Social partners have differing views on Laval Inquiry

Since the Laval Inquiry was concluded in late December 2008, it has been under the consideration of the Swedish social partners. Overall, the social partners have reacted strongly to the inquiry’s proposals, and opinions differ between and among trade unions and employer organisations. Some trade unions address the need for a change of Community law at European level, while some employer organisations dismiss the Laval Inquiry proposals in favour of new labour legislation.

Swedish Laval Inquiry

As has been reported before (SE0706029I, SE0801019I, SE0804029I, SE0811029I, SE0901029I), the Laval case has posed challenges for the Swedish Labour Market Model and the parties involved.

After the European Court of Justice (ECJ) delivered its verdict in the Laval case (117Kb PDF) in December 2007, the Swedish government initiated the Laval Inquiry in April 2008 in order to make amendments to Swedish labour legislation for posted workers as a consequence of changes to Community law and the ECJ verdict. The inquiry (SOU 2008:123 (in Swedish, 3.3Mb PDF)) came to an end in December 2008 and the social partners have since had the opportunity to respond to the conclusions of the inquiry.

The inquiry proposed that Swedish trade unions should not be allowed to take industrial action to force a sectoral collective agreement if an employer from another country within the European Economic Area (EEA) already applies agreements that correspond to minimum wages and working conditions according to Swedish collective agreements. The employer has to prove that at least minimum standards in terms of pay and working conditions are applied. Thus, trade unions’ rights to industrial action are reduced and also in relation to the so-called ‘hard core’ of the Posting of Workers Directive (96/71/EC), which provide for rest periods, paid annual leave, overtime pay rates, conditions for hiring out workers, health and safety at work, and equal treatment between women and men and other provisions on non-discrimination.

Mixed response from social partners

All of the Swedish social partners are positive about the fact that the Laval Inquiry’s term of reference was to maintain the fundamental principle in the Swedish labour market model, which gives the social partners the right to regulate pay issues and labour market conditions through collective agreements in favour of state legislation. Apart from that, the social partners are very critical of the inquiry’s outcome.

Trade union reaction

In a joint reply (in Swedish), the Swedish Confederation of Professional Employees (Tjänstemännens Centralorganisation, TCO) and the Swedish Trade Union Confederation (Landsorganisationen i Sverige, LO) criticise the inquiry and address the need to adjust the Community law at EU level.

The inquiry is suggesting that an exception should be made regarding the prohibition of night work and the right to have breaks for companies with posted workers in Sweden. LO, TCO and the Swedish Confederation of Professional Associations (Sveriges Akademikers Centralorganisation, SACO) are all critical of this proposal, stating that it will have negative consequences for the posted workers’ working conditions. LO and TCO believe that minimum standards for posted workers should include pay, working time and holidays, working conditions and accident insurances. LO and TCO criticise the inquiry for a narrow interpretation of the Community law and find the proposal on night work and breaks unnecessary. The Swedish Labour Court (Arbetsdomstolen) has also reacted to the suggestion to make an exception of working conditions for posted workers and recommends to the government to further investigate this before the proposed bill is expected to be released in the autumn of 2009 (see article (in Swedish) in the occupational health and safety journal Arbetarskydd on 15 April 2009).

SACO’s response (in Swedish) to the inquiry is generally positive. However, it criticises the proposed reduction of industrial action and states that the right to protect members’ interests and organise them is a fundamental right and protected by international law and conventions. SACO, LO and TCO welcome the fact that the right to regulate pay will still be in the social partners’ control.

Employer reaction

The trade union position is, however, in strong contrast to the opinion of the Confederation of Swedish Enterprise (Svenskt Näringsliv). The Association of Swedish Engineering Industries (Teknikföretagen) and the Confederation of Swedish Enterprise reject the inquiry as a whole. Both organisations suggest introducing legislated minimum wages. The Confederation of Swedish Enterprise also opposes the suggestion that trade unions should be able to call for the conclusion of collective agreements, also by using industrial or strike actions. The confederation states that it is not realistic to demand foreign companies to follow all of the labour regulation associated with collective agreements; the confederation also criticises the fact that the labour regulation is not transparent enough for foreign companies.

Moreover, the confederation argues that about 55,000 Swedish companies are currently operating without collective agreements and forcing foreign companies to abide by such agreements will lead to unfair competition. The Association of Swedish Engineering Industries has made its own suggestion for new legislation that would replace the Lex Britannia provision – a provision that allows industrial action in order to remove foreign collective agreements, when operating in Sweden – and the posted workers directive. The association suggests that the National Mediation Office (Medlingsinstitutet) and the state should define the collective agreement’s minimum standards for pay and working time within different sectors of the economy. These standards should be applied to all employees in all companies in Sweden in order to avoid discrimination between foreign and Swedish companies.

The Swedish Agency for Government Employers (Arbetsgivarverket) is worried about the suggestion by the Confederation of Swedish Enterprise and the Association of Swedish Engineering Industries to introduce legislated minimum wages. In general, the agency is supportive of the inquiry’s proposals.

Karolin Lovén, Oxford Research

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