The European Single Market is celebrating its 30th anniversary, but in practice the EU's promise of prosperity has turned into a hard-fought battle for the lowest standards, which is often fought on the backs of workers. How can we succeed in transforming the EU into a truly social union, effectively fighting wage and social dumping and guaranteeing fair labour mobility? Trade unionists from Slovenia and Austria and representatives of the European Trade Union Confederation, the European Commission and the European Parliament discussed this at an event organised by AK EUROPA and the Brussels office of the Austrian Trade Union Federation (ÖGB).
Cross-border posting of workers is steadily increasing in many sectors. According to Tea Jarc, President of Slovenian trade union Mladi plus, for example, the legal framework in Slovenia creates an incentive for companies to post workers in order to reduce labour costs through a “posting bonus”: many Slovenian workers in the construction but also in the service sector are posted to other Member States where they are entitled to the same pay as national workers, but there is a loophole with regard to social security contributions. The contributions are decoupled from the salary received, and companies even pay lower contributions for the posted worker than if the same company employed the same worker in Slovenia. As a result, posted workers have a much lower pension entitlement. However, not only the workers are disadvantaged, but also companies based in the destination country, which pay comparatively higher contributions and thus have a competitive disadvantage, for example, when awarding contracts. AK has already lodged a complaint against this with the European Commission in 2019.
Abusive posting practices
Another particularly vulnerable group of workers is also at risk from abusive posting practices: third-country nationals are increasingly being recruited by letterbox companies and posted directly to other Member States. In most cases, the posting company does not carry out any business activity in the Member State of origin. Claes-Mikael Ståhl, Deputy General Secretary of the European Trade Union Confederation, warns that the number of unreported cases of such bogus postings is high. MEP Evelyn Regner, Vice-President of the European Parliament, insists on classifying such practices as abuse cases: “This is not about working people who are posted for a short period, but about a business model.” Josef Muchitsch (GBH) also clarifies: “Postings within the EU should not lead to profits being made at the expense of workers.“
European legal framework and its limits
At the EU level, Directive 96/71/EC regulates posting of workers in the framework of the provision of services in order to prevent unfair practices and promote the principle of fair labour mobility. According to MEP Evelyn Regner, the Posting of Workers Directive and the Enforcement Directive already offer a wealth of regulations. She primarily identifies an implementation problem: even though there is a great need for improving the directive, many member states (including Austria) have not even properly transposed it into national law. This was confirmed by Gelu Calacean, Head of Union for Labour Mobility and International Affairs at the European Commission. Infringement proceedings have been initiated against two-thirds of the EU member states for inadequate transposition of the Posting of Workers Directive.
European Labour Authority (ELA) and digitalisation as an opportunity?
In 2019, the European Labour Authority (ELA) was established to help member states and the European Commission enforce EU rules on labour mobility and social coordination in a fair, simple and effective way. Supported by the Austrian Union of Construction and Woodworkers (GBH) and trade unions in other Member states, 10 cases of abusive practices have now been referred to the ELA by ETUC and the European Federation of Building and Wood Workers (EFBWW). While some are calling for further strengthening of the ELA and its powers, the European Commission says the European Labour Authority already has a broad mandate. However, it still needs more time to establish itself and to gain more influence through more trust. Furthermore, digitalisation is seen as a great opportunity to prevent wage and social dumping, especially by improving the necessary cooperation between national labour authorities. Josef Muchitsch (GBH) emphasises: “If I drive through a red light in Rome, I get a penalty notice in Austria - so why shouldn't digital control and cross-border cooperation also be possible for postings?”
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