This week, the Brussels office of the Austrian Chamber of Labour and the Austrian Trade Union Federation ÖGB dedicated several days to the E-Service Card and the Posting of Workers Directive and their effects. The motions by the Commission regulate the conditions, under which employees may be posted to other EU countries and apart from that shall simplify the administrative process. However, affected sectors, such as the Austrian construction industry, criticise that they distort competition and favour wage and social dumping.

At the centre of the exchange between the Austrian construction social partners – Union of Construction and Woodworkers (GBH) and the Federal Guild of Construction of the WKÖ – with members of the Commission and the European Parliament the benefit of the E-Service Card, core demands concerning the reform of the Posting of Workers Directive as well as competition distortion through wage and social dumping were discussed.

The highlight of the visit by the Austrian Construction Social Partnership was a high-level panel discussion on Monday evening, which focussed on the Posting of Workers Directive and in particular on the E-Service Card and was followed by a large audience. In his opening address, Alexander Pongratz, State Guild Master, Construction Branch, Crafts and Trade. Division, Styria Economic Chamber and Vice President of the European Construction Industry Federation (FIEC), presented the main results of a study by TU Graz on the influence of wage and social dumping on the competition in the Austrian construction industry. The message: the large differences in respect of wages and non-wage labour costs within Europe, in particular with regard to the more recent Central and Eastern European Member States, massively affect the competitiveness of the Austrian construction industry. This is added by the fact that about every fourth person working for a foreign company, which operates in Austria, is heavily underpaid. In comparison, this is only the case in less than one percent of workers employed by Austrian companies. Under current framework conditions for the Austrian construction industry, fair competition by legal means based on appropriate Austrian wages and comprehensive social protection is hardly possible.

The representatives of the Social Partnership, Josef Muchitsch, Chairman of GBH, and Federal Guild Master Hans-Werner Frömmel agreed that an E-Service Card, as planned in the current form, was definitely not required. Muchitsch commented that there was reason to fear that the E-Service Card would only favour further wage and social dumping as well as false self-employment. He used to be an advocate for the Common Single Market and of freedom of movement; however, today's reality of wage and social dumping would show, that much had turned out differently than expected. Frömmel added that even though the desire to cut red tape was to be welcomed, it should not result in justified requirements, such as certified qualifications, to be undermined.

Evelyn Regner, MEP (S&D) warned that one could not afford naivety in respect of the effects and the implementation of the E-Service Card. The Services Directive dating from 2006 had not even been properly digested. Hence, a new instrument was uncalled for and could not solve existing problems. Administrative cooperation too would not exactly work very well either.

Paul Rübig, MEP (EPP) also questioned the added value of the E-Service Card; however, he stood by the four fundamental freedoms of the EU und in particular the Single Market. Only Hubert Gambs, Deputy Director General, Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW), in charge of the E-Service Card, emphasised the advantages of such an instrument. It was the objective to strengthen the competitiveness of the service sector, which was so important for future growth and employment and to simplify the cross-border provision of services.

In the following discussion, a representative of the European Federation of Building and Woodworkers (EFBWW) called for solidarity with East European workers. After all, they were in most cases the victims of the strategy by western companies, which set up letterbox companies in Eastern Europe with the single purpose of legal dumping.

In addition, a demonstration against the E-Service Card, which had been organised by the European Trade Union Confederation on the occasion of the public hearing on the subject before the Committee on the Internal Market and Consumer Protection, took place in front of the European Parliament on Wednesday morning. Key points of criticism from a trade union perspective are still the possible introduction of the country-of-origin principle through the backdoor, the restriction of control options by the host countries, undesired overlapping due to the reform of the Posting of Workers Directive as well as the spreading of letterbox companies and pseudo self-employment.

Further information:

AK EUROPA: Services e-card: Free ride for pseudo self-employed people and letterbox companies?

AK Position paper on the new Single Market Strategy

Photos of the Event