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Magazin Mitbestimmung English online

Social Europe? The European Project after Viking and Laval

LAW The European Court of Justice (ECJ) rulings in the Viking and Laval cases have imposed restrictions on strike action by trade unions - in the name of free movement of services and freedom of establishment. By Martin Hpner. MARTIN HPNER, political scientist at the Max Planck Institute for Social Research in Cologne and co-editor of a book on the political economy of European integration, takes a long, hard look at Europe's liberalisation policy./Photo: picture alliance Consider two landmark cases on the future of the European project. The first concerns ferry company Viking, which operates Viking ferry under Finnish law on the short 80km route across the Baltic between Estonia and Finland. Viking wanted to make use of Article 43 of the Treaty establishing the European Community, which lays down the right of establishment, to re-flag one of its ships under the Estonian flag so as to circumvent Finnish collective agreements. The Finnish trade unions were horrified and threatened a strike, to try to ensure that Viking would be bound by Finnish labour standards even if the vessel were re-flagged. The International Transport Workers' Federation, which campaigns against flags of convenience, urged its national member associations to boycott Viking so as to avoid undermining Finnish standards. The case was brought before the ECJ, which had to rule on whether the union's action was compatible with the European Treaties. Did the right of establishment give Viking the right to exploit lower wage costs in Estonia by re-flagging? Were the Finish trade unions allowed to strike? The second case also concerns two other Baltic neighbours, Latvia and Sweden. Under the free movement of services underpinned by Article 49 of the European Treaty, construction company Laval, which operates under Latvian law, posted workers to Vaxholm in Sweden to build a school for a Swedish subsidiary of the company. The construction workers' union initiated industrial action in an attempt to force the company to negotiate and to apply the conditions laid down by the Swedish construction agreement. Laval claimed that this collective action was illegal. The Swedish police argued that the blockade organised by the union was permissible under national law and declined to assist the company. This case, too, came before the ECJ. For Laval, the main attraction of the right of establishment was precisely that it would not be bound by Swedish pay and conditions. And, it argued, the European Treaties guaranteed free movement of services. Was it really legal, then, for the Swedish union to organise this action? And could the Swedish authorities permit it? A RULING WITH FAR-REACHING CONSEQUENCES_The ECJ delivered its judgments on 11 December 2007 (C-438/05) and 18 December 2007 (C-341/05) in the Viking and Laval cases respectively. Two key points emerge. The first is confirmation that the right to strike is a basic right within the legal framework of the European Union. The second, which is more significant, is that exercise of the right to strike may not unreasonably restrict the "four freedoms" laid down in the Treaties - the rights to free movement of capital, goods, persons and services. Any restriction of one of these freedoms is reasonable only where overriding reasons of public interest require such action, "provided that it is established that the restriction is suitable for ensuring the attainment of the legitimate objective pursued and does not go beyond what is necessary to achieve that objective" (Point 3 of the Viking judgment). In other words, the right to strike is not exempt from the scope of application of the "four freedoms". After ruling on these principles, the ECJ referred the Viking case to the jurisdiction of the national courts but set a high threshold for assessing "overriding reasons". In the Laval case, the judges ruled that the action of the Swedish workers' representatives breached European law; the industrial action, which was "liable to make it less attractive, or more difficult" for Laval to make use of the right to free movement of services (Point 99 of the judgment), was not covered by "overriding reasons of public interest". This ruling has far-reaching consequences for the right to strike in many member states as a

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"proportionality check" on strike action has hitherto been unusual or, indeed, completely unprecedented in Germany and elsewhere. Robert Rebhahn has explained these consequences in his paper in "Wirtschaftsrechtliche Bltter" (see Rebhahn 2008). It may be useful to take a step back and reflect on what is actually going on here. The right of employees to strike in support of their claims is a valuable asset in the structurally asymmetrical dependency of a capitalist employment relationship. In Germany, its origins lie in the fundamental principles of what German calls a sozialer Rechtsstaat - a social state governed by the rule of law - and freedom of association; because it is protected under the Constitution rather than under legislation on freedom of economic action, such a right cannot be touched. Many years ago, governments concluded treaties that aimed to reduce the trade barriers between EC Member States and to achieve a common market in Europe. The guiding principle was that nationals of other Member States should enjoy exactly the same rights as nationals of the Member State concerned in terms of investment, labour markets, trade in goods and provision of services. The European institutions - the Commission and the ECJ - were given the responsibility of ensuring that these principles were upheld. Both institutions are thus legitimated by the Treaties rather than directly. Over time the Commission and the ECJ gradually freed themselves and increasingly shifted the boundaries between national law and European law to the detriment of the Member States. In particular, they granted the "four freedoms" the status of a supranational constitution that has precedence over national legislation even national constitutions and thus appropriated the right, without consulting the Member States, to pass liberalisation measures that would never have been viable at national political level. Cologne-based political economist Fritz Scharpf has referred to the "constitutionalisation of competition law". The immediate response may well be that such action is unacceptable - but will continue to happen so long as there are no serious challenges to it. BUILDING BLOCKS OF EU LIBERALISATION POLICY_The Viking and Laval judgments are a building block in a long history of the Commission's and ECJ's legal - rather than political - implementation of European liberalisation policy. Essentially, they say that national rights must be subordinated to the "four freedoms" laid down in the Treaties. Key stages in the history of European liberalisation policy include the deregulation of telecommunications, air and freight transport, energy markets and postal services; examples in Germany include the lifting of the former Federal Labour Office's monopoly role as an employment agency and restrictions on national broadcasting and on the liability of public regional administrative bodies for regional banks and savings banks (see Scharpf (2008) for detailed discussion of these areas). The Centros, berseering and Inspire Art cases saw the ECJ deny member states the right to require companies operating exclusively on their sovereign territory to comply with national company law; it is not yet clear what effects that will have on co-determination at company level. The ECJ also recently ruled that it was incompatible with the free movement of services to attach a condition to public procurement contracts stipulating that collectively agreed wage structures should be adhered to. The "four freedoms" are nothing other than the freedom of capitalist activity. The notion that the right to strike should be subordinate to these freedoms is bizarre from a national perspective. Let us for a moment disregard the European dimension and imagine a German court requiring trade unions to forgo industrial action where such action would impede commercial freedom unless there were "over-riding reasons of public interest". There would be an outcry. Yet this is exactly what is happening at European level: Bremen-based legal experts Christian Joerges and Florian Rdl have called it "a relativization of the right to strike by quasi-constitutional commercial freedom". If Swedish and Finnish unions are no longer able to embark on collective action against deliberate exploitation of European law to circumvent national collective agreements, surely this amounts to nothing less than claiming a basic right to unimpeded social dumping. There is no such right, however, and nothing authorises the ECJ to proclaim one or to reorganise national rights to strike or other basic rights protected by law. Labour and social legislation has just one aim - to impose constraints on capitalist activity and steer it towards social acceptability. If it is to be subordinated to the freedom of capitalist activity, then in principle it can be dismantled piece by piece. Why, for example, asks Robert Rebhahn, a Vienna-based lawyer, should train-drivers have the right to strike if that impedes the national or international transportation of goods? And, in the wake of the Viking judgment, could it not be argued that employee co-determination of supervisory boards is incompatible with European law if investors can be found who claim that such co-determination prevented them from exercising their right to make crossborder investments?

