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Brussels, 8 June 2018
For more than 10 years, the 1996 Directive on posted workers no longer reflects the market’s reality. When the directive was adopted, the minimum wage differentials in the EU15 ranged from 1 to 3 among the Member States. Today, inEU28, they range from 1 to 10. It is therefore obvious that social Europe must go hand in hand with the internal market. So it was due time to shake things up.
The negotiations on the reform of this Directive lasted almost two years, and resulted in the adoption of a text with a very large majority. Indeed, 22 Member States voted in favour of the agreement on 29 May 2018. Only Hungary, Latvia, Lithuania and Poland voted against. Croatia, Ireland and the United Kingdom abstained. This newly adopted directive came back from the brink: in May 2016 the Member States raised 11 yellow cards to the European Commission as they considered that its proposal was infringed the subsidiarity principle.
Shall we welcome this reform?
Whenever a posted worker works temporarily in another European country while remaining under the social system of his/her home country, only the host country’s “hardcore” legislation apply to him/her. Thus, his/her remuneration constitutes the minimum wage rates of the host country. The company pays for its employee’s social contributions in the country of origin, which are obviously much more advantageous. The consequences are inevitable:the social dumping, which is about lowering production costs and hence lowering the cost of labour, and unfair competition between posted workers and national workers.
The reform of the 1996 Directive finally put an end to the differences in treatment between workers and unfair competition. Four main points can be underlined. First, the principle of “equal work, equal pay, in the same workplace” will now apply. Posted workers will therefore earn the same wage as national workers for the same work. In addition, travel, pension and accommodation costswill be paid by the employer and not deducted from the workers’ wages. The authorised duration of posted workers shall not exceed a period of 12 months, extendable to a maximum of 18 months. However, the transport sector, which is fundamental in terms of mobility of European workers, remains under the 1996Directive until a specific European text is drafted.
It will still take two years for the new Directive to be transposed in all EU Member States.
Will the European Labour Authority really be able to guarantee compliance with this new directive and limit fraud?
In his speech on the State of the Union of 13 September 2017, Jean-Claude Juncker proposed to establish a European Labour Authority to ensure compliance with all EU rules on workers’ mobility. The European Commission has therefore presented its initiative in the social equity package of 13 March 2018.
Indeed, it is now essential to act against of crimes and offences committed in the field of workers ‘ mobility in order to stop the creation of ‘ screen companies ‘, social dumping, or even abuses in the field of temporary employment. At the moment it is clear that workers ‘ protection institutions are not functioning. Cross-border investigations are never successful because cooperation between the different Member States is difficult especially when it comes to accessing data. Will the European Labour Authority be able to force operational cooperation between the Member States? This is not so sure… especially when looking more closely at the foundations of this authority.
During a workshop carried out by Social Democrats MEPs on 6 June 2018, some deficiencies were raised with regard to the creation of this authority. First, it appears that “this authority would have authority only its name” since it has no binding power. Moreover, the role of the national authorities is underestimated. It is essential to strengthen Member States’ competences to prevent abuses. Clear regulations must be implemented to ensure that companies do not find loopholes, and to favour prevention of abuse to mere repression.
Finally, the President of the European Commission wanted a European Labour Authority based on the model of the European Banking Authority. However, it appears that the European Banking Authority has the power to set standards and has an important role of supervision. On the contrary, the European Labour Authority will have only a supporting role. We can therefore question the real utility of creating this Authority…