Swedish union erodes Latvian firm’s profits

Latvian construction company Laval un Partneri posted a sharp drop in turnover and minuscule profit in 2004, blaming the poor results on a conflict with Swedish trade unions over alleged wage-dumping, the head of Laval said on Tuesday.

“The conflict with the Swedish builders’ unions was definitely the main reason for our poor financial results last year,” Guntars Tiltins, director of the construction company, told AFP.

The company recorded turnover in 2004 of 1.389 million lats (1.98 million euros), down 32 percent from 2003, and just 2,962 lats in profit, which shrank 20 times from the previous year.

In 2003 the company’s net sales were 2.042 million lats and profit 59,600 lats.

“Our work was focused mainly on Swedish orders. We don’t have them any more,” Tiltins said, adding that Laval was in the red at the end of the first quarter of this year.

Laval un Partneri, a small construction company, was founded in 1998. Tiltins is the sole shareholder. The Latvian company won a tender to renovate a school in a suburb of Stockholm and to build an apartment house in Sweden last year.

But the Swedish builders’ trade union paralysed the construction projects, saying the salaries paid to the Latvian labourers brought into the Nordic state to carry out the construction were too low by Swedish standards.

Tiltins has said that the Latvian workers in Sweden were being paid about 1,000 lats (1,423 euros) before tax.

Laval filed a claim with the Swedish labour court in December 2004 saying the Swedish trade union should lift the blockade, but the court ruled that the Swedish unions were within their rights and said that collective labour agreements in the country where the work is being done must apply.

In April, Laval’s Swedish subsidiary went bust, with backruptcy lawyer Örjan Jarvin blaming the blockade by unions.

Latvian Prime Minister Aigars Kalvitis last year submitted a complaint to European Commission President Jose Manuel Barroso, asking that the EU look into the legality of the Swedish trade unions’ blockade and examine whether Sweden has implemented EU directives about free movement of people and services.

Sweden is one of three older EU member states that opted not to bar workers from new member states from their job market. The other two were Britain and Ireland.

Latvia joined the EU in May last year.