Tuesday, February 07, 2006

The conflict in Vaxholm: A Latvian company gave us the final wake-up call

I was asked by some friends at the ECOSY (Young European Socialists) secretariat in Brussels to write down my thoughts regarding the conflict in Vaxholm. Here goes:

The conflict in Vaxholm: A Latvian company gave us the final wake-up call

"Imagine a kitchen table. 14 blacksmiths sit around it. They are all blacksmiths in the same city. They are angry about the low wages. It is not enough to feed their children.
Everyone promises one another not to work for a lower wage than 22 cents per hour. And no one will work Sundays.
Around that table, in that moment, a trade union is born.
Everyone puts 25 cents in the empty cookie-jar on the table. Because they understand they must save in order to make the employer accept their demands.
That cookie-jar is their first strike-fund.
But one of the 14 blacksmiths is still not convinced. He does not have a job, and he thinks that 22 cents is too high a demand. The others must be satisfied with a lower wage. Otherwise he will never get a job.
One of the other blacksmiths then puts an empty coffee cup on the table. Everyone puts one krona in it. That is a week's salary to the one who is out of work.
The empty coffee-cup is their first unemployment benefit fund.
They take a piece of paper and write down their demands. The following day they take the piece of paper to their employers and ask them to accept their demands. The employers accept a new higher salary, 20 cents per hour, and they all sign the piece of paper.
They have completed their first negotiation. And the piece of paper is their first agreement.
This is a trade union: our common promise stipulating the price and conditions of our work. And we know we can only achieve this if we stand together. And that we together must have economic resources in order to protect the promise we made between us.
That is what we do in the trade union. We promise one another.

(Swedish Minister of Labour, Mr. Hans Karlsson, in a speech at the LO-congress 1996.)

The conflict in Vaxholm between two Swedish trade unions (electricians and construction workers) and the Latvian company Laval goes to the heart of the Swedish model. The speech cited above might come across as a nostalgic description of how democracy in the workplace once was won. But between the lines the core of the Swedish model and trade union history can be detected.

First, in the cited example all 14 blacksmiths decided to join, and the union participation rate in Sweden is still extremely high. Therefore the interest of trade unions tends to overlap with the general interest in society. This is not the case when only one out of ten workers are unionised, leaving the door open for more protectionist policies.

Secondly, the wage demand in the example above is realistic and modest. Swedish wages are still increasing at a level close to the European average, in spite of very strong trade unions that theoretically could demand more. But in accordance with point one, trade unions must also think of the general interest, and too high wages tend to spur inflation, undermining the real wage increase of the workers.

Thirdly, minimum wages or legislation is nowhere to be found in the example above. The employers and workers also make their agreement without the involvement of anyone else. Sweden still does not have minimum wages, legislation has been rare, and the state is not involved when wages are set. The structure of collective bargaining is still alive, and functioning very well.

The core of the conflict in Vaxholm has to do with whether Swedish trade unions are allowed to put a non-Swedish EU-company under blockade, if the company (for example) pays salaries below the level set by the collective agreement. In accordance with the example above: what would the 14 blacksmiths do, if five Latvians show up, and dump wages through doing their job at 15 cents an hour?

The point of view of the Swedish trade union is simple: the Latvians are more than welcome to work in Sweden, but they should also get 20 cents per hour for their work. Otherwise we would enter a race to the bottom, where the Swedish blacksmiths would have to sell their work for 14 cents per hour. Therefore, the trade union has the right to put a company under blockade if they do not accept the wage level set by collective agreement. But is this in accordance with EU law?

As things look now, it seems likely that the freedoms of the internal market cannot be regarded as standing in conflict with the right of the trade union to strike and put a company under blockade. Moreover, the idea with collective bargaining is not only to give workers decent wages, but also to treat everyone the same way. That is a principle normally adored in the EU.

It should also be stressed that Sweden was promised upon entering the union in 1995 that this model could be kept. Also, one must ask if it is the purpose of the EU to fight a system that functions well and is very popular in the member country. Indeed, even the most pro-European parts of the Swedish labour movement (i.e. SSF) would probably turn its back on Brussels if we were forced to throw one of the cornerstones of the Swedish model over board.

Finally, some people are arguing that Vaxholm is mostly a political conflict, and should be settled in Sweden and not in Luxemburg. This is the new standpoint of the Swedish blue-collar trade union LO, even though the Court of Justice of the EC in Luxemburg still and most probably will present a ruling (that is the tradition when the Court is handed a case).

Personally, I make three reflections.

First, many people on the far, nationalistic left took for granted that the freedoms of the internal markets easily would beat "anomalies" as the Swedish model and a few trade unions. But it has happened before and it will happen again; social democratic policies and trade unions can win fights in the European Union. And it is important to note that the decision to stand by Sweden was unanimous in the board of the European Trade Union Confederation. There is no serious divide between trade unions in the West and East of the EU over this issue. Also, quite a few countries, some of them with governments to the right of centre, have rushed to support Sweden's case.
Conclusion: The EU is an arena of opportunity for the left, not an arena where we always lose.

Secondly, Vaxholm might have fooled us to lose focus. One of the most alarming news during the last year is not that the Vaxholm-case ended up in Luxemburg. To see German trade unions give in and accept worse working conditions in order to keep jobs in Rüsselsheim looks much more serious to many observers. After hundreds of years of trade unionism and gradual achievements, was that the start of a slippery slope? Hopefully not, of course, but when global capital and companies travel everywhere, we on the left must do the same.
Conclusion: All trade unions on earth should take globalisation even more seriously, and spend even more of their time and resources on cross-border work and activities.

