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Democrat July-August 2008 (Number 109)

Report by Brian Denny

EU Court judgement against Luxembourg further undermines protection for workers

Alarm bells should be ringing in trade union buildings across the EU following another ruling by the European Court of Justice which found once again that the rights of business to do what it likes when it likes overrides trade union rights.

Unfortunately, while the threat to trade union rights is very real, the sense of danger and concern, this should provoke among workers’ organisations is missing.

This is due to the secretive nature of EU institutions and a lack of understanding of the immense power they have given themselves over the years

In the latest case the European Court of Justice in Luxembourg has, ironically, found against its host country in its judgment in a case brought by the European Commission. The ECJ upheld the Commission’s complaint in the way in which Luxembourg has implemented the Posting of Workers Directive is an obstacle to the free provision of cross border services.

In other words, Luxembourg’s national labour laws protecting foreign workers are hampering the rights of firms to extract profits and should be done away with.

The seriousness of this ruling was underlined by very frank comments from the arch Europhile John Monks, general secretary of the European Trade Union Confederation (ETUC).

When establishment figures like Mr Monks say that the Luxembourg judgment is “another hugely problematic judgement by the ECJ, asserting the primacy of the economic freedoms over fundamental rights and respect for national labour law and collective agreements” we should be worried.

He goes on to admit the Posting of Workers Directive is being used as an instrument not to protect workers and labour markets against unfair competition on wages and working conditions but as an “aggressive internal market tool”.

Yet the Posting of Workers Directive was designed to remove obstacles to the freedom of firms to operate and not to protect vulnerable foreign workers as Europhiles have claimed in the past.

In the ECJ Vaxholm case in Sweden, Latvian building company Laval justified using low paid Latvian workers by quoting the Posting of Workers Directive (Article 3.1.C). According to Laval, this implied that member states shall ensure a minimum rate of pay is laid down in national legislation or in a generally applicable collective agreement.

The company invoked Articles 12 (prohibition of discrimination on the grounds of nationality) and 49 (which stipulates that restrictions on freedom to provide services shall be prohibited in respect of nationals of member states who are established in a state of the Community other than that of the recipient of services) of the EU Treaty.

Cases such as Vaxholm imply that countries with well-functioning collective bargaining arrangements could be forced to change these to meet the requirements of European Union legislation.

As Sweden had not introduced a statutory minimum wage, the company claimed there was no obligation for an employer to pay the minimum wage collectively bargained for in the building sector.

In the latest Luxembourg case, the EU court has agreed with the Commission that the country’s labour laws obstruct the free provision of services.

In this case, the ECJ does not recognise the autonomous right of Luxembourg to define national public policy provisions to counter unfair competition on wages and working conditions of workers by cross border service providers.

This latest ECJ judgment is likely to have an enormous impact, far beyond the Luxembourg borders, and increases the spectre of social dumping for all workers.

It effectively challenges the scope for member states to secure decent wages for all workers on its territory, demand respect for collective agreements and devise effective mechanisms for the monitoring and enforcement of the workers’ rights.

The court is effectively saying that any national laws that blocks ‘free movement’ within the EU must be struck down as they conflict with EU rules on the free movement of goods and services.

The court is in effect slowly imposing, through case law, the hated ‘country of origin’ principle, supposedly dumped from the services directive in 2005.

An unelected EU commission is now actively acting against the interest of workers and the sovereignty of member states. The Irish people’s stance to defend democracy and workers rights by voting No! to the recent Lisbon treaty has been proven again to have been the correct decision.

Workers and their organisations across Europe act now as the implications of allowing EU institutions to ride roughshod over democracy and workers’ rights are very grave indeed.

A good starting point would be to heed RMT general sectary Bob Crow’s call for labour movements across Europe to stand up and demand respect for national labour laws and the repeal of these vindictive and anti-working class ECJ judgments.

Also see the full text of the pamphlet "Social Europe is a Con" which has sections dealing with ECJ rulings as well as Mode 4. This is available here in pdf format.