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SECURING THE FUTURE OF A
NEO-LIBERAL EUROPE

Laval case shows why trade unionists should vote No to Lisbon Treaty. 

A European Court of Justice ruling in the Laval case constitutes a grave threat to trade union rights. It shows why certain clauses in the Lisbon Treaty are objectionable from a union point of view. 

A Latvian company, Laval un Partneri, established itself in Sweden in 2001 to engage in construction work, particularly in repairs and renovations. Approximately 87 percent of the Swedish building workers are union members and most of the industry is covered by registered agreements. 

Laval un Partneri, however, withdrew from negotiations with unions and refused to sign up to a registered agreement. It imported workers from Latvia who stayed temporarily in Sweden to complete refurbishment work in Vaxholm. 

The Swedish unions instituted a 'blockade' against the company which involved a boycott of the company. No physical impediments or violence was involved. Their actions were a typical response to any employer who refused to sign up to registered agreements -whether the employer was Swedish or non-Swedish.  

The case eventually found its way to the European Court of Justice who ruled that the action of unions was illegal. 

While it recognised that workers had a right to take industrial action, this right was of lesser importance than the EU rules of open competition. 

Even the normally moderate John Monks of the European Trade Union Congress acknowledged the grave danger the ruling posed. In a submission to the EU Parliament's employment committee he said,

'Bolkestein derailed the EU Constitutional Treaty. The Laval case, in particular, could damage the ratification of the EU Reform Treaty as awareness of its implications spreads'. 

He further suggested that the Laval case - and a similar Viking case - creates a 'licence for social dumping'.

This judgement showed how clauses in the Lisbon Treaty such as Protocol 6 which states that the EU must 'include a system for ensuring that competition is not distorted' are a danger to trade unionists. They only strengthen the legal foundation for judgements like that in the Laval case and so help to create a  wage cutters' charter. The tens of thousands who marched in the Irish Ferries dispute will not want to see their efforts undone by the neo-liberal measures which are enshrined in the Lisbon Treaty. '

ETUC submission to the EU Parliament Employment Committee

Introduction by John Monks General Secretary, European Trade Union Confederation

Presentation to the Employment and Social Affairs Committee of the EP

1. Chairman, thank you for this invitation to present the views of the ETUC on these two cases. We are grateful that you have moved swiftly to deal with them. They are of massive importance to the European trade union world, and not just to our colleagues directly affected in Sweden/Latvia and Finland/Estonia. It is deeply ironic that the Swedish and Danish models - the widely respected home of flexicurity - are under particular pressure from these cases.

2. They are different cases with different implications and the Viking case in particular has not yet finished its legal journey. The consequences of the Laval case for the Swedish system are the subject of social partner negotiations in Sweden, and talks are also underway in Denmark which shares many similarities with Sweden. But the cases have huge European importance to which I want to draw your attention.

3. In effect, in the Laval case, the European Court of Justice, by accident or design, has come close to challenging the European Parliament's compromise position on the Services Directive by ruling that the free movement of services can impede the exercise of trade union fundamental rights to demand equal treatment. Collective action by unions to push for equal pay with host country workers could be regarded as an obstacle to free movement (although the ECJ recognised there could be an overriding public interest to avoid social dumping).

4. In the Viking case, although there are positive features to this case, one worrying point in particular stands out. The Court stressed that collective action must be "proportionate" to the issue in dispute and has indicated that the action of the International Transport Workers was not proportionate. (This issue is now referred to a UK court if the case is not otherwise settled between the parties). We are now left with not knowing what is "proportionate" action and what is not. Presumably a court will define "proportionality" in the context of each case, so creating intolerable uncertainty for unions involved in virtually any case of industrial action over migration and free movement, a naturally growing area for disputes as Europe integrates its labour and services markets. In some member states, the right to strike is a first rank constitutional right and this is now at risk. So, generally, is trade union autonomy.

5. The Laval case is unclear as to the question of when collective agreements set standards above minimum levels; are these standards recognisable by the ECJ as applicable standards? A German case - the Rueffert case - will be important on this issue when the judgment is issued in mid March.

