Swedish Laval Inquiry proposals may prove difficult to implement

The Swedish Laval Inquiry Committee presented the results of its assessment in December 2008. In April 2008, the committee had been asked to present proposals for changes to Swedish legislation following the Laval judgment by the European Court of Justice. The outcome of the committee’s inquiry has met with a mixed response, with all of the social partners agreeing that its mission to harmonise the Swedish labour market model and EU law will be more difficult to implement in practice.

Background

In late 2004, a blockade and sympathy protest were held against the Latvian company Laval at a building site for a school in Vaxholm in central Sweden. The conflict underlined the enormous clash that had emerged between Swedish labour market principles and EU law – more specifically, on the basis of Article 49 of the EC Treaty regarding the free movement of services, the non-discrimination principle on grounds of nationality and the Posting of Workers Directive (96/71/EC). In the Laval case, the European Court of Justice (ECJ) ruled that it was not compatible with EU law to allow industrial action in this particular instance.

Subsequently, the Swedish Laval Inquiry was launched in April 2008 to present proposals for amendments to Swedish legislation as a consequence of the Laval judgment by the ECJ (SE0706029I, SE0801019I, SE0804029I, SE0811029I).

Remit of inquiry

The terms of reference for the Swedish Laval Inquiry Committee was to maintain the fundamental principle in the Swedish labour market that the main responsibility for regulating pay and working conditions lies with the social partners. At the same time, EU law must also be fully respected.

Main proposals of committee

The Swedish Laval Inquiry Committee proposes that Swedish trade unions should not be allowed to take industrial action to force a sectoral collective agreement if an employer from another country of the European Economic Area (EEA) already applies agreements that correspond with the minimum wages and working conditions stipulated under Swedish collective agreements. The employer has to prove that at least minimum standards in terms of pay and working conditions are applied. Thus, the trade unions’ right to industrial action is reduced and also in relation to the so-called ‘hard core’ of the Posting of Workers Directive, which provides for:

  • maximum work periods and minimum rest periods;
  • minimum paid annual holidays;
  • the minimum rates of pay, including overtime rates;
  • the conditions for hiring out workers, in particular temporary workers;
  • health, safety and hygiene at work;
  • protective measures with regard to the terms and conditions of employment of pregnant women or women who have recently given birth, and of children and young people;
  • equal treatment between men and women and other provisions on non-discrimination.

The committee also proposes that a trade union demanding better wages and working conditions from an EEA employer should address the Swedish Work Environment Authority (Arbetsmiljöverket) liaison office.

Furthermore, the inquiry committee highlights the social partners’ key role and huge responsibility in ensuring that the model, as proposed by the committee, will work in practice and in a way that satisfies the requirements of EU law. It is in fact the trade unions in the Swedish labour market that are, under the inquiry proposals, given a role that basically corresponds with functions that in many other countries lie with the public authorities.

As regards the state, the inquiry proposal requires a more active role for the Swedish Work Environment Authority as a liaison office, in terms of making it easier for foreign service providers to access information and to generally enhance predictability regarding which terms and working conditions are to apply when posting workers to Sweden.

According to the Swedish Laval Inquiry Committee, the proposals mean that the Swedish labour market model can largely be applied as regards regulating wages and working conditions for posted workers, at the same time ensuring that EU law is fully respected.

Social partner reactions

The Confederation of Swedish Enterprise (Svenskt Näringsliv) believes that the inquiry’s proposed regulatory changes do not follow EU law, which affect the free movement of workers and services. Another difficulty highlighted by the confederation is the fact that it is unlikely that an employer from an EEA country will be able to predict labour costs in Sweden, which is requested by EU law.

The Swedish Confederation of Professional Employees (Tjänstemännens Centralorganisation, TCO) acknowledges the use of collective agreements as the method for incorporating safety rules according to EU law. This will strengthen the role of collective agreements in regulating labour market issues, which today are regulated by law. However, TCO is critical of the proposal to prohibit trade unions from taking industrial action as long as the employers follow minimal standards and that the burden of proof regarding fair agreements lies with the employer.

The Swedish Trade Union Confederation (Landsorganisationen i Sverige, LO) has welcomed the inquiry committee’s support of the Swedish labour market model, whereby the social partners play a key role in negotiating wages and working conditions. Nevertheless, LO is critical of the loopholes that unscrupulous companies may take advantage of to reduce wages and exploit employees. According to the confederation, Sweden cannot solve the problems created by the Laval judgement alone; rather, it is a European problem that can only be solved by changes in EU law.

All of the social partners agree that the committee’s mission to harmonise the Swedish labour market model and EU law will be more difficult to implement in practice.

Commentary

It is now up to the Swedish government to act on the inquiry’s proposal and introduce a government bill. Whatever the result may be, it will be difficult to find a middle ground that suits all of the social partners. This debate may also have a political impact on next year’s election. The four-party government has both internal and external challenges to tackle in the run-up to the country’s 2010 election.

Thomas Brunk, Oxford Research

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