EU law puts a dent in Scandinavian labor organizing

By U.S. standards, the months-long standoff between Danish trade unions and the low-cost airline Ryanair was nothing special. But in a country normally characterized by its high level of cooperation between labor leaders and corporations, the prolonged skirmish over Ryanair’s use of foreign temporary workers — which culminated over the summer in the Irish airline’s decision to shutter its regional facility in Billund, home to Denmark's second largest airport — was exceptionally heated.

Ryanair director of personnel Eddie Wilson accused Danish trade unions of “destroying highly paid jobs for Danish pilots and cabin crew” in a July statement announcing the base’s closure. “This is a black day for the Danish economy,” he said.

Meanwhile the vice president of the Danish Confederation of Trade Unions (LO) said Ryanair “grossly underpays its employees and blatantly disregards our rules” in a dueling statement. “The trade union movement will not sit by quietly and watch them try to undermine Danish pay and working conditions again,” said LO vice president Lizette Risgaard.

With the closure of the Billund facility and last week’s announcement that Ryanair would nonetheless expand its service to Copenhagen, the fight appears to have reached an uneasy conclusion. But the conditions that made such a bitter fight possible remain, and they continue to aggravate the labor movement — not just in Denmark but in neighboring Sweden as well.

For Swedish and Danish unions, the real aggressor is not Ryanair or any individual company; it’s the European Union, and in particular the EU legal system’s emphasis on promoting the free flow of labor between member states. Scandinavia’s borders have been thrown open to a whole continent of businesses that don’t necessarily feel obliged to replicate the region’s famously worker-friendly labor practices.

“The question is under what circumstances the services offered by a Latvian, Polish or German firm should be sold in Denmark and Sweden,” Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics, told Al Jazeera. “There’s an ongoing struggle over whether they should be able to offer those services paying Polish or Latvian wages."

The struggle concerns a particular category of workers, defined as “posted workers” under EU law. A posted worker is “sent by his employer on a temporary basis to carry out his work in another Member State” according to a fact sheet on the European Commission website.

Under the Posting of Workers Directive, approved by the European Parliament in 1996, workers who are posted to a particular member state get to enjoy that state’s labor protections. A Polish worker posted to Denmark must be paid Denmark’s minimum wage or more.

The problem is that Denmark doesn’t have a minimum wage, at least not legally speaking — nor does Sweden. (Norway, the third of three Scandinavian countries also does not have a legal minimum wage but it is not a member of the European Union.)

Instead of legislating their minimum wages, the Scandinavian countries have their unions bargain for them. Sweden and Denmark may not have minimum wage laws, but they do have effective wage minimums, defined by the collective bargaining agreements their unions negotiate.

For example, unions in Denmark usually stipulate that workers at a particular firm be paid no less than $20 per hour. Because roughly 80 percent of Danish workers are covered by collective bargaining agreements, that $20 figure ends up becoming the effective minimum wage; firms without collective bargaining agreements may legally be permitted to pay their employees less, but in practice, they are unlikely to do so if they want to compete with other firms in attracting workers.

What’s true for compensation is also true for many other kinds of benefits and worker protections. Compared to the United States, Sweden and Denmark have relatively few labor regulations inscribed into law; instead, employers and unions negotiate the terms under which most workers are employed.

That system has helped Swedish and Danish workers maintain a high standard of living for decades, but it has also created a vacuum of sorts in Scandinavian labor law. The Polish worker who gets posted to Denmark does not automatically become covered by a Denmark collective bargaining agreement, nor is there any Danish law that would require he be paid the effective minimum wage.

A Swedish union can still compel the posted worker’s employer to negotiate a collective bargaining agreement. This is sometimes done the old-fashioned way: By forcing the employer’s assent through strikes, blockades and other disruptive labor actions.

“The important thing is that trade unions can use industrial actions to induce firms to sign collective agreements,” Åsa Janlöv, a research officer at the Swedish Trade Confederation (known, like its Danish counterpart, as LO), told Al Jazeera. “And a collective agreement will apply to all workers in a specific firm; it doesn’t matter whether or not they’re union members. So this prevents non-unionized employers from gaining a competitive advantage and applying worse terms."

But for nearly a decade, Swedish and Danish unions have faced a new constraint in dealing with posted workers: European legal precedent.

In 2004 negotiations broke down between a Swedish trade union and the Latvian construction firm Laval un Partneri, which had posted workers to Sweden. The union initiated a blockade against the construction sites in Sweden where Laval’s subsidiary, L&P Baltic Bygg AB, happened to be operating; Laval sued the union in Swedish Labor Court.

The court ruled the blockade was lawful under Swedish law, but referred the matter to the European Court of Justice (ECJ) for clarification on what EU law had to say. The ECJ declared in 2007 that industrial action, although it is a fundamental right, must be “proportional.” In other words, the economic damage inflicted by an industrial action may not exceed the economic benefit the union hopes to gain.

Swedish unionists were appalled, believing that no such limit should exist on the right to strike.

"Who decides what is proportionate?” said Janlöv. “To us, all of this is proportionate."

The ECJ also ruled that industrial action was justified insofar as it compelled businesses to comply with the Posted Workers Directive. But unions could not strike to force more generous business practices than those required by the directive. Unions complained the ruling flipped the intent of the directive on its head.

“The Posting of Workers Directive — which is, in its own words, a minimum directive setting out minimum levels of protection for workers — became the maximum directive,” said Janlöv.

The consequences for unions were stark and immediate. Before the Laval ruling, the Swedish LO says it tended to achieve roughly 100 signed collective agreements per year with employers in the construction sector. In 2008, the year immediately following the Laval judgment, they racked up 40 agreements. They’ve held steady at roughly 30 agreements per year since.

Nonetheless, Kirkegaard said he has yet to see a significant impact on Scandinavian labor standards.

“There have been many cases that are functionally similar to the Laval case where you have a local labor union protesting the circumstances under which a Polish firm — or wherever they’re from — is operating with foreign workers in domestic markets,” he said. “This happens all the time. But I would say that by and large these firms will either be picketed, blockaded or forced to operate on circumstances that are similar to those faced by domestic firms."