobia, he said, and mentioned recent developments in Great Britain as an example.

Following the presentations the possibility to change the Posting Workers directive was put on the agenda by Anders Nordström, generals Secretary for the Council of Nordic Trade Unions, NFS.

Are the worries that a review of the directive would lead to an even weaker legislation well founded? Anders Nordström did not think so, and mentioned three arguments.

Firstly, a review of the directive does not mean that everything is up for discussion. The Commission decides what part of the Directive that should be reviewed. And the Commission is very well aware of the problems from European integration that is already arising from labour discontent (the referendums in France and Holland are still in their memory).

Secondly, to change the directive takes a majority in the council, but it only takes a blocking minority to stop proposals that weakens it. It is very improbable that such a blocking majority should not emerge. It is, for example, difficult to imagine that Germany or France should accept that, considering the domestic political debate in these countries. Put bluntly, it is also difficult to believe that eastern European member states should challenge the big countries on an issue like this in situation where the economic crisis makes them more dependent on financial support from the EU.

Thirdly, any change in the directive has to be approved by the European Parliament, and the idea of a majority of MEPs voting for weaker rights of posted workers seems highly unlikely.

But what then are the possibilities to improve the directive? Of course, there is no guarantee, argued Anders Nordström, but two developments point in a positive direction. One is that there is a growing consciousness in leading EU-circles (both Commission and Member States) that social discontent is increasingly spilling over into EU-scepticism, and that this is a problem for the Union (and not only in times of referendums). Another is that the Court effectively has changed the nature of the posting workers directive, from minimum directive to a maximum directive. This means of course that in reality not only the commission, but also the Council have been “overruled” by the judges. Today it is easty for MS to say no, but if just a few countries starts demanding a review it will be difficult for others to say no (not lest for internal, political reasons).

Finally, concluded Anders Nordström, it is in the interest of the trade union movement to keep the debate about Laval, Viking and social dumping alive. It is a good starting point for pushing for the social dimension regardless of whether there is a review or not. And since the risk that the outcome will be a weaker directive is insignificant we should continue to speak out loud and clear on this issue.

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