Could Tesla Force the EU to Change its Rules on Posted Workers?
Tesla’s use of posted workers as strikebreakers in Sweden is prompting calls for the EU to revise its travel mobility laws.
Zain Ali | 5 September 2024
Relations between European Union officials and Elon Musk plumbed new depths this past summer. Most of the animosity has stemmed from the tech magnate’s content moderation policies on X.
But the actions of Musk’s other flagship company, Tesla, might precipitate a new set of tensions. It all comes down to industrial relations in Sweden.
Understanding the Tesla Strike
Mechanics at Tesla’s Swedish service centres went on strike in October 2023. They demanded the company sign a collective bargaining agreement of the sort commonplace in Sweden.
By December, they were joined in solidarity by unionised workers in Denmark and Finland, who refused to provide services to Tesla. Actions included a blockade on mail delivery,. Tesla tried to challenge in the courts, but was not succesful.
In May 2024, Sweden’s largest union joined the strike, instituting more blockades on Tesla’s operations. The strike is still ongoing, and is now one of the longest in Swedish history.
One factor in the impasse is Tesla’s use of temporary foreign staff as strikebreakers. Since February, Tesla has brought in dozens of workers from as far afield as Belgium, Ireland and Portugal. It has done so legally, under the rules of the European Union’s Posted Workers Directive.
The Posted Workers Directive
The Posted Workers Directive (PWD) is a pillar of the EU’s cherished internal freedom of movement for people, goods and services.
The PWD is a regulatory framework that sets the rules for posting workers in the European Union.
It is designed to ensure fair hiring practices and prevent ‘social dumping’ – employers’ use of cheaper foreign workers to undercut native workers’ wages and conditions.
The PWD legislates for a raft of employee protections, including minimum rates of pay, rest periods, health and safety and gender equality. It is a key instrument of Europe’s much-prided high employment standards.
Why Musk’s actions are so controversial
Tesla’s leveraging of the PWD as a strikebreaking tool has elicited outrage across Europe.
In a letter to the European Commission, various Nordic MEPs voiced their anger at Tesla’s actions. Swedish MEP Jonas Sjöstedt labelled it ‘unacceptable that an EU law such as the directive on the posting of workers is being misused to undermine the right to strike’.
One cosignatory, the Danish MEP Per Clausen, used even stronger language, stating, ‘This is an American company coming in and saying they refuse to play by the rules in place in Europe. We cannot let them – or others like them – abuse the EU rules to undermine European trade union rights’.
In their account, Tesla is weaponising one aspect of the EU’s infrastructure of labour rights to undermine another. In the Nordic countries in particular, collective bargaining is prized as a core aspect of how business is done.
Tesla’s gambit exploits a dissonance here. Musk has pitted the bloc’s liberal approach to employee mobility against its long history of trade unionism. This act has fed a perception that he and other American multinational executives hold Europe’s traditions and rules-based systems in contempt.
What happens next for European free movement rules?
The two sides remain at loggerheads. But Tesla’s escalation may have consequences for the EU’s mobility rules.
Polls show that the strikers can count on the support of 58% of the Swedish public. This could feasibly lead to parliamentarians at Strasbourg forcing a review of current rules.
The fulcrum here may be the so-called Monti Clause of the Posted Workers Directive. This states that posted worker regulation ‘may not be interpreted as affecting in any way… the right or freedom to strike.’
In this case, that provision has clearly been found wanting. An update was once mooted confirming the primacy of the freedom to provide services over the right to strike. But this was shelved in 2012 after opposition from business groups. After the furore in Sweden, it is not inconceivable that we see this legal instrument revived.
We don’t know what will happen in Strasbourg. But Musk’s tussle with Sweden’s powerful unions dramatises a growing unease in Europe. Have governments been too quick to roll out the red carpet for American multinationals? And are those companies’ business interests fundamentally at odds with strongly-held European traditions of well-defined employment rights?
A continent’s working practices hinge on the resolution of this localised industrial conflict. We will be watching closely.
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