11 August 2016

Revising the posted workers directive: A controversial symbol for the future of social Europe

The proposal for the revision of the Posted Workers Directive has rekindled the old debate between economic freedom and social rights, and that between old and new member states.

On 9 March 2016 the EU Commissioner for Social Affairs, Marianne Thyssen, presented a targeted revision of the 1996 Posting of Workers Directive (PWD). Already in his 2014 Political Guidelines, Jean-Claude Juncker had committed to pushing in that direction. Thus, in its 2016 Work Programme, the European Commission repeated its intention to deal with the PWD while underlining its social approach: “against social dumping” and aimed to make sure that “same work at the same place should be remunerated in the same manner”.

Some figures, facts and definitions

In absolute numbers, the posting of workers is a limited phenomenon compared to the size of the EU’s labour market (0.7% of the total employed). In 2014, the number of posted workers stood at 1.92 million according to the impact assessment of the Commission. Currently, 42% of all postings are in the construction sector, 21,8% are in manufacturing, 13.5% in the service sector (such as education and health) and 10.3% in the administrative, professional and financial services. A steep increase in the number of posted workers took place in the years between 2010 and 2014—a development that was attributed by many to the accession of the new member states.

According to the Commission’s definition, a “posted worker” is an employee temporarily sent by her employer to carry out work in another EU member state. In these cases, the law of the country of destination applies to a wide array of issues, including minimum and overtime pay rates, maximum work periods, minimum paid holidays, health and safety regulations as well as gender equality and non-discrimination provisions. This regulatory framework extends also to any “law, regulation or administrative provision, and/or collective agreements or arbitration awards which have been declared universally applicable’ in the member state where the work is conducted (art. 3(1)).

The proposal for the revision of the PWD mobilized actors at the national as well as EU level, and at the same time rekindled the old debate.

Over the years, four famous decisions attempted to give an interpretation on the balance between the freedom to provide services and and the social rights of posted workers: Viking C-438/05, Laval C-341/05, Commission v Luxembourg C-319/06 and Rüffert C-346/06. While it was acknowledged that social and economic rights weigh as much as EU principles of equal status, the European Court of Justice “leaned” towards the freedom of providing services, stressing that this should not be restricted by the exercise of social rights.

The 2014 Enforcement Directive and the political background of the PWD revision

In the public discourse the PWD has been criticized by many sides, some considering it too bold while others too soft for the protection of workers. In general, the practice of posting has been linked with social dumping, the circumvention of social security provisions and unfair competition. Therefore, hopes that the directive could be a significant step in supporting socially oriented labour mobility were quickly dissolved. Indeed, even after 1996 the reported cases of abuse have been abundant, thus raising more criticisms about the directive’s real impact. As a response, the Barroso Commission passed the so-called Enforcement Directive (2014/67/EU) in 2014, aiming to enhance cooperation between national authorities to better implement sanctions against fraud, but also extend liability rules to subcontractors. While its full transposition in the domestic law was set for June 2016, the implementation is still pending in many EU member states.

The Commission’s proposal for the revision of the PWD was also pushed by the Dutch presidency (January-June 2016), and concentrates on three specific areas: the remuneration of posted workers, the equality of working conditions in temporary work agencies, and the protection of long-term posted workers. The proposal enhances the position of posted workers and attempts to equalize their rights with those of local workers. As for remuneration, it attempts to extend the universally applicable collective agreements to all sectors (currently the protection is limited to construction workers only). However, the fact that the proposal refers only to universally applicable collective agreements implies that it excludes other agreements at the sectoral and company-level. This limitation is quite important, given the diversity of the industrial relations landscape in the EU.

The proposal for the revision of the PWD mobilized actors at the national as well as EU level, and at the same time rekindled the old debate. During the summer of 2015, two different groups of national labour ministers sent their letters to Commissioner Thyssen. The first one, which consisted of seven high-wage member states, called for a detailed analysis of the posting issue, concluding that the enhancement of social protection and national cooperation is necessary. The second group, composed of nine ministers from the Central and Eastern European member states, pointed out that the revision of the directive should not undermine the freedom to provide services. In that respect, they added, the “competitive advantage” linked to pay rate differences between member states should be “safeguarded” by the EU law and the ECJ. Finally, within the context of social dialogue, several actors such as the European Trade Union Confederation (ETUC) and employer associations like Business Europe, UEAPME and CEEP, asked to participate in future consultations.

Rekindling the debate between economic freedom and social rights: The “yellow card” procedure

But the initial concern shown by the second group of member states has evolved into strong opposition against the revision of the PWD. A couple of days after the Commissioner’s announcement in March, more than ten national parliaments of Central and Eastern Europe states made use of the “subsidiarity control mechanism” annexed in the Lisbon Treaty in order to initiate a “yellow card” procedure. According to it, if parliaments believe that an EU draft legislative act breaches the subsidiarity principle, then they have the power to issue a reasoned opinion with their arguments. If the opinion is supported by at least one third of the votes in a substantial number of national parliaments then the yellow card procedure is triggered, meaning that the Commission is obliged to revise its proposal, or justify its decision not to do so.

The Commission should do as much as possible to guarantee that posted workers are not treated as an exception in the labour market of the host country.

At the moment it is likely that the advancement of the PWD revision process will be stalled due to the existing institutional and political hurdles. It is interesting that the resistance towards enhanced social rights derives from the member states that should protect their own workers. Although the issue should not have big repercussions for the common EU market as a whole, it remains highly symbolical as well as controversial. But certainly more needs to be done: the existing scope of protection should be extended in order to mitigate inequalities between the domestic and the posted workers. The lack of detailed information on the situation has reproduced the stereotypes and cleavages between east and west, while the subject is being used as a political tool for the maintenance of the limits to economic freedom. The 1996 Posted Workers Directive had limited protection effects and was unable to really tackle exploitation and fraud practices. Of course, the 2014 Enforcement Directive aims to deal with these, being a most promising development, but only time will tell how efficient it will prove to be.

Adopting the revision of the PWD will be a step in the right direction for equal pay and better working conditions. The Commission should do as much as possible to guarantee that posted workers are not treated as an exception in the labour market of the host country. Revising the directive is a good opportunity to restart the dialogue about a more social European common market. It remains to be seen how much the Juncker Commission is determined to push for changes, despite the existing adverse conditions.

Photo credits CC: J J

Subscribe to our newsletter

«This article shows that misperception of immigration numbers has changed across time, but continues to endure among European citizens. Misperception is linked to Eurosceptic preferences and restrictive immigration policies.»