Freedom of Movement, Wages, and Posted Workers

In an attempt to mask xenophobia as a legitimate concern for workers’ low pay, many on the left have attacked Freedom of Movement (FoM) within the EU.

The research shows that immigration does not affect wages and that the fall in wages is due to a multiplicity of factors, see here.

EU legislation on temporary workers (‘posted workers’) seeks to ensure fair competition so that workers are not ‘undercut’ by temporary mobile workers. Posting affects less than 1% of the EU labour force.

EU rules establish that, even though workers posted to another Member State are still employed by the sending company and therefore subject to the law of that Member State, they are entitled by law to a set of core rights in force in the host Member State.

This set of rights consists of:

  •    minimum rates of pay;
  •    maximum work periods and minimum rest periods;
  •    minimum paid annual leave;
  •    the conditions of hiring out workers through temporary work agencies;
  •    health, safety and hygiene at work;
  •   equal treatment between men and women.

However, there is nothing to stop the employer applying working conditions which are more favourable to workers than those of the sending Member State.

As reported by Euroactiv, the most recent “text adopted by the European Parliament settles a certain number of problems, such as the length of time that employees can be posted. France initially wanted to limit this time to 12 months. The final agreement provides for a period of 12 months that can be extended to 18.

“To ensure a real parity in wages between posted and local workers, the new text also stipulates that employers will now have to bear the travel, accommodation and catering expenses for the workers.

“Another important chapter in the text concerns implementation of the text to the international road haulage industry. The new rules will soon apply to the sector, where competition between East and West is particularly sharp. But these rules will only apply once specific legislation has been adopted within the framework of the mobility package.”

As explained by Batsaikhan of Bruegel, “A common fear is that workers moving from a low-wage country to high-wage country could result in “social dumping”, which entails a deterioration in social conditions in the host country due to increased competition with countries with lower social conditions.

However, “only a third of postings are from low- to high-wage countries, while one-third is between high-wage countries”

“According to Sapir (2015) there are three competition channels through which “social dumping” could theoretically occur:

1) imports of goods from a low-wage country

2) imports of services involving posted workers

3) offshoring of production to low-wage countries

“The issue of posted workers draws the most attention due to the fact that these workers are more visible and immigration is in general viewed ever more unfavorably. Yet, of the three channels the posting of workers is the least important channel for competition between low-wage and high-wage countries, compared to goods imports and offshoring of production. (see Darvas (2017)). […]

Posted workers are not a major risk factor for social dumping. […]  owing to the specific conditions under which posted workers are employed in the host country, their relatively small number, and the limited duration of the posting period, the labour market impact and/or local displacement effects are likely to be very small.”

For more read Batsaikhan’s article EU Posted Workers. Separating Fact from Fiction, on Bruegel.

 

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This entry was posted in EU, freedom of movement, labour market, migration, Uncategorized, wages. Bookmark the permalink.

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