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AK EUROPA: The planned European Labour Authority – an effective tool against wage and social dumping or a placebo?

Following lengthy discussions, the heads of state and government agreed on the “European Pillar of Social Rights” in November last year. A short time later, Commission President Juncker announced a “Social Justice Package” for 2018. Against the background of the legislative proposal on establishing a European Labour Authority, which is eagerly awaited for 7 March 2018, Gerhard Michalitsch, Josef Muchitsch, Inge Bernaerts, Evelyn Regner and Liina Carr joined a discussion in a joint event by AK EUROPA und ÖGB Europabüro hosted by Kurier Brussels correspondent Ingrid Steiner-Gashi.

Gerhard Michalitsch, President of the Chamber of Labour Burgenland, briefly described the situation in Burgenland; a small labour market with about 100,000 employees, which would share a border with three East European countries with a pay gap of 1:3 to 1:5. Free movement of services, postings and illegal jobs put great pressure on labour market and wages. In spite of an increase in employment over the past years, unemployment had risen; in particular older employees were pushed out of the labour market. In Burgenland, which has aside Carinthia Austria's lowest pay level, one could even see a retrograde development. Admittedly, successful regional cooperation between Chamber of Labour, trade unions and Economic Chamber also existed; however, Michalitsch sees a need for action at European level. According to Michalitsch, it was also important to regain the trust of the people in the European Project.

Josef Muchitsch, Member of the National Council and Federal Chamber of The Union of Construction and Timber Workers, also pointed out that the problem of wage and social dumping could only be solved with the support of the EU. By introducing a wage and social dumping law, reforming the Industry Regulation Act, a new procurement law and increased controls, Austria has already taken many steps in the right direction. In spite of this, companies time and again succeed in finding bypass constructions. The European Legislator is called upon in particular with regard to implementation and enforcement across borders: this is made particularly clear by the example of an administrative authority in Burgenland, which had imposed fines amounting to 1 Mio Euro, but was only able to collect 2,000 Euro across borders. Apart from the demand for an EU labour card, a “Driving licence for fair work”, Muchitsch puts his hope on the proposal for a European Labour Authority.

Inge Bernaerts, Head of Cabinet of Employment Commissioner Marianne Thyssen, referred to the fact that today about 16 million citizens are working in another EU Member State – twice as many as only 10 years ago. Often, this was not only a challenge for the recipient countries, but also for the posting countries: after all, well trained young people were often more mobile and this would lead to a noticeable “brain drain” in those countries. Hence, the Commission would support clear and enforceable regulations, which would be fair for all sides. Reforms of the Posting of Workers Directive and of the social security coordination, which are currently underway are regarded by the Commission as important steps to reach this target. Another important milestone would be the European Labour Authority, which had been announced for 7 March 2018: Bernaerts sees its task in supporting the national authorities in providing information and organising joint cross-border checks.

Evelyn Regner, SPÖ Head of Delegation to the European Parliament, emphasised that in particular the immense wage differences had to be combatted; they were often the reason why employees would leave their native country. When the EEC was formed, the wage difference between the richest and the poorest Member State was just 1:1,5; now it was 1:7,9. This is why the European Parliament had presented a package for social minimum standards; Europe needed a social foundation, one of which would be decent work. Concerning employee postings, experiences from discussions with affected authorities showed that cross-border cooperation would all too often not work: even though checks were carried out and violations established, there were no follow-up steps taken. The reasons for this were sometimes banal: often authorities did not have the funds for notifications and translation costs; overall the chances of success were low.

In her concluding words, Liina Carr, Confederal Secretary ETUC, posed the question as to how employees could be given more rights. It would be important that employees were paid compensation and that they could take their claims to court. It should not be allowed in Europe that employee was played off against employee. Carr also sees an important aspect of combatting cross-border social dumping in the proposal regarding a European Social Security Number, which was also announced within the scope of the “Social Justice Package”, as the current practice of the so-called A1 forms was very much prone to fraud. Summing up, she points out that social upwards convergence within Europe was very difficult to achieve as long as Member States would regard wage and social dumping as a competitive advantage; hence, it was very important that the Commission would take courageous and not only half-hearted steps.

In the subsequent discussion, social security institutions once again pointed to the fact, that there were sufficient cases, which were clearly social fraud; however, they would fail because the current law could not be enforced. Hence, a future Labour Authority should be able to take the binding decision which social security right should be applied.

Further information:

Pictures of the event

AK Position Paper: European Labour Authority

Complaint by the Union of Construction and Timber Workers: Putting social standards in the Austrian construction industry at risk

FES: Towards a European Labour Authority

A&W Blog: A European Labour Authority: Supporting the rights of employees instead of those of dumping companies

AK Europa: Say NO to social dumping

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Photo: Petra Völkerer
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