Eastern European countries oppose new cross-border work rules

Eleven mostly eastern European countries are trying to block legislation that would grant pay and welfare protection to employees sent to work in another EU country on an equal footing to those of the host country for up to two years.

The Commission published last March the proposed revision of the posted workers directive.

At present, posted workers are paid and granted social security cover according to their home country standards. As a result, to hire a Bulgarian to work in London, for instance, is cheaper than to hire a local. The Commission, which says that its proposal would prevent social dumping, has no obligation to withdraw it but has to explain whether it takes action.

Bulgaria, Croatia, the Czech Republic, Denmark, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia have all filed complaints to stop the Commission’s revision. Most of them claim that the changes would increase costs of services and reduce their competitive lower wage advantage. Denmark, a country with very little labour market legislation and the only one outside eastern Europe, opposes the revision because it does not offer enough protection to its collective bargaining system, where negotiations mainly happens at a local level.

Wages vary widely across the EU. Employers pay an hourly average of €41.30 in Denmark, €39.10 in Belgium, €37.40 in Sweden, €6.80 in Lithuania, €5.00 in Romania and €4.10 in Bulgaria, according to Eurostat data for 2015.

Poland, Germany and France (in that order) are the largest senders of posted workers in the EU, whilst Germany, France and Belgium are the largest receivers and, at the same time, the countries that have been pushing most strongly for the revision. They argue that the existing rules allow employers to undercut local labour laws.

The number of postings in the EU has almost doubled since 2010, with around 1.92 million in 2014. The construction, manufacturing, services and business sectors, as well as personal services, attract the most postings.

The legal procedure being used to attempt to stop the revision is called yellow card. It is a political move by which national parliaments try to influence the Commission on the grounds that it may be violating the subsidiarity principle and that decisions should therefore be taken at a lower level. It is only the third time that this procedure has been triggered since it was enacted by the Lisbon Treaty. The Jacques Delors Institute has released a paper explaining the political influence such a yellow card can exert in this matter.

The Commission’s proposed revision is now being discussed in the European Parliament and Council. The last time that the posted workers rules were changed was in 2014, when an enforcement directive was approved. That directive introduced changes to prevent abuses such as the exploitation of staff, false self-employment and letterbox companies; but only 3 countries, France, Latvia and Slovakia, have implemented it.

Most of the countries that oppose the latest revision claim that the legislation in place already provides enough protection to workers, who should remain under the sending country for social security purposes. They prioritise transposition of the enforcement directive before considering any further modernisation.