In the last issue, we looked at how workers pay the price of the European Union. In this article, we focus on how the EU has restricted unions’ ability to defend wages and conditions…
In principle, EU law asserts the right to collective bargaining and the right to strike. Yet these rights fade away when it comes into conflict with the fundamental freedoms of business, enshrined in EU treaties: the rights to provide services, to establish a business, to move labour, to invest (and de-invest) where they want.
Yet in Britain many unions are blithely ignoring the damage the EU is doing to collective bargaining and the right to strike.
It’s not as if they haven’t been told. In 2016 John Hendy – dubbed “the barrister champion of the trade union movement” by trade journal The Lawyer – wrote a detailed article looking at decisions from the European Court of Justice, the EU’s Charter of Fundamental Freedoms, and European Commission reports. He concluded, “The EU has become a disaster for the collective rights of workers and their unions.”
Among the key decisions he mentions was the Viking case – a landmark in the European Court of Justice’s support for the interests of the employers.
Viking is a Finnish company which operates a large ferry fleet of eight ships. In autumn 2003, saying it was losing money, it told the Finnish Seamen’s Union it wanted to reflag one of its ships to Estonia or Norway to save costs.
The union threatened strike action, backed up by a circular from the International Transport Federation urging member unions not to negotiate with Viking about reflagging. Viking backed down.
But then, on 1 May 2004, Estonia joined the EU. Soon Viking announced it was reflagging the ship to Estonia. With the circular from the International Transport Federation in force and the Finnish union talking about a strike, Viking went to the High Court in London (where the International Transport Federation is based), claiming that union action violated its rights under EU law to free movement and to establishment (articles 39 and 43 of the Treaty on the Functioning of the European Union).
The High Court sided with Viking, and issued an injunction restraining union action. The unions appealed, and the Appeal Court referred the case to the European Court of Justice.
At the European Court the unions argued that their action was a promotion of the European Union’s social policy (fairness, solidarity, and so on). The European Court sided with Viking. No surprise, perhaps. But the reasons are revealing.
Company rights prevail
First, the court established that the right to strike in pursuance of social policy cannot automatically override the right of companies to set up where they want (Article 43).
Second, the court established that the right to strike can be prohibited not just under national law but also under EU law. So the EU can and will (and does) ban strikes that national legislation would permit.
‘Including the right to strike in the Charter allows the EU to interfere…’
Third, while not outlawing strikes over free movement in principle, it said that any strike would be illegal if it was actually effective – if “by virtue of its general effect on the holders’ rights to freedom of movement [it] is capable of restricting them from exercising their rights, by raising an obstacle that they cannot reasonably circumvent”.
Fourth, it made it clear why free movement and the right to establishment are so important: “...the possibility for a company to relocate to a Member State where its operating costs will be lower is pivotal to the pursuit of effective intra-Community trade”.
There you have it: shifting between countries to lower operating costs is central to EU trade, and the law will be brought to bear on anyone who tries to stop it.
Defenders of the European Union make much of the EU’s Charter of Fundamental Rights. And, indeed, it does state in Article 28 that workers have the right to collective bargaining and the right to strike.
But just about every time unions have gone to the EU legal system to uphold those rights, they have been told that the employers’ rights are more important.
What these unions are missing is the fact that the very inclusion of collective bargaining and the right to strike in the Charter allow the EU to interfere in these areas that are supposed to be the exclusive competence of national governments.
The point was neatly made by Professor Niamh Nic Shuibhne, University of Edinburgh, in a paper in 2010: “…looking to the EU Charter of Fundamental Rights to ascribe ‘fundamental’ status to the right to strike, as the parties in both cases did here, has an inverse consequence too – because it confirms that such questions do form part of Community law to some extent.”
In effect, every time a union goes cap in hand to the EU for a ruling over collective bargaining or the right to strike, it hands over another piece of workers’ sovereignty to Brussels.
As the European Ombudsman has made clear (see Restrict air strikes, says EU), the EU’s legal authority over labour relations is restricted, but it is free to make “recommendations”. And the Commission’s Directorate General for Economic and Financial Affairs did just that.
“Employment friendly” policies it is encouraging include: decentralisation of wage setting and collective bargaining; wider scope to opt out of industry-wide agreements at national level; “decreasing bargaining coverage” and “an overall reduction in the wage-setting power of trade unions”; and “performance-related pay”, reducing barriers to immigration, and raising retirement age.
And the EU has seized the debt crisis as an opportunity to enforce these “recommendations”. In Greece, the European institutions used economic blackmail to railroad huge changes in collective bargaining and even in existing collective agreements – reducing the role of trade unions in setting the national minimum wage, removing automatic indexing in line with price increases, and a reduction in the minimum wage itself.
Swiss unions are currently fighting to stop the EU’s attempt to impose an overarching agreement on Switzerland to force it to adopt every EU ruling on the single market.
The agreement would “substantially dismantle” Swiss wage protection and prevent any improvement. They will fight “vigorously” against the proposal – a position confirmed unanimously at the Swiss Trade Union Confederation’s annual congress at the end of November 2018.
In what the Austrian Trade Union Federation called “a black Tuesday for social Europe” the court ruled in favour of Slovenian employers posting staff across the border to work mainly on building sites. Figures from the unions suggest that in the first six months of 2018 almost half the foreign companies posting building workers were undercutting Austrian rates, against around 1 per cent of local companies.
None of this is hidden. All is freely available on the web. Unions know about it. But most choose to ignore it. Is that because the alternative – leaving the EU and fighting for ourselves rather than petitioning Brussels – sounds too much like struggle, too much like hard work?
• Related article: Restrict air strikes, says EU