Whereas the Danish post-Laval legislative outcome showed that a cross-class coalition can enable the reregulation of posted workers, the Swedish case shows that through strategies such as
mediatization and politicization of the employment conditions of posted workers, trade unions can convince political allies to reregulate posted workers despite the preferences of employers.
Employers as represented by BI and the confederation SN are highly critical of the new bill that will introduce an entrepreneurial liability in the Swedish construction sector. After the Laval ruling, it was possible for Swedish employers to act as a veto player warning that a legislation considered to be too lenient would be tried soon after (Seikel, 2015). This rendered any wishes the labor
movement may have had of a compromise moot. However, now, the Swedish construction worker’s union Byggnads has successfully convinced its political allies that an entrepreneurial liability is needed in the construction industry due to practices typically referred to as social dumping. Swedish
6 Besides the compulsory membership fee, members pay ½ % of their wage bill to become a member of BI (Interview
60 employers were decisive in shaping the post-Laval regulatory outcome, but more recent
developments in Sweden show how trade unions can still use their power resources to shape and create new regulatory outcomes if they manage to find allies at the political level.
Similarly, the Danish construction worker’s union 3F has been successful in lobbying both the public and politicians through multiple media campaigns about ensuring equal terms of employment for all. This has led to labor clauses with chain liability being inserted in almost all public sector construction works. Thus, it seems a promising strategy for trade unions to fight social dumping is to leverage the public’s opposition to dumping practices into reregulation. That has been the case in both Denmark and Sweden.
This also shows how public procurement regimes take on increased importance as rule-makers and in ensuring fair terms of employment on public construction sites. In Sweden, the lack of social considerations in public tenders seems to contribute to segmentation or dualization while the Danish procurement regime, at least on paper, prioritizes the collective agreement coverage of
subcontractors. Here, the specific design of labor clauses and the enforcement thereof matter greatly in terms of ensuring these clauses actually have an effect on employment conditions of workers (Jaehrling et al, 2018; Interview 4, p. 71). Thus, big infrastructure projects, where long and complex subcontracting chains are a necessity due to the magnitude of such work, are potentially very
vulnerable to wage dumping practices. For instance, this has been evident in the construction of the metro in Copenhagen where several irregularities in employment conditions have been discovered and covered in the Danish press (see for instance Interview 3; Frandsen & Renard, 2017 or
Jaehrling, 2018).
The practices of companies committed to wage dumping are not such that chain liabilities by themselves are enough to solve the issue. There is first of all the completely lawful practice by which employers pay workers the minimum wage or close to it. This is a practice which by
employers is considered natural and healthy ensuring wages are kept in check whereas trade unions argue that it leads to a downwards pressure on wages and disregards the local negotiations
embedded in the collective agreements. Second of all, unions report that even some companies covered by collective agreements deliberately circumvent the agreements and, thus, still pay their workers below the rates stipulated in collective agreements (Interview 9). Finally, the enforcement of collective agreements has become harder. Posted workers are less knowledgeable about their rights and less likely to report when employers circumvent the collective agreement. In addition to
61 this, companies disappear, file for bankruptcy or take other steps to avoid paying the salaries of their workers and fines incurred in labor courts. Posting companies and their workers work on specific jobs for a short period of time to return after the completion of the job. This makes recruitment of workers and detection of fraudulent companies harder. These factors mean that dumping practices can only be contained, never eradicated.
In both countries, posting companies have been shown to be rule-takers who challenge interpretations of rules embedded in the institution of collective bargaining. By reinterpreting practices and rules, posting companies have successfully managed to circumvent local wage and working time negotiations. When 3F has complained that these practices are embedded in the collective agreements, the labor court has ruled in favor of posting companies. Recent collective agreements in both Sweden and Denmark have taken steps to clarify the minimum wages of posted workers as part of this constant reinterpretation negotiation of rules.
This underlines how posting companies introduce new behaviors in Scandinavian industrial relations that lead to conflicts between organized labor and business. The labor courts then take on an increased role in defining the correct interpretations of rules in collective agreements, and its rulings become a source of institutional change. Furthermore, the courts are essential to preserving national reregulation of posted workers. As shown by Arnholtz & Andersen (2018), the Danish Labour Court has increasingly become a forum for posting companies and private practice lawyers to challenge regulations in hopes of having cases referred to the CJEU. Therefore, the court is facing more and more situations where it is faced with either becoming a rule-maker by insisting on making judgements or risking undermining national compromises by referring cases to the CJEU (Arnholtz & Andersen, 2018).
