Will Lex Laval work?

No. Even though the circumstances are remarkably similar, this incident is different in one important aspect from the one leading to the ruling from the EU court in 2007.   

Unlike Laval, this company, Metto Jumti, actually had signed Byggnads' collective agreement and agreed to pay its workers a market price of 158 kronor an hour. And unlike Laval's workers these workers had joined Byggnads after not receiving any wages after two months of working. Five days' industrial action to recover the unpaid wages led Metto Jumti to promise to pay, and a few days later the pay was in the workers' accounts. 

This story illustrates how efficiently Swedish unions can secure the rights of foreign workers as long as the employer is signatory to a collective agreement. So far most foreign companies have actually signed Swedish collective agreements.

Since 15 April this year, however, new legislation on posted workers and industrial action has been in force, 'Lex Laval', which means companies can operate in Sweden without the need to sign agreements, as long as they can 'demonstrate' that their employees enjoy at least the same conditions as Swedish colleagues. 

The construction workers still hope nothing will change. If they are right they can be congratulated. But if you listen to the employers - and this is where the penny drops - there is reason to believe more and more foreign companies will take advantage of the opportunities the new regulations present. And without a formal collective agreement unions are powerless.

The Swedish Parliament has in effect passed legislation which undermines the control mechanisms which traditionally have been present in the Swedish labour market, without replacing them with other ways of controlling the market which could have compensated for this loss. The focus on the Laval case might have left the outside world with the impression that foreign companies are treated very strictly in Sweden. Yet in reality Sweden is unusually liberal; it is both possible and legal for foreign companies to supply services for long periods of time without the Swedish authorities even knowing they're present in the country. In this respect Sweden is different from Norway, Denmark and Finland, which have all tightened their monitoring of foreign companies in recent years. 

The Swedish Confederation of Trade Unions (LO) and the Swedish Confederation of Professional Employees (TCO) say the new rules mean Sweden no longer fulfils its commitments to the International Labour Organisation (ILO) concerning the conventions on the right to uinion membership and the right to collective negotiations. That question will now be examined by ILO's Committee of Experts. Irrespective of the answer there is a more pressing question: does Sweden live up to its commitments to the EU according to the directive on the posting of workers? In their haste to avoid introducing elements which would be 'incompatible with the Swedish model' the lawmakers seem to have forgotten one of the directive's aims, namely to protect the posted workers. It is doubtful whether Lex Laval will give them the protection they are entitled to.

It would in other words not be surprising if Sweden was to be forced to reexamine the legislation in order to close a loophole here. Perhaps that would also allow for the studying of the rules from a different perspective. Lower wages is not the only - and perhaps not even the most important - competition tool available to foreign companies. A posted worker can remain in the social security system of his or her home country for two years. That encourages trickeries and cheating because statutory social fees levied at employers varies enormously between different countries. Even the authorities in charge of making sure employees fall under the correct social benefit system struggle to control this. Time for a reality check?