Brussels, 08/02/2016 (Agence Europe) - On Tuesday 8 March, the European Commission presented its already controversial legislative proposal for a targeted revision of the 1996 directive on posted workers. Its first goal is to significantly reduce the pay differentials between local and posted workers.
The Commission proposal, which we have already outlined (see EUROPE 11505), launches a frontal attack on the extremely sensitive issue of postings - namely the cost - and seeks to create greater pay parity between local and posted workers. The aim is to ensure the latter benefit not just from a minimum wage but also the other factors included in pay, such as bonuses and allowances. It should be pointed out that a “posted” worker is an employee sent by their employer to another member state to provide a temporary service there.
The Commission would like to attain its objective by replacing the references to the “minimum wage” in the directive applicable to posted workers by “necessary remuneration for the protection of workers”. This provision would apply to all sectors of activity where remuneration is set out in law or collective agreements for general application and, on a voluntary basis, for the entire subcontracting chain. The central principle of posting is not in question and the social contributions will still be those in the country of origin but within the 24 month limit set out in the revision.
The aim is to respond to the ambiguity that exists in the conditions of pay for posted workers and to put into practice the principle of “equal pay for equal work in the same place”. Only the definition of a “minimum wage” is subject to many variations in member states (they does not even exist in Sweden and Denmark) particularly with regard to what is included or not in certain bonuses and allowances, such as the 13th month or holiday pay. The result is that the difference in pay between local and attached workers is often significant and can even be 50% less for posted workers, as is the case in the road haulage transport sector in Belgium. With the revision, member states where posted workers are working will have to provide comprehensive estimates of the latter's remuneration conditions on an Internet website.
The approach chosen by the Commission is not in itself an innovation because it is based on a proposal on two European Court of Justice rulings. A year ago, the Court clarified the way in which the minimum wage should be calculated for posted workers, with a de facto rise (see EUROPE 11252). Another ruling by the Court more recently, ruled that participation in a public market could be subject to a commitment to pay a minimum wage, particularly in cases where subcontracting is utilised (see EUROPE 11432).
In an effort to highlight what change this targeted revision could create on the labour costs of a posted worker, the Commission carried out an impact study, of which EUROPE has obtained a copy. In this example, the monthly wage cost of a Polish worker in the building industry posted to France could go from €1,587 to €1,960 following the revision of the directive, whereas the cost would be €2,146 for a local worker. The impact would be even greater in Germany. The difference in monthly wage costs between a posted Polish worker and a German worker would increase from €562 month to €45, at least in sectors where collective agreements are generally applied.
With this proposal, the Commission has responded to the political pressure exerted by France, Germany, the Netherlands, Luxembourg, Austria and Sweden by largely meeting their demands. The wish of these countries to see the basic directive revised stems from the fact that although the phenomenon of posted workers is marginal overall, because it only involves 0.7% of the EU labour force (1.9 million postings in 2014), it is constantly increasing and is still linked to the problem of “social dumping” and unfair competition (with good reason, according to the Commission's impact study). The most recent updated figures (2014) show that the number of posted workers increased by 10.3% in 2013 and by 44.4% compared to figures for 2010. They could possibly account for three million by 2018. The average period of posting is four months and remains stable.
The basic structure of the phenomenon has not changed. It is still Germany, France and Belgium, which on their own, account for 50% of posted workers, with Poland sending the most, just ahead of Germany and France. The construction industry is the most affected sector, with 42% of postings involving building workers. It should also be pointed out that although the Commission has also decided to target the temporary employment agencies, the latter only account for 5% of postings. The revision of this point will affect certain member states that are expected to apply the directive on temporary work (2008/104/EC) to posted workers by the agencies in question.
At a political level, those most opposed to the revision of the directive are Poland, Bulgaria, the Czech Republic, Baltic countries, Hungary, Slovakia and Romania. These member states believe that such a revision could possibly undermine the competitiveness of their workers. At a more general level, they consider that any revision of the directive is currently premature because the effects of the 2014 directive of application, whose primary objective was to strengthen control instruments (see EUROPE 11029), have not yet been gauged. The member states must transpose this by mid-June and very few of them already have done so. This group of opponents ultimately believes that the principle of “equal pay for equal work in the same place” is incompatible with the internal market.
The Commission proposal is attempting to rectify the shortcomings that were not tackled in 2014 with the directive application and this new proposal is therefore being presented as exclusively complementary. Nonetheless, one of the demands from those in favour of a revision particularly involved the A1 form, which has often been criticised as not very reliable. This administrative form lists the legislation applicable to a worker who is not affiliated in the country where he is working and it is therefore a centrepiece in the posting. Its revision is only possible with the amendment of Regulation 883/2004 focusing on the coordination of social security systems. Moreover, this revision was submitted later because it will need to include the changes negotiated with the United Kingdom as part of the reform of its status in the Union, if the British vote to remain in the EU next June (see EUROPE 11495).
The result of the negotiations with London could also have an impact on the political game plan at the Council of Ministers when the latter examines this Commission proposal on posted workers. The United Kingdom can no longer be part of the minority bloc, which was the case in 2014. This is in fact the opinion proffered by the French Minister for the Economy, Michel Sapin, who expressed his views in Brussels in a backdrop to the Ecofin Council on Tuesday. He explained that “the political conditions” compared to those in 2014 (Sapin was at the time involved in the negotiations as Employment Minister) have “changed somewhat” and the “the position of the British government has been able to evolve” following the agreement reached at the end of February. According to Sapin, although an agreement on this targeted revision is possible, it is not going to be easy. He also pointed out that qualified majority voting was possible in 2014 thanks to Poland, following “a lengthy political endeavour”. (Original version in French by Jan Kordys and Mathieu Bion)