EFTA Surveillance Authority continues to examine social dumping measures

In July 2009, the EFTA Surveillance Authority announced its finding that the Norwegian General Application Act complies with the free movement of services and Directive 96/71 on posted workers. However, it will continue investigating other measures to combat social dumping in Norway, such as a contractor’s duty to inform and monitor subcontractors regarding minimum wages and working conditions, as well as obligations under public work contracts on these issues.

The EFTA Surveillance Authority (ESA) monitors compliance with the European Economic Area (EEA) agreement by the European Free Trade Association (EFTA) states of Norway, Iceland and Lichtenstein. In this respect, it serves the same function as the European Commission towards EU Member States. In January 2008, Norwegian Technology (Norsk Teknologi), which is a sectoral federation of the Confederation of Norwegian Enterprise (Næringslivets Hovedorganisasjon, NHO), submitted a complaint to ESA arguing that the Act relating to the general application of wage agreements (53Kb PDF) (General Application Act, Allmenngjøringsloven) imposes unjustified restrictions on foreign undertakings providing services in Norway. According to the act, provisions of collective agreements may be made generally applicable if foreign workers in Norway are subject to wages and working conditions that are inferior to those of ordinary Norwegian employees (NO0612029I, NO0509103F, NO0411103F).

ESA ruling

On 15 July 2009, ESA decided to conclude its investigation into the General Applicable Act. According to ESA, the act in general pursues a legitimate aim, namely the protection of workers, capable of justifying a restriction on the freedom of services. In the view of ESA, the provisions of the act are suitable and proportionate for achieving this aim and are also in compliance with the requirements set by Directive 96/71/EC concerning the posting of workers in the framework of the provision of services. ESA highlights, however, that its investigation has focused on the provisions of the act, and it has not examined whether regulations adopted under the act, such as decisions to make a specific collective agreement generally applicable, comply with EEA law.

Investigations continue on social dumping measures

On the same day as ESA presented the result of its investigation, the authority also announced its plan to further investigate other measures introduced by the Norwegian government to combat social dumping. This involves taking a closer look at a 2008 regulation that imposes a duty on contractors who undertake work in areas where a collective agreement has been made generally applicable, to provide, monitor and receive information from their subcontractors on matters regarding the conditions regulated by the collective agreement and the fulfilment of these conditions (NO0705019I). ESA wants to establish whether such requirements impose undue restrictions and obligations on foreign undertakings providing services in Norway.

ESA also announced that it had initiated a formal infringement procedure against Norway pertaining to a piece of regulation that requires contracting authorities to incorporate a special clause into their contracts committing contractors to monitor that collective agreements or normal wage and working conditions are respected by subcontractors. Opening a formal infringement procedure means that ESA suspects that the regulation does not comply with the EEA agreement. The ESA opinion in this matter is based on the interpretation of the posting of workers directive as laid down by the European Court of Justice (ECJ) in the Rüffert case (C-346/06), where a similar regulation was believed to be incompatible with EC law (EU0805029I).

Measures to combat social dumping under pressure?

Measures to combat social dumping have been high on the agenda of both the trade unions and the present government during the past few years, and several new measures have been introduced (NO0705019I, NO0906019I). In a comment to ESA’s infringement procedure, the State Secretary of the Ministry of Government Administration and Reform (Fornyings- of administrasjonsdepartementet, FAD), Wenche Lyngholm, stated that the government will do whatever possible to convince ESA that the regulation is necessary, and that this is an extremely important issue for the Norwegian government. The complaint made by Norwegian Technology to ESA, and ESA’s own investigations are, however, only a few of the initiatives seen by the trade unions as attacks on the Norwegian model of the extension of collective agreements. In March 2009, nine shipbuilding yards and NHO issued a complaint against the state claiming that the decision to extend a collective agreement to the shipbuilding industry constitutes an infringement of Norwegian law and the EEA agreement (NO0808019I). Furthermore, in July 2009, the employer organisation for small and medium-sized enterprises (Bedriftsforbundet) filed a complaint with ESA claiming that a regulation requiring the use of an identification card by workers at construction sites (NO0802019I, NO0705019I) is not in compliance with the EEA agreement.

Kristin Alsos, Fafo

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