First shots fired in fight for a more ‘social’ Single Market

Demonstration on social cuts

Attempts to give a more social dimension to the EU's Single Market will result in legislative deadlock similar to the Maternity Rights Directive, the European Commission was warned last week.

The EU executive is preparing to frame two highly contentious ideas before the end of this year that would have the effect of introducing fundamental social rights into the ambit of the Single Market Act.

One proposal will be a regulation or new directive designed to reframe the Posted Workers' Directive to prevent perceived abuses which have been the subject of controversial ECJ rulings (see 'Background').

A second would see the insertion of a new regulation which would apply fundamental social rights horizontally across the Single Market Act, giving cross-border services more social protection. This latter clause is dubbed 'Monti II', since it reflects a similar clause introduced in 1997 by Mario Monti during his tenure as internal market commissioner, to remove obstacles to the free movement of goods.

Commission warned to take pragmatic approach

Stakeholders from the labour and employment camps revealed the difficulties that lie ahead at a special Commission-sponsored conference designed to 'test the waters' last week in Brussels.

Warnings over the two proposals came from several sides, including employers' groups, the centre-right European People's Party (EPP) and a minister from the Danish government, which will take over the EU presidency just after the Commission tables its draft plans later this year.

Inger Støjberg, the Danish minister of employment, said: "This is likely to be a sensitive issue so the appeal [to the Commission] will be take a pragmatic approach […] but we would encourage the Commission to be careful."

Edit Bauer, a Slovakian Christian Democrat MEP who sits on the Parliament's employment committee, said there was no need to revisit the Posted Workers' Directive. She warned that a wide-ranging review of the directive would end up in legislative stalemate, like the Maternity Rights Directive.

Social Europe was 'price for Barroso's re-appointment'

Labour representatives were adamant that the reform of the directive and the substance of a Monti clause should be far-reaching however.

MEP Pervenche Berès (France; Socialists & Democrats), chair of the Parliament's committee on employment and social affairs, said: "The Commission wants to re-interpret the directive but we need to re-issue it. We reject the amending approach: a fundamental review of the [Posted Workers] directive is necessary."

Berès said that José Manuel Barroso gave the S&D group an undertaking to support the issue when the party endorsed his re-appointment as Commission president in 2009.

The deputy secretary-general of the European Trade Union Congress (ETUC), Patrick Itschert, told the conference that Monti II clause should be broadly applicable and have a horizontal effect across the Single Market Act, rather than applying narrowly to strike actions.

Member states are watching keenly to see how such a clause is drafted since even those working within the Commission acknowledge that its effects could be hard to predict.

Addressing the conference, Internal Market Commisioner Michel Barnier said he would not shy away from making a strong political commitment in the proposals.

Referring to the ECJ rulings, he said: "I have come to this problem as a political man. You cannot rely on the judges to respond effectively. As the guarantors of the treaty we have to find the answers, and we have to give strength to the social market economy."

Jeremy Fleming

"Attempts to revisit the core working conditions provisions contained in the directive have been discussed in the Council and there is no appetite there to re-open them. What is anticipated are more details on enforceability," an EU diplomat told EURACTIV.

He added: "The standards in each member state need to be taken into account on their own merits. We are anticipating that the Polish Presidency will come with proposals on enforcement."

"We have to acknowledge that there are concerns, and we are often asked about the challenges by trades unions needing to know who their counterparts are," according to Inger Støjberg, the Danish minister of employment.

She said: "This is likely to be a sensitive issue so the appeal will be to have a pragmatic approach we need to find tools that will help us to find common ground. We know that there will be two proposals and we look forward to seeing them but it is going to be a hard process, we are keen to work on the issue and make it a priority under the Danish Presidency next year, but we would encourage the Commission to be careful."

"The Commission wants to re-interpret the directive but we need to re-issue it. We reject the amending approach: a fundamental review of the [Posted Workers] directive is necessary," according to MEP Pervenche Berès (France; S&D), the chair of the Parliament's committee on employment and social affairs.

"We asked José Manuel Barroso for his support in this matter when he asked us [the Socialists & Democrats faction] us to support his mandate for re-appointment [in 2009]. We need to put an end to the circumvention of the directive. The ECJ rulings have not done that. We need a system that allows for legal redress and gives us the opportunity to appeal cases."

"The idea of a Monti clause is presented as something to brook the conflict between freedom of movement and societal rights. I am sceptical that the type of regulation envisaged, under Article 352 of the EC Treaty, will be effective since that regulation does not allow Parliament an effective voice in the framing of the regulation, so I am sceptical about the regulation's ability to counter the challenge of the freedom of movement's erosion of social rights," Berès concluded.

