EU's top legal advisor strikes blow against wage-dumping

(LUXEMBOURG) - The European Union's top legal adviser gave a boost on Wednesday to unions seeking to stop cheap labour from flooding in from eastern Europe, in a landmark case involving Sweden and Latvia.

In an opinion to the EU's highest court, Advocate General Paolo Mengozzi said that unions may take proportionate action in the public interest to compel a firm from another EU country to respect local wage rates.

Such opinions are non-binding but the Luxembourg-based European Court of Justice enforces about 80 percent of them.

The case concerned Latvian company Laval un Partneri, which posted workers to Swedish building sites, mainly on extensions at a school in the town of Vaxholm. The works were handled by a susidiary, L and P Baltic Bygg.

Sweden's Byggnads construction union accused Laval of paying rates far lower than permissable and blockaded three of its building sites in the Scandinavian country to pressure the subsidiary into signing a collective wage accord.

The action forced L and P Baltic Bygg into bankruptcy.

The rift has been followed closely in Sweden, where it was seen as a direct consequence of EU enlargement amid fears of an influx of cheap labour from eastern European countries, such as Latvia, which joined the bloc in May 2004.

The advocate general found that the circumstances in this case "do not prevent trade unions from attempting, by means of collective action in the form of a blockade and solidarity action, to compel a service provider of another member state to subscribe to a rate of pay" in a wage agreement.

"Collective action must, however, be motivated by public-interest objectives, such as the protection of workers and the fight against social dumping, and must not be carried out in a manner that is disproportionate."

No date was set for the court to rule in the case.

British conservative Member of the European Parliament, Richard Ashworth, complained that any court decision in this direction would give too much power to the unions and stifle competition.

"The court must not allow trade union blockades to dictate the terms of the EU single market," he said in a statement.

"If we are to achieve our goals of more jobs and higher economic growth, we need to encourage competition, not force foreign companies to agree to collective agreements they never actually agreed to," he said.

"This case has nothing to do with social protection. Swedish unions are simply protesting because their labour market cannot compete with the new member states."

But the Greens bloc welcomed it as "an important step for preventing social dumping in the EU" and said it "affirms that the principle of 'equal (minimum) pay for equal work in the same workplace' has to apply across Europe."

Further details - European Court of Justice