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More social dumping

Posted by Richard Wednesday, December 19, 2007

As confidently predicted last week, the ECJ has ruled on the Laval un Partneri case in favour of the plaintiffs and thus in favour of more "social dumping".

This was the case where the Latvian construction firm Laval un Partneri Ltd had won a contract to refurbish a school at Vaxholm, Sweden, but the company sought to use cheaper Latvian workers rather than indigenous Swedish workers (or Latvians at Swedish rates).

As a result, the local labour unions blockaded the site, preventing the company from fulfilling the contract. Laval's subsidiary L&P Baltic Bygg AB — set up for the project — eventually went bankrupt because of the blockade, and the Latvian workers returned to Latvia. Laval ceased its activities in the construction business and is now involved in the food industry.

Anyhow, the fight ended up in the ECJ for a ruling as to whether the union's action was legal.

Now, in a judgement that mirrors the finding with the Finnish ferry company Viking, the court has found that "such action in the form of a blockade of sites constitutes a restriction on the freedom to provide services." And, while it ruled that unions had the "fundamental right" to take collective action to protect workers, action which breached EU law was "not justified with regard to the public interest of protecting workers."

Sweden's Building Workers' Union has done its best to put a positive spin on the ruling, applauding the recognition of collective action by unions to protect workers "as a fundamental right" but, according to our Swedish correspondent, it is set to cause political mayhem.

In fact, the ruling has struck the Swedish establishment "like a bomb", leaving the (Conservative) labour market minister to promise new laws that will make it compulsory for companies which carry out contracts in Sweden to follow the collective agreements settled between the Swedish employers union and the trade unions.

This is something experienced in the UK, where ministers, confronted with unpopular EU law, try to bluff their way round it – hence Brown's "British jobs for British workers" pledge – but the cold light of day will doubtless bring reality to the fore.

The ruling though has potentially wider political implications. Until the news broke, the chance of Sweden rejecting the Lisbon treaty or giving the voters the right to have a say to less was minimal, but the situation is now transformed, with the chances having increased substantially.

At the moment, the Conservative/Liberal (Centre party/Christian Democrat) coalition only has a majority of nine. If, on the back of the ECJ judgement, the Social Democrats decide that the treaty is one treaty too many, because the EU threatens the way Sweden traditionally runs its labour markets, then it is going to be very difficult for the government to pass the necessary law to ratify the treaty.

As our correspondent puts it, "It may become a very interesting year, next year." And that may also apply to the UK. During the hearings for the case, the British government had argued that strike action was not a fundamental right, so the court's ruling may have implications for British labour law – interesting indeed!

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