Thirdly, the journalist and former SSF president Jesper Bengtsson recently suggested that the recent neo-liberal years actually might have been a blessing for the left. Think of it. Maybe the anger and protests against Bush, Bolkestein, Barroso, Berlusconi, and Buttiglione really brought us closer together over the borders. I tend to agree. And up here in the north, the conflict in Vaxholm forced the Swedish labour movement, with its powerful trade union branch, to think again and think hard about globalisation. The outcome of the conflict in Vaxholm might well be the turning point when the Swedish labour movement finally realised that globalisation is the new major challenge and opportunity; that the EU is not a necessary evil but what Gramsci called campo di possibilità (field of possibility); and that big chunks of the European left is looking up to Swedish social democracy, waiting for us to again play a more active role.
Conclusion: A Latvian company called Laval might have delivered the final wake-up call, giving us the necessary re-internationalisation and pro-Europeanisation of the Swedish labour movement.

Eric Sundström


Anonymous Jon Worth said...

Hi Eric!

Excellent and very clear overview! There are a couple of points here that I would add...

(1) The very essence of the complexity here is the informality of the Swedish system. The problem in the EU is not that it is against decent provisions per se but more that it is very much a rules / law based system of governance that does not sit easily with the Swedish negotiated model. A Vaxholm case in the UK would never happen - the UK minimum wage is law, and the Latvian firm would have to respect that.

(2) The problem for Russelsheim (and other industries in Germany - the bathroom firm Grohe is the same) is that Germany finds itself in quite a collective mental depression about its economy. That is very much not the case in Sweden. So hence there's more of a hope of trying to push for a positive answer in Sweden, rather than the 'hell, we need to keep jobs at all costs' approach in Germany.

(3) This is without doubt a question for the EU to deal with. Sweden has been honest enough to open its labour markets to workers from the new member states, and the Vaxholm case comes as a result of that. I cannot see any other way that this issue could be resolved other than in Luxembourg.

One final question: I have never read why this is called the Vaxholm case! Was the Latvian firm working in Vaxholm or something?

8/2/06 10:50  
Blogger Eric Sundström said...

Thanks for your useful comments! And yes, Vaxholm is indeed the name of the place outside Stockholm where Laval was working. But now I think it is more accurate to refer to it as the Laval-case, but I prefer to stick to Vaxholm. Why change when the whole trade union movement in Europe finally can say "Vaxholm" with a stellar Swedish accent? :-)

8/2/06 14:38  
Blogger BondWoman said...

Interesting and useful contributions to the debate from both Jon and Eric. Thanks very much. I would add a couple of comments/questions:

1. The case arises as a result of free movement of services, rather than free movement of labour, as far as I can tell, in which case it could arise in any of the Member States. It is true that Sweden was honest and brave enough to open its markets (but the numbers are quite low, presumably because of the linguistic barriers to entry in terms of A8 workers getting jobs in domestic firms, as well as perhaps issues with mutual recognition of qualifications, etc.). But all the Member States have opened their doors to free movement of services, and ironically it is easier for an A8 worker to move as part of a package with a company that is providing services, where the linguistic issues do not come into play (or presumably the qualification recognition issue as well). There is something comforting about moving to perform a contract with a home state company, rather than trying to strike out on your own and get a job. Anyway, the point of that is to say that if the legal/social/political conditions were correct, this issue could arise in any of the Member States.

2. The second point concerns the relationship to globalisation vs. EU integration. The issue raised by the 2004 enlargement is that it combines on the one hand the challenges of integrating "co-ethnic" fellow Europeans who got an extraordinarily rough deal after WW2 with the fact that these states are developing economically and modernising at precisely the time when the cold winds of neo-liberalism are blowing at their fiercest. I have sympathy for the workers within national welfare and social states who have successfully negotiated certain settlements with capital since the second world war. But what exactly are the responsibilities consequent upon deciding to enlarge the Union to include the A8 countries as Member States, not to say that we will deal with them simply as developing economies and polities who happen to be neighbours.

8/2/06 15:57  
Anonymous Jon Worth said...

Thanks for clearing up the confusion over why it's called Vaxholm... I spent a very pleasant day last spring there, drinking coffee in the sunshine and looking out over the water!

8/2/06 23:08  
Blogger Eric Sundström said...

Bondwoman: interesting points.
1. Yes indeed, and Vaxholm is of course related to the services directive as well.
2. This discussion is very relevant and much needed. And we must not forget that there are also countries to the East of the A8 countries... So that discussion must continue.

Jon: yeah, the boat to Vaxholm is great. Hope we can do it when Spring comes!

9/2/06 08:38  
Anonymous Anonymous said...

What about this story for a change:
8 black smith companies wants to have better marginals. They promise each other that they will not sell their products for less than an internally agreed price. A price cartel is born.

People are complaining about the high prices and asks the politicians to look into it. The black smith companies decides to contribute to a friendly politicians election in exchange for continuing with the price cartel. A bribe is born.

Now the black smith companies get competition from black smith companies in other countries. They then asks for help from the bribed politician to keep up their price cartel. The politician helps of course and a walled garden is born.

Puts the union in a different light doesn't it?

16/2/06 23:05  

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