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Discussion of the Viking and Laval judgments should go beyond mere critical exegesis. Sadly, large swathes of the political elite tend to defend the European project for better or worse. While ineffective 'soft law' and the 'open method of co-ordination' in the social field, along with non-binding common positions on the part of the EU social partners, are being presented as social progress, the force with which liberalisation policy is implemented through 'hard law' tends to be deliberately ignored. As if liberalisation policy were merely an interim stage in the formation of a 'social Europe'. ETUC Secretary-General John Monks said of the Laval judgement "Unions across Europe are now busy defending their national systems - and there is a risk of protectionist reactions . The Laval case in particular could damage ratification of the EU Reform Treaty as awareness of its implications spreads". Well, I disagree. The problem with the Viking and Laval judgments is not that they may provoke criticism. It is rather that they are an attack on employee rights. Trade unions' defence of rights laid down in national legislation has nothing in common with protectionism or nationalistic reflexes. Uncomfortable truths are no less true for being uncomfortable: it is the nation states, rather than the European Union, that remain the place where social inequities are tackled. The Viking and Laval judgements offer us one opportunity, though - the opportunity to replace counterfactual assertions about a 'social Europe' with a hard look at the facts. These cases are not merely about two or three 'wrong' judgments by the ECJ but rather about a process of European union that is foregrounding capitalist freedoms and thereby clearing the way for more such judgments. By way of conclusion, we could ask why judgments such as those in the Laval and Viking cases are actually perceived as legitimate. Why is there not greater resistance to a process of European economic integration that has exceeded its terms of reference and appears to be well on the way towards subordinating democratic social states to a single European competition state, as those voting in referenda on the Lisbon Treaty seem to have concluded? There may be two reasons. First, the legal material is highly complex. Second, there is a conspiracy of silence. It is hardly surprising that neo-liberals are failing to protest about European liberalisation policy; they are, by definition, in favour of economic liberalisation. What is surprising, though, is that there is also silence from those who have been actively committed to the European project. This results from a far-reaching misjudgement: subordinating social affairs to the freedom to operate in capitalist markets is no less explosive because it comes from Europe. Let us stop romanticising European economic integration, seeing it as a democratic, social project. It is neither democratic nor social. Translatet from Magazin Mitbestimmung 5/2008 More information Martin Hpner, Armin Schfer (2008): Grundzge einer politkonomischen Perspektive auf die europische Integration. In: ibid. (ed.), Die Politische konomie der europischen Integration. Frankfurt/New York: Campus, S. 11-45. Christian Joerges, Florian Rdl (2008): Von der Entformalisierung europischer Politik und dem Formalismus europischer Rechtsprechung im Umgang mit dem "sozialen Defizit" des Integrationsprojekts. Ein Beitrag aus Anlass der Urteile des EuGH in den Rechtssachen Viking und Laval. ZERP Discussion paper 2/2008. Bremen: Zentrum fr Europische Rechtspolitik. John Monks: Presentation to the Employment and Social Affairs Committee of the European Parliament, Brussels, 26.2.2008, Download (pdf) Robert Rebhahn (2008): Grundf reiheit versus oder vor Streikrecht. In: Wirtschaftsrechtliche Bltter 22, pp. 63 - 69. Fritz W. Scharpf (2008): Positive und negative Integration sowie Nachwort. In: Martin Hpner, Armin Schfer (eds.), Die politische konomie der europischen Integration. Frankfurt/New York: Campus, S. 49-99.

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