ZPP Newsletter
Warsaw, 12nd September 2017
THE STANCE OF UNION OF ENTREPRENEURS AND EMPLOYERS CONCERNING THE EUROPEAN COMMISSION’S PROPOSAL OF REVISION OF THE 96/71/WE DIRECTIVE OF THE EUROPEAN PARLIAMENT AND COUNCIL
In the article 3, section 3 of the Treaty on European Union, the common internal market has been established. According to the exact content of this provision, its existence should foster European development based on economic growth, stability of prices and high competitiveness. This provision has been somewhat specified in the article 26 of the Treaty on the Functioning of the European Union. According to this Treaty, the internal market encompasses the area without internal borders where unrestrained flow of goods, people, services and capital is provided. On the other hand, article 56 of the TFEU directly forbids limiting the freedom of providing services inside the EU by the citizens of the Member States who run their companies in a Member State other than the country of the recipient of the service. In the subsequent articles of the chapter concerning services, we may learn i.a. that: Member States ought to make their best efforts to liberalise services in the scope exceeding the obligations resulting from the relevant directives, as long as their general economic situation allows it.
Similarly, it was directly stated that in order to ensure the liberalisation of the given service, European Parliament and Council adopt directives. All of the presented provisions constitute frames for the functioning of the internal European market. Each of them emphasises the importance of freedom or flow of: services, competitiveness, or liberalisation of law. The liberty of providing services is such a crucial element of the internal market that there is even a whole directive concerning this issue (2006/123/WE, so called the Services Directive). One of its goals was to simplify the administrative procedures concerning service providers and supporting cooperation among European countries. However, the main resolution of the Directive concerned enabling entrepreneurs to start their activity in other EU countries, on the principle of common market, in a simplified way and under the same conditions as the local entrepreneurs. In the preamble to the Service Directive, there are many arguments proving that the freedom of flow of services is crucial for the European Union and its development. This freedom allows to increase the competitiveness in the market of services, which is vital for supporting economic growth and creating workplaces. It has been pointed out that the barriers in the internal market influence mostly small and medium entrepreneurs who wish to provide services in other countries. Finally, which is crucial for the following discussion, it was also stated that free market obliging the Member States to abolish the limitations in the trans-border services ensures consumers with greater choice and better quality of services provided for better price. Those arguments, among others, were mentioned as the biggest advantages of the free flow of services in the common EU market.
It is worth to remember that the notion of decreasing the number of barriers in the flow of services within EU was enthusiastically welcomed by a great part of the Member States. Not all of them were in favour, however. There is a famous concept created by Philippe de Villiers, former Member of the European Parliament representing France, who claimed that the project of the directive liberating providing services in the common market in such an advanced manner as it was assumed at that time, would enable a Polish plumber, or an Estonian architect to offer their services in France for the remuneration resembling prices in their countries, which, in his opinion, would be an attempt of destroying French economic and social model. Reactions to these words were strong, but eventually the Services Directive, despite the objections of the representatives of part of the Member States, was adopted in a slightly limited version. The cited words are worth remembering, however. They obviously demonstrate the protective approach towards economy of some of the European countries. Such situation excludes the possibility of fully common market. It also shows the incredible attachment to the own “economic and social model” which is often based on the high non-wage costs of work and vexing tax wedges.
The concern of some of the “old Union” countries about the competitiveness of smaller, but more dynamically developing economies, seems understandable. However, it is an important obstacle for the further economic integration and for shaping the common market of the European Union. This issue has again become prevailing, this time in the context of the European Commission’s proposal of revision of the 96/71/WE directive concerning posting workers.
In compliance with the article 2, section 1 of the directive, a posted worker is a worker who, for a limited period, carries out his work in the territory of a Member State other than the State in which he normally works. Article 3 of the directive describes the conditions of employment of a posted worker. According to this description, Member States shall provide posted workers carrying out their work on the territory of those countries with i.a.: maximum work periods, minimum rest periods, or the minimum wage including overtime rates. The content of the directive combined with the judicial practice of CJEU clearly indicate that the concept of the minimum wage can be, in this context, understood only as it is specified in the state law, or the generally applicable systems.
Two the above-mentioned provisions are crucial in the context of discussing the European Commission’s proposal, since the most dangerous elements refer to them.
First of all, the European Commission proposes adding the article 2a to the directive. According to this article, when the anticipated or effective duration of postings exceeds 24 months, the receiving Member State is treated as a country in which the posted worker normally works. In case of replacement of posted workers performing the same task at the same place, cumulative duration shall be take into account. This refers to workers posted for at least six months. This proposition contradicts the whole concept of posting workers. The main characteristic of posting workers is temporality. Certainly, it is difficult to define the exact borders of temporality. It is impossible to adjust it to any rigidly established time frames, since posted workers deal with different industries, and they are delegated to handle various tasks, more or less time consuming. Taking this into account, we believe that establishing such rigid time frames has no plausible grounds and contradicts the whole idea of regulations concerning posting workers. This opinion is concurrent with the CJEU judicial practice – the sentence in the C-215/01 Schnitzer case of the Tribunal clearly stated that in the understanding of the CJEU the services may encompass various types of services of divers character, also services performed for a very long time (i.e. several years). Thus, it is impossible to a priori establish time frames of providing services.
