Since 2007, the European directive on the posting of workers has become increasingly unclear following a series of rulings by the European Court of Justice. In March of 2012, the European Commission presented a rewritten text in an attempt to clarify the content of the directive. Social partners have identified a few praiseworthy advances, but several points remain vague.
A new text to be polished
On March 21, 2012, the Commission presented a reworked version of the directive, to be submitted to the Council and the European Parliament before the end of this year. According to the Commission’s estimate in the revised draft, there are some one million workers posted among EU Member States. To reconcile the need for social cohesion with the workings of the Single Market, the new text stresses that administrative cooperation among Member States must be improved. The idea is to guarantee posted workers’ fundamental rights while respecting the needs of businesses.
Progress was made regarding workers’ legal protection by instituting the principle of “joint and several liability” in cases where a posted worker’s salary is not paid. This new provision penalizes companies whose subcontractors fail to guarantee the rights of posted workers.
The new directive seems to invoke a spirit of compromise between the positions of European labor unions and business leaders. Nonetheless, MEPs and social partners have pointed to certain limits in the text, particularly with regard to establishing criteria to delineate instances of posting. Fear of “social dumping” remains tangible as well. The fact that the draft establishes no maximum duration of posting abroad for the workers concerned portends future imbalances, as employers could derive long-term benefits from lower labor costs by using workers from countries with the lowest minimum wage standards.
It is with this in mind that the European Economic and Social Committee (EESC) called upon the Commission to clarify certain provisions of the directive. In an opinion adopted on September 19, the EESC also urged Member States to adopt identical minimum working conditions to prevent unfair competition among workers. Involved in the Commission’s prescriptive process, the European Parliament is currently unable to reach a consensus regarding the content of the directive. MEPs representing countries with strong economic attractiveness, starting with Danuta Jazlowiecka (EPP), Polish MEP and rapporteur for this matter, seem to be focused mainly on defending their populations’ employability rate throughout the EU.
These varied approaches to the topic punctuated the recent meeting of the EU Council of Employment and Social Policy. Gathered in Brussels on December 6, Member States’ Social Affairs ministers clashed over topics ranging from national control measures for businesses to the principle of “joint and several liability.” Once again, a divide seems to be forming among countries with conflicting views on labor market flexibility. The United Kingdom, the Czech Republic and Hungary thus expressed their thorough opposition to including this measure in the directive, a position that puts these countries at odds with a coalition led by France and Germany. The prospect of a compromise on this topic is waning. This is especially true as Ireland, which will assume the rotating Council Presidency in January, has displayed “very great prudence” regarding all provisions in the text.
Freedom to provide services alongside social rights: provisions in EU law
Although a fundamental right in the European Union, free movement of workers nonetheless raises a number of problems for Member States. Unequal treatment of workers is the foremost criticism to be levied regarding this principle. In 1996, the Commission adopted a directive intended to keep this phenomenon in check and guarantee the fundamental rights of workers posted for the provision of services. With the exception of minimum wage requirements – certain countries such as Sweden have never established a threshold in this area – Member States were obliged to respect workers’ rights in terms of paid vacation and non-discriminatory recruitment.
In 2004, EU enlargement and the accession of 10 new countries weakened the directive. Indeed, the 10 new members possessed a “cheap” workforce that was particularly attractive for companies in sectors such as food service or construction. In 2007, serious controversy erupted following the “Viking” case, when the Finnish ferry company of the same name decided to register vessels in Estonia to facilitate recruitment of workers with minimum wage standards well below those in force in Finland. Finnish labor unions brought the case before the European Court of Justice (ECJ), which handed down a crushing judgment. The judges established a de facto hierarchy between economic freedom and the relevance of upholding collective bargaining agreements.
Two other cases with similar characteristics – “Laval” in Sweden (2007) and “Rüffert” in Germany (2008) – gave the Court the chance to further elucidate its view of the directive. The Court essentially attacked the principle of local or sector-specific collective bargaining agreements, a pillar of Scandinavian “flexicurity” systems. In 2008, Luxembourg suffered the wrath of the ECJ for improper application of the directive. The Duchy was singled out in particular for repeatedly impeding foreign service providers from setting up shop on its territory.