"The fundamental right to strike as enshrined in EU law has not been affected in any way by the findings of the court in the cases relating to the Posted Workers Directive, so there is no need to change the directive," according to MEP Edit Bauer (Slovakia; European People's Party), another member of the Parliament's committee on economic and social affairs.

She added: "Where problems have been highlighted by the court, countries have changed their approach accordingly. I would warn the Commission to take a pragmatic approach. A wide-ranging review will change the balance of the law and it will cut down on growth in jobs and potentially increase undeclared work. Moreover, a new legislative initiative will have few chances of being adopted in the Council and will cause controversy in the Parliament."

"Such a move would end up like the Maternity Leave Directive or the Working Time Directive. The only action that needs to be taken is to make the enforcement of the current directive better, and in order to achieve that what is really needed, is dialogue between the social partners rather than Commission proposals," Bauer concluded.

"I think there is some work to do on the directive but what is needed is the pragmatic approach," said Philippe de Buck, director-general of BusinessEurope, adding: "We are prepared to discuss elements of the Posted Workers Directive relating to shared information across borders and enforcement, because it is in our interests to prevent fraud by companies, but we are prepared to do so only on the basis of proportionality."

"I do not understand how SMEs can do nothing [about the problems thrown up by the directive] when they see workers being used for a third of the salary of ordinary labour," said Patrick Itschert, deputy secretary-general of the European Trade Union Congress (ETUC).

He went on: "We have heard of cases where Chinese and Bangladeshi women have been involved in labour where the agencies were being paid a quarter of their salaries and were confiscating their passports. We want to see a lawful salary climate and a Monti II clause might be a first step to social progress, but such a clause could be limited to the right to strike and we want the clause to be on a horizontal basis so that it covers all areas of cross-border services provision."

"I have come to this problem as a political man. You cannot rely on the judges to respond. As the guarantors of the treaty we have to find the answers and we have to give strength to the social market economy," said Internal Market Commissioner Michel Barnier, adding: "We must give a framework that will give protection to the these workers."

In the Laval case (also known as the Vaxholm case), Latvian company Laval un Partneri posted several dozen workers from Latvia to building sites in Sweden. Their work included refurbishing a school in the Swedish town of Vaxholm. 

Swedish unions took action against Laval over the company's refusal to sign a collective agreement and to respect Swedish legislation on working conditions and minimum wages. The Swedish labour court referred the case to the European Court of Justice. 

Presenting his conclusions on the Laval case on 23 May 2007, Advocate-General Paolo Mengozzi  argued that "where a member state has no system for declaring collective agreements to be of universal application," the Posting of Workers Directive "must be interpreted as not preventing trade unions from attempting, by means of collective action [...] to compel a service provider of another member state to subscribe to the rate of pay determined in accordance with a collective agreement which is applicable in practice to domestic undertakings in the same sector". 

In the related Viking case, the Court held that trade unions' right to take collective action may be limited by employers' right to freedom of establishment (see EURACTIV 12/12/07).

Employment ministers from France, Luxembourg and Sweden called in October 2008 for a political solution to European Court of Justice (ECJ) rulings that inflamed debate on the balance between workers' rights and economic freedom in the EU.

The ministers convened at the Forum on Workers' Rights and Economic Freedoms in Brussels to discuss the implications of the Laval court ruling.

Luxembourg's Employment and Social Affairs Minister François Biltgen claimed that the judges who ruled against his country did not simply apply the rules, but they interpreted them. He said their interpretation was "very restrictive; literal rather than teleological". 

Biltgen only saw one way of reconciling the wording of the text with the law's original spirit: the adoption of a political act, such as a Commission communication, which would clarify an EU directive on the foreign posting of workers. 

Xavier Bertrand, the French employment minister, agreed with Biltgen, stating: "The judges have filled a gap left open by politicians." "Social Europe must be restarted," said Bertrand, adding: "It is absolutely necessary that politicians take the initiative." 

The two proposals – which are to be tabled later this year – are so-called 'key actions' under the 'social cohesion' lever of the relaunched Single Market Act, which means the Commission wants to adopt them before the end of next year, when the new Act is set to be finalised.

  • Dec. 2011: Internal Market Commissioner Michael Barnier will table the two proposals by the end of the year.
  • Dec. 2012: Single Market Act to be adopted, including the two proposals.

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