They Took Our Jobs! The free market bias of the European Court of Justice and the dismemberment of workers’ rights
“We have surrendered our sovereignty to the European Court of Justice” is the one of the most common arguments in favour of leaving the European Union of the Tory right. This, I have argued before, is somewhat surprising given that the consequence of that loss of sovereignty is the removal of Member States’ liberty to depart from a free-market, pro-private enterprise, capitalist ideology. The cardinal offender, in the minds of Jacob Rees-Mogg, et al. is the European Court of Justice (ECJ), with their fondness for distasteful European ideas such as rights, etc. It is true that the ECJ is imbued with a broad power to bind the courts of the Member States, and that that power might not be so objectionable if it were exercised in a manner that is ideologically neutral. However, while it is certainly the case that the ECJ is not ideologically neutral, what the Rees-Moggs and the Borises of this world seem to ignore is that the ideology the Court has consistently chosen to impose is the pro-enterprise ideology that Rees-Mogg and Boris so favour.
Article 3 of the Treaty on European Union (TEU) provides that one of the aims of the EU is to pursue a “highly competitive social market economy”. The ideological ambiguity in this objective is no accident – the consensus in favour of European unity at the Communities’ outset was so broad that the objective of unity was paramount to all other ideological concerns. As the ECJ is a fan of the purposive approach to legal interpretation, it therefore, inevitably, falls to the court to resolve the conflict between the “social” and “free market” objectives of the Union. It is clear from the decisions of the Court that the ECJ favours the free market over social objectives.
Though the Court’s ideological leanings have been evident since the days of Cassis de Dijon, in keeping with the other EU institutions, the ECJ became more overt in expressing its ideological preferences in the mid-1980s. In Zaera, the Court stated that the objective contained within Article 3 of “raising the standard of living” within the Union was not a directly effective right or an objective per se, but rather that it was an expected consequence of the operation of the single market. In other words, the only increases in living standards that the EU Treaties mandate are those that occur by accident through the operation of the market, and that any artificial attempts at raising living standards are (presumably) illegal where they interfere with the operation of the market. The decision to favour one objective of Article 3 while surgically neutering another is an ideological preference.
While we frequently hear claims from the left about how much the EU has done for workers’ rights (ignoring the fact that many of the rights that they provide already existed in the UK, and in the case of holidays the UK provides more the minimum mandated by the EU) there appears to be a collective ignorance amongst many on the left as to the ECJ’s total dismemberment of collective labour rights. Two seminal cases in the past decade exemplify this: International Transport Workers’ Federation and Finnish Seamen’s Union v Viking Line ABP (Viking) and Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet (Laval).
In Viking, Viking Line ABP operated a ship between Finland and the Estonia, and planned to change the registration of the ship from the former to the latter in order to avail of a lower minimum wage in for Estonian workers. The International Transport Workers’ Federation opposes all “reflagging” for convenience, and instructed all of its international partners not to deal with Viking. Viking sought an injunction in the High Court of England and Wales on the grounds that the industrial action infringed upon their right of freedom of establishment under Art. 56 TFEU.
Similarly, in Laval, the the Swedish government awarded a contract to build schools to a Latvian company, Laval, who posted workers from Latvia to work on sites alongside Swedish workers. The Swedish Building Workers’ Union demanded that Laval sign their collective labour agreement, which would provide Latvian workers with far better protection than they would have been entitled to under the Posted Workers’ Directive. Laval refused, and so the builders’ union, along with the electricians’ union, called a strike in order to picket Laval’s sites. Laval sought an injunction under Art.56 as the pickets prevented them from doing business in Sweden, thereby infringing upon their right of freedom of establishment. The Court held, inter alia, that the Posted Workers’ Directive only entitles workers to the rate of pay the higher of the rate of pay they receive in their home country or the minimum wage in the host country, irrespective of whether or not that wage is significantly lower than the wage received by domestic workers. In effect, you can undercut domestic workers by importing labour even when it’s prima facie discriminatory.
In both Viking and Laval the Court held that there exists in EU law a fundamental right to industrial action. Naturally in cases such as these, that right to industrial action comes into conflict with the employers’ right of freedom of establishment. Normally in cases such as this, where two rights are in conflict and the scales are evenly balanced, the Court will grant the Member State a wide margin of appreciation. Resolving the conflict between two rights is, ultimately, an ideological, and therefore, a political task, and not a role that a court such as the ECJ should be performing. This is the approach that the Court had previously taken in cases such as Schmidberger and Omega.
However, in Viking and Laval, the Court held that the right to industrial action is subject to the right of freedom of establishment, it must pursue a legitimate aim, and it must be proportionate. In other words, you’re allowed to strike provided it’s not too inconvenient for your employer! And there I thought the whole point of a strike was for it to be inconvenient.
These are just some examples of the court’s preference for corporations over workers. There exist plenty of other examples of the Court’s ideological preferences in the field of labour law (such as Rüffert), as well as scores of examples where State Aid, Public Procurement, and Competition law are concerned, which I intend to write about in a subsequent blog. What’s clear from all of this, however, is that if anyone should be enraged by the European Court of Justice, it’s not the Jacob Rees-Moggs of this world, it’s the left.