6. So we are being told that the right to strike is a fundamental right but not so fundamental as the EU's free movement provisions. This is a licence for social dumping and for unions being prevented from taking action to improve matters. Any company in a transnational dispute has the opportunity to use this judgement against union actions, alleging "disproportionality".

7. This is intolerable and I am asking you today to initiate action to repair the damage being done. Unions across Europe are now deeply concerned with defending their national systems - and we risk a protectionist reaction. Bolkestein derailed the EU Constitutional Treaty. The Laval case, in particular, could damage the ratification of the EU Reform Treaty as awareness of its implications spreads.

8. What can be done to repair the damage? Our Executive meets next week and we are still at work on these two complex cases, but our proposals are as follows:

9. Firstly, quickly, we need a "Social Progress Clause" issued in anticipation of the EU Reform Treaty (article 5(a)), which firmly establishes that the Treaty and especially its fundamental freedoms shall be interpreted as respecting the observance of fundamental rights and especially collective action. It should also establish the rights of workers and their representatives to take collective action to improve their working and living conditions above minimum standards. (There is a precedent for this procedure with the Amsterdam Treaty to which the Employment Chapter was added at a late stage. There are also precedents with the Monti clause and the Services Directive).

10. Second, the Posted Workers Directive should be strengthened to fulfil its original aims of protecting workers. We have to reflect on the need for a revision.

11. Third, we need the speedy implementation of the Temporary Agency Workers Directive which has been blocked in the Council of Ministers. This Directive is highly relevant to mobility and migration and its principle of equal treatment would reassure unions that the EU was not to be a vehicle for social dumping.

12. The idea of social Europe has taken a blow. Put simply, the action of employers using free movement as a pretext for social dumping practices is resulting in unions having to justify, ultimately to the courts, the actions they take against those employers' tactics. That is both wrong and dangerous. Wrong because workers' rights to equal treatment in the host country should be the guiding principle. Wrong because unions must be autonomous. And dangerous because it reinforces those critics of Europe who have long said that liberal Europe would always threaten the generally excellent social, collective bargaining and welfare systems built up since the Second World War.

13. Europe needs to move fast to repair the damage.
Thompsons Solicitors' reaction to ECJ decision in the Laval case

Explanation:

A Latvian company, Laval un Partneri, posted several dozen workers to building sites in Sweden, in one instance to re-furbish a school in Vaxholm. Swedish unions took action against the Laval's refusal to sign a collective agreement and to respect Swedish laws on working conditions and minimum wages. The case was eventually referred to the ECJ. 
The court deemed that the union action at the building site was illegal under EU rules on freedom to provide services. Here is the reaction of Thomspson Solicitor's,  one of the leading law firms in Britain which deals with union rights: 

European Court of Justice ruling that the right to take industrial action is restricted because of an employer's freedom to provide services in other member states rides roughshod over the trade union rights which have been recognised across the European Community for decades.

Thompsons Solicitors, the UK's leading trade union law firm, say today's decision in Laval is absurd.

As in the ruling in the Viking case last week, the ECJ emphasises the "fundamental" nature of the right to take industrial action. But it then balances that right against the employer's competing EU law rights. In Laval this is specifically the right to freedom of provision of services.

The court said an objective of protecting workers is justified, and industrial action taken to prevent "social dumping" can also be justified. But industrial action in support of union demands in member states to which workers are posted will not be justified where the demand exceeds the extent of the protections provided to workers under the Posted Workers Directive and clearly defined national legal requirements.

In other words, a union can only take industrial action to achieve minimum terms and conditions which are prescribed by law.

Richard Arthur, Head of Trade Union Law at Thompsons Solicitors, the most experienced firm of personal injury and trade union lawyers in the UK said:

"The ECJ's ruling runs roughshod over trade union rights which have been almost universally recognised throughout the European Community, and in numerous international treaties and instruments, for many decades.

"It is absurd for the ECJ to say that the right to take industrial action is a "fundamental" right forming an integral part of the general principles of Community law, and then to rule that that right is superceded where an employer complains that the union is seeking terms and conditions in excess of the minimum provided by the Posted Workers Directive. The Posted Workers Directive is intended to set a minimum level of protection for workers posted to separate states. It is ludicrous to suggest that a union is not entitled to take industrial action in support of demands in excess of that minimum level.

