RIGA - Seven more Swedish labor unions joined the Byggnads builders union in a blockade against a Latvian construction firm the morning of Jan. 11 claiming migrant workers on the project were receiving wages that were too low.
The labor unions participating in the blockade against Laval and Partners now count thousands of companies in Sweden. The unions announced their intention to participate in the blockade after a preliminary court decision by a Swedish labor court on Dec. 22 saying the action, which effectively brought work on the construction site to a halt, was legal.
A final ruling by Sweden's labor court could come by the end of February.
The Latvians running the project - a school renovation - claim that the blockade is a violation of one of the European Union's founding principles, the free movement of labor, and are hoping for favorable intervention by the EU.
Tensions between Latvia and Sweden escalated shortly after the initial strike was announced on Nov. 2, with the country's foreign and prime ministers personally appealing to European Commission President Jose Manuel Barroso to examine the issue.
Meanwhile, other Swedish unions joined in the blockade, which began on Dec. 23, in a sign of "sympathy" and has grown to include metal workers, transport workers, electricians, industrial workers, forestry workers and building maintenance workers. The blockade concerns primarily a school reconstruction project in Waxholm, a suburb of Stockholm. Two smaller Laval and Partners projects, a bank in Stockholm and a suburban home, are also affected by the strike, but those contracts were much smaller and closer to completion than the school.
The difference in wages between the Latvian and Swedish workers is indeed significant. Latvians are paid roughly half what Swedes make. Laval and Partners, however, have argued that they acted in accordance with collective bargaining agreements in Latvia, where the contracts were signed with the Latvian workers. The Swedish unions, however, claim everyone must abide by Swedish agreements when working in Sweden.
"We are a bit astonished that this happened," said Ingmar Goransson, a negotiator for Landsorganisationen, the umbrella blue-collar labor organization in Sweden, of which Byggnads is a part. Industrial actions are fairly common in Sweden, he said, and are in no way connected with nationality.
Goransson called the situation "sad" and a "scratch in Latvian Swedish relations," but he found the Latvian position inexplicable. Allowing foreign companies to come to Sweden and pay lower wages would undermine the whole economic system, he added. "How could they think they could come here and be paid in Latvian wages?"
The union believes that the increased cost the blockade has brought to bare on the Latvian company, coupled with legal fees and other expenses, will eventually force Laval and Partners to compromise. "They will sign a contract, or they will go home," Goransson said.
Guntars Tiltins, director of Laval and Partners, puts the loss at between 2 million kronor (227,000 euros) and 3 million kronor.
Regina Purva, project manager for Laval and Partners in Sweden, told the Baltic News Service the company was not ready to give up yet. "It doesn't mean anything whether its one or more," she said of the number of unions participating in the boycott. Laval and Partners would continue to work regardless, she stressed.
Purva said she planned to meet with the client, the Waxholm municipality, to come to a decision on what to do next, since reconstruction needs to be completed by August. If the agreement is broken, then the client will have to pay compensation due to the increase in costs.
Swedish collective bargaining agreements limit competition from the outside, said Anders Elmer, the lawyer representing Laval and Partners. Foreign companies employing foreign workers would have to not only pay the higher wages, but also the costs of transporting them to Sweden, increasing the overall price making bids noncompetitive. In this situation if the collective bargaining agreements were signed then it would be "impossible for Laval and Partners to have been competitive when their bid was put forward," he said.
Elmer also said that Laval and Partners were looking for other avenues for legal redress and had appealed to the Swedish Supreme Court since they believe that the labor court did not take into account EU regulations. An answer is expected within three weeks, he said.
The company is also hoping that the European Commission will support the Latvian position.