Workers’ rights and economic freedoms – View from ETUC
A British trade union lawyer colleague of mine who is here today termed the recent quartet of legal judgments in the European Court of Justice – an accident waiting to happen.
The accident waiting to happen is the way the free movement of the single market interact with both the national industrial relations systems and fundamental social rights. The single market is a European competence; industrial relations is a national one and they clash when free movement’s terms are established, especially when applying over national terms.
The score at the moment is ECJ 4, European trade unions 0; and I do not exaggerate when I say that we are reeling at the score.
The cases have caused widespread concern in the European trade union world and are affecting adversely trade union support for the EU. As the ETUC President will say later, they are certainly making the Swedish ratification of the Lisbon Treaty problematic.
For the ETUC and its members the outcome of these cases represent a major challenge; how to establish and defend labour standards in an era of globalisation. In the ETUC’s view, the ECJ does not sufficiently recognise that trade unions must defend their members and workers in general against unfair competition on wages and working conditions, to fight for equal treatment between migrant and local workers, and to take action to improve living and working conditions of workers across Europe. This is an interest and concern that all trade unions share in Europe, be it in the ‘old’ or the ‘new’ Member States.
In addition, the ECJ is limiting the possibilities for Member States to safeguard the role of collective bargaining and their own labour legislation in dealing with the effects of increased cross border mobility of workers and companies.
Essentially, these outcomes expose some essential weaknesses of the current legal framework (of Treaties and Directives) at EU level that need to be addressed:
-# 1) The ECJ seems to confirm a hierarchy of norms (in the Viking and Laval cases), with market freedoms highest in the hierarchy, and collective bargaining and action in second place. This means that organised labour is limited in its response to the unlimited exercise of free movement provisions by business which apparently does not have to justify itself. Any company in a transnational dispute will have the opportunity to use this judgement against trade union actions, alleging that actions are not justified and ‘disproportionate’. Combined with a situation in several Member States in which it is very easy to get interim court-injunctions at the request of one party stopping trade unions in their actions – because, otherwise, they would run the risk of paying enormous damages – it becomes clear that ECJ cases may have a very negative impact on the balance between capital and labour. In some cases, the situation is resembling the legal framework of the beginning of the 20th century.
-# 2) The ECJ interprets the Posting Directive in a very restrictive way. On the one hand, it limits the scope for trade unions (in the Laval case) to take action against unfair competition on wages and working conditions, and to guarantee equal treatment of local and migrant workers in the host country. Specifically, trade union action to lift the conditions of these workers above the minimum provisions of the Posting Directive would be unlawful.
As you will appreciate, this is being seen widely as a license for employers to hire workers via foreign subcontractors and agencies in order to pay them below local standards, and as a direct threat to the collectively agreed terms and conditions of indigenous workers. On the other hand, it limits Member States (in the Rüffert case and Commission vs. Luxemburg case) in applying their public procurement law or public policy provisions on situations of posting to prevent disruption of their labour markets and unfair competition between local and foreign service companies, which is not only to the detriment of workers but also of local companies – especially small and medium-sized enterprises (SMEs).
A review of the Posting Directive
The ETUC is of the opinion that the EU institutions must take the concerns about the way the ECJ is interpreting the Posting Directive seriously, and must discuss whether this interpretation sufficiently reflects and accommodates the original objective of this Directive, as stated in its preamble: ‘(5) whereas (…) promotion of the transnational provision of services requires a climate of fair competition and measures guaranteeing respect for the rights of workers’.
In so far as this is not the case, a review must be envisaged. This is one point. But there is another. To help correct the balance between the freedoms of the single market and fundamental rights, ETUC is proposing that a ‘Social progress clause’ be added to the European Treaties. (The idea of such a clause was originally considered by Chancellor Merkel and Jean-Claude Juncker in the wake of the ‘no’ votes in France and the Netherlands on the old Constitutional Treaty.)
In ETUC’s view, the restrictive interpretations by the ECJ are not the only possible interpretation of the European Treaties, which have a clear social dimension that will be reinforced by the Lisbon Treaty. A social progress clause should unambiguously clarify and establish the relations between fundamental social rights and economic market freedoms. Such a clause must be legally binding at the highest level, to ensure that it influences the decisions of the ECJ. Only a protocol, attached to the Treaties, can give sufficient guarantees in this regard.
It should contain the following key elements:
-# a) it should confirm that the single market is not an end in itself, but is established to achieve social progress for the peoples of the EU;
-# b) it should clarify that economic freedoms and competition rules cannot have priority over fundamental social rights and social progress, and that in case of conflict social rights shall take precedence;
-# c) it should clarify that economic freedoms cannot be interpreted as granting undertakings the right to exercise them to evade or circumvent national social and employment laws and practices or for unfair competition on wages and working conditions.
By these means, we can establish trade union freedoms that are appropriate. We are not protectionist. We do not want to keep migrant workers or companies out but to establish in industrial relations the old principle of ‘when in Rome do as the Romans do’.
Speech held by John Monks at the European Commission's Forum on workers' rights and economic freedoms on 9 October 2008.