Sweden’s much-vaunted model of industrial relations and collective wage bargaining faces a challenge after a judgment by the European Union’s top court, trade unions warned on Tuesday.
The European Court of Justice found that Swedish construction workers were not justified in blockading a building site run by a Latvian building company, Laval un Partneri, that failed to pay the locally agreed going rate.
Tuesday’s ruling could intensify tensions in the EU over balancing workers’ ability to move across borders – particularly from the lower-wage east to “old” Europe – with labour and trade union rights. Laval, through its Swedish subsidiary, won a contract to refurbish a school in a Stockholm suburb. The company, however, refused to sign the building industry collective agreement and sought to use Latvian workers at below the minimum wage.
Byggnads, the Swedish builders’ union, supported by secondary action by other unions, picketed Laval’s construction sites, which forced the company to abandon its contract and later put its Swedish subsidiary into liquidation.
The entry of 10 former communist countries to the EU since 2004 has heightened concerns over wage disparities and lower-cost competition from eastern European companies.
Laval had sued the Swedish unions over the blockade, saying it violated the fundamental freedom of companies to provide services across the EU bloc. The unions argued they had the right to pursue industrial action. Judges on Tuesday upheld striking as a fundamental right. But they balanced this entitlement with an employer’s freedom under EU law to provide services across the union.
The European Trade Union Confederation said: “Our disappointment is focused on the challenge [the ruling] poses to the very successful flexible Swedish system of collective bargaining and those of certain other Nordic countries – the models for flexicurity ... being promoted by the European Commission.”
Richard Arthur, head of trade union law at UK-based Thompsons Solicitors, said: “In the last week, in the Viking [a related ECJ judgement] 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.”
Trade unions in Sweden called on the government to protect the country’s labour model against the ruling.
Sven Otto Littorin, Swedish employment minister, told the Financial Times that the centre-right government – which had supported the unions in the dispute – would now have to amend the law. “I’m a bit surprised and a bit disappointed by the verdict,” he said. “I think things are working well as they are.”
Svenskt Naringsliv, the Confederation of Swedish Enterprise, welcomed the decision. Jan-Peter Duker, vice-president, said: “This is good for free movement of services. You can’t raise obstacles for foreign companies to come to Sweden.”
