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The EU is not the worker’s friend – the ten trade union leaders are misguided

David Green, 6 June 2016

The leaders of ten trade unions claim that workplace rights will be under threat if we leave the EU. It seems that they have been drawn into the privileged world of high-powered meetings in Brussels and gone native to such an extent that they are divorced from the true interests of their members.

The European Court of Justice (ECJ) is no friend of trade unions. In two landmark case in 2007, Viking and Laval, it put the interests of employers above those of rank and file workers. It used its powers to give the highest priority to the primary dogma of globalisation, namely that nothing should stand in the way of businesses that want to relocate or provide a service in another member state, even if their aim is to drive down pay and conditions.

Viking was a Finnish passenger ferry company that operated a vessel between Helsinki and Tallin, in Estonia. It sailed under the Finnish flag and paid wages under a Finnish collective agreement. Viking tried to reflag to Estonia and planned to pay lower wages. In a complex judgement, the European Court of Justice  applied article 43 of the EC Treaty, which prohibits restrictions on ‘freedom of establishment’. The effect of the ruling was to make the right to strike subordinate to the economic freedom of employers to re-locate a business, even when plainly seeking a flag of convenience.

The second case concerned a Latvian building firm, Laval, with a Swedish subsidiary, which posted 35 Latvian workers to Sweden to renovate a school. The Swedish building workers’  union wanted Laval to accept the collective agreement that had been made but negotiations failed and the union blockaded the site. Laval went bankrupt and sought compensation from the union.

The ECJ held that the Posted Workers Directive, which requires that posted workers are given the same employment protection as workers in the host country, did not apply in this case. The Court decision was especially unsympathetic to local collective bargaining. In Sweden industrial relations relies on ‘social partners’ regulating pay rates through local negotiation, which over time has allowed conditions to be progressively improved. The ECJ took the view that there would be uncertainty for service providers if they were required to take part in local collective bargaining. For the Court it was of primary importance for companies to be able to predict with certainty what obligations they would have.

Article 49 of the EC Treaty  was also interpreted unfavourably to unions. It provides that ‘restrictions on the freedom to provide services within the Community shall be prohibited.’ The collective action of a union, even though a non-state actor, was considered a restriction under article 49. Union action that opposed temporary labour from other member states was contrary to article 49 if it sought to require posted workers to enjoy the same conditions as host country workers, above the minimum. The ECJ accepted that ‘social dumping’ could be a legitimate aim but ruled that it was not in this case.

Far from being a protector of workplace rights, the Viking and Laval cases suggest that the ECJ is a bosses’ court that places greater weight on the economic freedom of employers than on the protection of social rights by trade unions. In view of this record, it is difficult to see why ten trade union leaders would be so certain of the value of the EU to their members.

It is even more difficult to understand how they could turn a blind eye to the abject failure of the EU to give priority to jobs and economic growth. All social advancement ultimately depends on the strength of the economy and the possibility of finding a well-paid job. On these fundamentals the EU fails miserably. In recent years it has suffered low economic growth, low productivity, and high unemployment, often with individuals out of work for long periods. Some member states, such as Italy, Spain, Portugal and Greece, have suffered from especially severe youth unemployment.

With this record, trade union leaders should be leading the fight to leave the EU. Doesn’t finding themselves on the same side in the debate as David Cameron even give them pause for thought?

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