EU OBSERVER Just a few weeks ago heads of states and governments gathered in Brussels to discuss the UK reform agenda. Achieving compromise was a hard task – and one of the key sticking points was whether and how much we are willing to limit one of the key benefits of European integration, the free movement of labour.
The governments including ours were willing to make sacrifices in order to reach the strategic goal of keeping the EU stronger with the UK in. The negotiations were complicated and hard – and thus it is quite surprising that the European Commission has decided to open this sensitive debate once again. A Labour Mobility Package was announced at the very beginning of the commission’s term. It was supposed to be a part of a comprehensive set of proposals to foster labour mobility. But despite that promise, the commission has instead opted for a piecemeal approach.
While a package could have been an opportunity for a holistic approach to labour market reform, a single proposal for the targeted review of the Posting of Workers Directive will only lead once again to bitter and extremely difficult negotiations. Some of the readers may remember the bad blood from two years ago when the Enforcement Directive was negotiated. This one-legged approach of the commission will unnecessarily open old wounds and yet again drive a wedge among the member states for no tangible benefit.
When looking at the commission’s plan, we see no rationale for such a broad review. The principles in the current Posting of Workers Directive are sound, they provide for level playing field and social protection of workers. We haven’t seen any robust evidence from the commission that a review is needed. While it is certainly true that cases of fraud occur, the national authorities have full powers and tools to prosecute such abuses – and if they do not, it is not because of the lack of ability but because of the lack of willingness of national authorities to fight the fraud.
The European social model is certainly eroded by such deplorable phenomena like dangerous working conditions, illegal zero-hours contracts, chained temporary agency work, letterbox companies or bogus self-employment. However, the Enforcement Directive, with its implementation deadline in June 2016, provides for a whole set of tools to tackle these unfair practices.
If the commission makes it harder for companies to post workers abroad, these fundamental harmful practices on the labour market will not be solved. On the contrary, as the directive covers only workers and not self-employed labour force, more people will be forced into bogus self-employment with all the negative effects on their social security and protection.
In the end, the commission’s proposals will lead to the complete opposite of its original intention. Commission strives for “better regulation” which among other aspects requires rigorous assessment of the need for new regulation and of its impact. That hardly squares with a proposal that comes before existing measures could even be assessed because their implementation deadline has not yet passed.
Also, even the commission’s own studies clearly prove that the persistent issues on the labour market should be addressed by the Enforcement Directive and that wage differences per se are not the main issue. Furthermore, it goes without saying that any proposal by the commission should be accompanied by a bullet-proof impact assessment including impacts on the competitiveness and SMEs – none of which is available. Moreover, since posted workers account only for a tiny fraction of total employment, the commission is being huge on minor things. This is not a wise approach and it goes directly against many statements made by the members of the commission.
It would be even more unwise to enlarge the scope of Posted Workers Directive to include highly mobile workers such as drivers. Transport is the backbone of the single market and insufficiently thought-through measures will disproportionately impact small and medium-sized enterprises. A level playing field is set for those who seek work in a different member state. The current framework offers high standards of social protection. We should keep working on enforcing the current rules as a whole and not solely focus on wage differences.
There will always be wage differences because the member states differ in both productivity and cost of living. But wage differences cannot be considered as an unfair competition or social dumping. Our government is determined to increase wages: we have been repeatedly raising the minimum wage and we have also raised salaries across the public sector. Now the private sector shall follow suit as the economy is strong.
Some member states are quite vocal in their criticism of what they perceive as unfair wage competition by countries with lower wages. It is worth mentioning that multinational companies, including those with their fiscal and legal seats in these member states, are hugely benefiting from the openness of Czech economy. It would be therefore very symbolic if companies from countries talking so much about wage competition responded to their home governments‘ concerns and raised the remuneration in their Czech subsidiaries and along their supply chains.
The member states have acknowledged in the treaties that they are resolved to achieve convergence of our economies. The fundamental tool towards this goal is a robust single market which is completed in all its dimensions.
However, it seems that the current proposal will unevenly hinder free movement of labour and therefore hurt the dimension of the single market the citizens cherish the most. Once we start distorting the single market in one dimension, where do we stop? And will we be even able to stop once we go down this dangerous path?
