Letter from Brussels: Posted worker woes

It will not be the first time that proposed revisions to EU rules affecting finance and pensions get stuck in a logjam between interests groups. Now it is the turn of the 1996 Posting of Workers Directive, which covers temporary workers in EU member states other than their own.

In March, Commissioner Maryanne Thyssen published revisions to the directive “to achieve fairness for all”. She seeks to set uniform rules between posting and domestic companies. The goal is to support the principle that the same work at the same place should be remunerated in the same manner. The revisions would ensure protection for workers and fair competition between companies. 

Currently, nearly two million posted workers are covered by the labour-law rules of the host state on issues such as health, safety, hygiene and equality. But under the existing rules and the proposed revisions, accrual of pension rights remain with the ‘home’ country. The reason for this is that applying pension accrual rights for a posted worker with under two years in the host country, to host countries is not practical. The European Trade Union Confederation (ETUC) explains that the possibility of a worker being sent from their home country to one host country after another would lead to administrative confusion – there would many small sums involved. 

As for the actual levels of pension accrual, it finds it impossible to give provide a host country employer with the precise figures, if only because of the multitude of cross-border combinations. However, savings for the employer of posted workers can be significant. 

According to a trade union study, a Dutch employee in the Netherlands with a salary of €1,600 per month might incur social charges and taxes of €577. The equivalent for a posted worker from Poland would cost the employer €431. But for a Portuguese worker the figure is €162. In this case, a Dutch employer would have to pay out considerably more for a domestic worker than for a Portuguese worker. Pension contributions would normally play an important role in social security costs. 

Not surprisingly, a storm is brewing over Thyssen’s intentions, with protests coming from national governments, businesses and trade unions. The inevitable result is legislative deadlock. On the one side are countries such as Germany and France that seek to oppose “social dumping”. They oppose labour activity shifting to counties with lower costs. Opposing them is an 11-nation group – including the Czech Republic, Denmark, Poland and Slovakia – pointing to the free movement of workers. 

The deadlock has resulted in the use of a curious ‘yellow card’ procedure by the free-movement group. The rarely-used technique to block new legislation applies the principle “national where possible, Europe where necessary”. The formula was agreed under the 2010 Treaty of Lisbon. 

The Commission’s response has been to hold its position. It states that “it is crucial to maintain citizens’ and businesses’ support for the internal market and continue to promote the free movement of people on the basis of rules that are clear and fair for everybody”. It says that its proposal is well-balanced and respects subsidiarity. 

As a result, the matter has moved back to the Commission. At the time of writing, the Commission was faced with the choice of leaving the March proposal as it is, amending it, or withdrawing it altogether. Another possible ‘action’ could be more deadlock, that is, to put the matter on hold for further examination. 

Assuming the matter does reach the Parliament, some MEPs might heed BusinessEurope, which opposes Thyssen’s revisions. The employees’ organisation has argued that the move would “trigger a prolonged period of debate and political divisions between member states at times when the EU needs actions promoting unity”.

Have your say

You must sign in to make a comment


Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2570

    Asset class: Direct Real Estate.
    Asset region: Europe excluding Switzerland.
    Size: 150m.
    Closing date: 2019-10-30.

Begin Your Search Here