That the labor courts are becoming an increasingly important forum for rule-making and clarifying is not lost upon the social partners. A representative of BI confirmed that the new chain liability could lead to a challenge at the courts (Interview 7). The DCA has already tried one region’s chain liability at the courts and lost but would not rule out another attempt if the right case comes along (Interview 6). Similarly, trade unions regularly take posting companies to court alleging dumping practices (Interview 3; Bengtsson, 2016).
While trade unions in Sweden and Denmark both suffer from declining membership rates, despite their relative success in recruiting migrant workers to become members (see for instance Interview 3; Interview 2; Interview 9), they are still powerful actors in these two countries with the ability to
62 influence public opinion and politicians with media campaigns and lobbying efforts. This has led to significant new developments in Danish public procurement contracts and the legislation of a chain liability in the Swedish construction industry. This also forces employer associations to consent to some reregulation of posted workers. Whereas Laval may have led to changes to the balance of power in favor of employers (probably less so in Denmark where a national compromise was established), trade unions in Sweden and Denmark have regrouped and identified strategies to counteract pressures from below. However, this comes at a cost as establishing a precedent that parliaments can interfere in matters traditionally governed by the social partners can lead to adverse effects down the road in the form of more legislation and/or new coalitions without trade unions. In regards to the theoretical expectations, as stipulated by employer preference theory, only one of the cases was shown to be in line with theoretical expectations. Swedish employers were
antagonists of regulation as expected. However, Danish employers generally did not show themselves to be consenters or protagonists of regulation. Therefore, the divergent outcomes that were expected have not materialized, and the two cases in fact have shown themselves to be remarkably similar.
Trade unions in both countries have bargained repeatedly for a chain liability without making much progress. The two major institutional changes have been respectively the 48-hour meetings that the social partners in Denmark agreed in 2010 and the version of a chain liability that was put in the Swedish collective agreement in 2014. What is most noteworthy about the cases, though, is the similarity in the challenges posting has led to. Disagreements between the social partners have brought both industries on the verge of conflict; in Sweden in 2014 and in Denmark in 2012. While both cases have shown the partners’ continued willingness to work together constructively to come up with innovations to combat dumping practices as mentioned above, interviews with the social partners confirm that the issue of foreign companies and labor leads to many disagreements on a daily basis and, importantly, when making collective agreements. Where the Laval ruling may have exacerbated existing conflicts between the social partners, the Danish case shows how posting can lead to conflicts between the social partners. This would explain why Danish employers are not protagonists of regulation. Furthermore, the interests of other members in the employer
confederation DA are firmly against further regulations of posted work.
The conflicts are rooted in the presence of new actors who exhibit rule-taking behavior different from native employers and workers. These new actors have reinterpreted rules and regulations
63 leading to conflicts over whether such behaviors are lawful or desirable interpretations of the
collective agreements. This has made adaptation of the institution of collective bargaining to reflect the presence of these new actors harder and means that the models of autonomous collective
bargaining in both countries risks becoming victims of institutional drift. This is also what has led to increased importance of other arenas for clarifying the rules of collective agreements (the labor courts) and actual rule-making (the political level).
Finally, the empirical data I have gathered for this interview leads to questions about the
expectations derived from the theory on employer preferences. In both cases, employers deny that their smaller members would be in favor of instituting a chain liability. The theory posits that smaller employers are likelier to be in favor of regulations of posted work as the competition from posting often will be felt most by smaller companies whereas bigger companies are able to hire posting companies as subcontractors and thereby realize cost savings. This study has not found that smaller employers are never be in favor of regulations but that the specific regulation which has dominated the agenda in the two cases – chain liability – could well be opposed by smaller employers. This is due to the regulatory burden associated with a chain liability which would be a relatively costlier burden for smaller employers like the ones in the Scandinavian construction industry where companies typically employ less than 10 workers. These sorts of companies, apparently, are more likely to oppose regulations which introduce a significant administrative burden. This would also explain why employers have been able to withstand calls for a chain liability. Trade unions have simply not been able to poke at existing cleavages within employers. Thus, the study has clarified the conditions under which smaller employers are opposed to
regulations. Whether the smaller employers in BI and the DCA are in favor of further regulations of posted work besides a chain liability, this study has not been able to ascertain.
To sum up, the institutions of collective bargaining in the two cases have shown remarkably little formal institutional change. New rule-takers have appeared on the ground as a result of posting offering different interpretations of practices embedded in the institution of collective bargaining. This has led to conflicts and disagreements between the social partners in both countries. This disagreement has eroded the consensus which is the foundation of the model and has led to increased involvement of legitimizing third parties in rule-making. These finding suggest we can expect to find pressures on national employment relations elsewhere as well.
64 The results also suggest that, contrary to expectations, that smaller employers oppose labor clauses with chain liability due to the administrative burden associated with these.
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