Employers’ chief: Juncker won’t admit he is wrong on Posted Workers Directive

Renate Hornung-Draus

The new Posted Workers Directive is not necessary but Commission President Jean-Claude Juncker will not admit he is wrong on the new rules, Renate Hornung-Draus, managing director of the Confederation of German Employers’ Associations (BDA), told EURACTIV.cz.

Despite opposition from its business community, Germany is one of the EU countries that supported changes in current rules for the posting of workers.

Renate Hornung-Draus is managing director and director of European and international affairs of the Confederation of German Employers (BDA), a business organisation representing the interests of private employers in the fields of employment, labour, and social affairs. She spoke to Lucie Bednárová from EURACTIV Czech Republic.

The European Commission presented its proposal for a revision of the Posted Workers Directive in May 2016. The main idea is to ensure “equal pay for equal work at the same place”. You are from a German association representing thousands of businesses, is this proposal necessary, and in what areas?

I can speak on behalf of German business and also of BusinessEurope. We have presented a very clear position which says the proposal was not necessary. It is obvious that the existing rules, which were adopted two years ago, are not effective at the moment because we are just at the end of the transposition period and some countries have not finished the process. All German companies including those in the construction sector agree the new draft is not necessary.

Let’s look at the details of the proposal. What do you dislike and why?

There are several points we dislike. If the new rules are adopted they will create legal uncertainty. The first one is an extension of universally applicable collective agreements from the construction sector to all industries. This is not necessary because the problems to be tackled regarding working conditions mainly exist in the construction sector. The extension will only complicate life in other sectors that do not share these problems, like the chemical and metal industries.

The second point is the move away from a reference to minimum pay rates to pay in general. It will bring huge legal uncertainty and a lot of bureaucracy. It is unclear what elements are covered by the “remuneration” the Commission mentions in the text. It will bring a lot of complications, especially for SMEs.

The third point is the limitation of posting to two years. This is not appropriate because the duration of postings is very diverse. While the vast majority of postings are much shorter than two years, some postings need to be longer. Also, in the corresponding EU regulation on coordination of social security systems, the possibility is foreseen for posted workers to stay in the social security system of their country of origin for more than two years if the two member states agree.

So limiting the posting to two years in the directive would create an incoherence with the regulation coordinating the social security systems in the EU. The claim of the European Commission goes even against the Rome 1 Regulation which does not stipulate a time limit for the duration of a posting. It is a usual practice because some workers are posted for three or four years, but from the outset they know they will come back after finishing the task. This means that the “habitual place of work”, which determines which country’s labour law should apply, remains the home country, even when the worker is posted abroad for more than two years.

The Commission proposal damages this flexibility and brings over-regulation. It will influence large companies that practice a lot of intra-company postings.

Unlike companies in the French or Italian construction sector, for example, German companies in this sector are against this proposal. They say it will not help them and that it just creates more bureaucracy and it is not tackling the real problems we have.

You said the rules are sufficient but you also mentioned that there are some problems regarding the posting of workers in the EU and Germany. Which problems did you mean and how they should be solved?

The problems in Germany are related to illegal practices and abuses, like fake self-employment, non-payment of wages or social security by the employer in the posting country and difficulties in combating these practices due to deficiencies in cooperation between public authorities from the sending and receiving countries. This is a particular problem in construction and related industries.

How many posted workers does Germany receive and in what sectors?

Germany is among the countries that receive the most workers in the EU, but that makes sense because it is a very big country with a large economy. There are also other countries in a similar position. The main mobility, and of course the main problems linked to posted workers, are in the construction sector and related industries.

The European Commission statistics show the number of posted workers has increased in recent years but still it is a very small number. You can say we have a 40% increase, but if it is 40% from a very small number, then the number is still very small.

One of the arguments we hear in the Czech Republic is that the proposal could cause a deep division in Europe, especially between the newer and older member states. Do you understand these worries?

We agree very strongly with this argument, but at the same time, it is important to say that the objections against this directive are not only from the new member states. They also come from countries like Denmark, which also participated in the yellow card procedure, and from the German business community. Even though the German government sent a letter to the Commission and was in favour of making changes when it comes to very concrete details of the proposal, it had a lot of questions. It has not yet taken a political position because the proposal was blocked by the yellow card procedure.

The yellow card already shows the potential of the proposal to deeply divide Europe and cause conflicts. It is also bad for the institutions because it shows the necessity of beginning by talking to partners and understanding the problems before you decide to change anything. We would do better to wait for the results of the implementation and then start a discussion about possible changes. The Commission will damage the EU institutions if it insists on this draft.

Why is the Commission acting like this? Why did it come up with such a proposal?

My explanation is that it was a sort of a political promise made to certain countries by Jean-Claude Juncker before he was elected, for example France, and to the trade unions. Now he does not want to step back and admit he was wrong.

Are there any positive aspects to the current proposal?

Unfortunately, the current proposal does not address the problems. In fact, it would reinforce the problems by adding new rules, which are even more complex and difficult to apply and enforce than the rules that are currently in force. The Enforcement Directive of 2014 is the instrument that addresses these problems adequately. Efforts should go towards really implementing and enforcing these rules rather than inventing new ones.

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