"In the last week, in the Viking and Laval rulings, trade unions have seen their internationally recognised rights to take industrial action relegated in priority by the ECJ below the business interests of employers. The rulings are poorly reasoned and inconsistent, and completely fail to recognise the dual purpose of promotion of social policy as well as the optimisation of business conditions, which the ECJ says lies at the heart of the European Community."

This treaty secures the future for the neo-liberal Europe and further advances the EU’s commitment to a free market economy and the removal of barriers to international trade. This means the opening up of public services – including health, education, water, public transport – to privatisation.
This treaty means that any governmental commitment to social priorities would immediately come into conflict with a Thatcherite policy of neo-liberalism and privatisation.

One of the main reasons why the French rejected the constitutional referendum was that it contained an even more explicit clause that referred to ‘free and undistorted competition’. On the insistence of the French Prime Minister Nicolas Sarkozy this phrase was taken out of the list of objectives. But it was a pyrrhic victory because no sooner was it removed from the main text than it came in through the back door.
Whereas EU leaders are guaranteed powers to sweep away obstacles to competition, a far greater hesitancy is shown towards other social values. The EU is merely supposed to ‘take into account’ the promotion of high levels of employment, adequate social protection and a fight against social exclusion.

As if to restrict this even further, laws that might possibly create European wide standards on employment or public health are banned.
Health, social standards or employment – where there could be genuine cross border standards – are relegated to mere aspirations that do not carry the same legal punch. The Lisbon Treaty, therefore, turns the EU into a turbo charged neo-liberal economy and a grossly underdeveloped society.

No Capital Controls

One of the dangers that any constitutional document faces is that it can burden future generations with the specific beliefs of today. One of the fashionable doctrines for modern neo-liberals is outlawing capital controls.
The Lisbon Treaty contains a provision that bans capital controls on global finance – possibly for ever.
The practical implications of this clause are enormous. Consider, for example, the current financial crisis. This was triggered by precisely the unregulated freedom that the financiers demand. They opened a global ‘securities’ market that bundled together packages of loans from all parts of the world. However many of these so called ‘AAA rated securities’ contained loans from the US sub-prime market. The result has been a ‘credit crunch’ whose implications are still not fully clear.
Ruling out, by a near constitutional decree, any possibility of capital controls for the foreseeable future is, therefore, short sighted in the extreme.

Public Services

Most people in Europe still believe that they have a right to decent public services that protect them from the full ravages of capitalism. The EU, however, has been used to undermine these services and the present Lisbon Treaty carries that further.
There is no provision in the treaty that gives a legal basis to public services. The EU has developed its own special jargon for public services, which are known as either ‘services of general interest’ or ‘services of general economic interest’. Both terms cover services such as water, electricity supply, waste disposal, health care, social housing provision or education.
The distinction between the two categories is crucial but is hard to pin down. The only examples that the EU Commission has given of ‘non-economic services’ are the army, the policy and air traffic control. If services are defined as ‘services of general economic interest’, they are subject to competition rules and so their funding cannot ‘distort’ the market.
For example, soon after the Lisbon Treaty was proposed for ratification, the schools in Ireland were informed that they had to pay for water charges.  Schools were a defined as non-domestic users and so, according to the Irish Times, ‘Taoiseach Bertie Ahern and Minister Mary Hanafin, insist the Government is powerless to block the charges because of the EU water framework directive’.
The Lisbon Treaty will take public services out of the hands of local societies who might democratically decide how their public services should be run.

A Fast Track to Globalisation

The Lisbon Treaty confers important new powers on the EU Commission to negotiate at agencies such as the World Trade Organisation (WTO) on behalf of the 450 million Europeans. Local political elites will, thus, be able to claim that they have to implement WTO rulings as they were ‘over-ruled by Brussels’.

This treaty will also give constitutional protection to the current EU practice of pressurising poorer countries to ‘open up’ their public services to European corporations.


 


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Booklet cover: Reasons to Vote No to the Lisbon Treaty
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