The sense of adding the article 2a in such a shape to the directive can be questioned for another reason. There is the already-adopted implementing directive to the 96/71/WE directive – the directive 2014/67/EU. In its article 4, section 3 the issue of temporality of work in another Member State has been addressed. It includes a list of criteria helping to decide whether a given case is an example of temporary work. In the implementing directive, no rigid time frames regarding posting workers were determined. They have used a more content-ample and abstractive method of formulating several example circumstances which may indicate the temporality of work in another Member State. It is clearly stated that such evaluation has to consider all of the existing elements characterising such work and the situation of a given worker, with special emphasis put on the following aspects: performing the work in other Member State for a limited period; date of the commencement of posted work; posting the worker to a different Member State than the State where, or from where, he normally works; returning to the Member State from where he was posted after finishing his work or delivering services in another Member State, or fact of starting work in his Member State; the character of work.
Taking this into account, since it is impossible to precisely define the time frames of “temporality” of work of a posted worker in other Member State, but also considering the fact that the criteria of evaluation of a given case have been described in the implementation directive in detail, adding article 2a to the directive about posted workers in the shape proposed by the European Commission seems unacceptable.
Another crucial alteration to the directive, proposed by the European Commission, is changing the article 3 which defines the requirements regarding the conditions of employment of posted workers. The major problematic topic is the issue of remunerations. Till now, in compliance with the article 3, section 1 of the directive, a posted worker is legible to obtain a minimal wage rate, including the overtime rate adequate to the rates existing in the Member State where the work is being carried out. For the needs of the directive, the concept of the minimal wage is defined by the state law of each Member State or by practice existing in this country. The EC proposal assumes that posted workers shall be guaranteed remuneration including the overtime rates, by law or by the collective systems. In the directive, the “remuneration” would be defined as: all of the mandatory elements of the remuneration in accordance with the state statutory, executive and administrative provisions, collective agreements or arbitration awards, which have been recognised as commonly used; or, in case of not considering the system of accepted collective agreements or arbitrary awards as commonly applied, other collective systems or arbitrary awards in the Member State where the posted worker carries out his work.
Therefore, the change it this field is significant. The European Commission’s proposal assumes changing the guarantee of the “minimal wage for work” for the guarantee of “remuneration” encompassing all elements of remuneration in the given Member State. It is an alteration, which – as we believe – cannot be accepted from the perspective of competitiveness in the common European market. The foregoing conditions of posting workers, and the guarantee of a minimal wage were a sufficient social security of the workers. At the same time, the regulation takes into account the fact that Member States differ in regards to the level of socio-economic development, which is actually one of the factors influencing the level of wages. One of the main arguments supporting the European Commission’s proposal is invoking the so called “social dumping”. According to the opinion of the European Economic and Social Committee, social dumping occurs when cheaper workers from one Member State takes the posts of the inhabitants of another Member State. Whatever approach applied, however, this concerns a system in which less-paid workers or service-providers supersede the native workers from the market in a given Member State.
Suggesting that the foregoing regulations concerning posted workers leads to social dumping is wrong. First of all, we have to be aware of the scale of this phenomenon. Posted workers constitute only 1% of the labour in the whole European Union. Moreover, it is not true that posted workers always come from the poorer countries and carry out their work in the richer ones. Obviously, the greatest number of posted workers come from Poland, but Germany is the second in this regard, and the third place is held by France. More than 1/3 of the posted workers flow comes from wealthy countries to other wealthy countries. According to the research performed by the Bruegel institute, a believe that posted workers from Central-East Europe decrease the rates by performing work for lower wages than determined in the Member State’s provisions is also faulty. Therefore, the arguments used to support the Commission’s proposal are, in many aspects, simply not true. The phenomenon of social dumping, as long as we can accept its existence in a scale worth mentioning, cannot be related to the issue of posting workers, since posted workers carry out their work for higher rates than the minimal wage in a given country, and to the great extend their flow takes place between developed, wealthy countries.
Moreover, the often-invoked statement that diversification of the wage rates of workers from different Member States was an element of an unfair competitiveness is wrong. It is a standard element of building the competitiveness advantage, and each entrepreneur operating in each market has a right of using it. As it results from the former discussion, one of the aims of the common European market is to ensure customers with access to better services in lower prices. This may happen only when maintaining the conditions of free competitiveness between entrepreneurs. On the other hand, a situation when part of entrepreneurs coming from, in this case, easy-to-identify regions of Europe is denied the opportunity of using their competitive advantage against their counterparts from other countries is unacceptable. The proposal of the European Commission strikes not only the significant element of the common market – freedom of providing services, but also a particular group of entrepreneurs, because part of the players from western markets cannot compete with them in regards to prices. An Analogic but reverse situation is present in the trade industry – international trade networks by using the economies of scale also compete with the local stores and networks which often lose this fight. Yet, we never hear anything about initiatives aiming at limitations of using the competitive advantage of those companies (which is good because the essence of the common market are: equal rules and freedom of competitiveness). Even though, or maybe because, the biggest supporters of the revision of the posted workers directive are often the states where the big networks come from. It is obvious then, that we are facing a kind of hypocrisy in the general approach, which demonstrates itself in the protectionism towards own economy and in supporting expansion at the same time – by using each available competitive advantage of their own enterprises in the economies of other Member States. Such an approach cannot become a norm in the European Union, because it is in contradiction to the foundations of the common European market.
As mentioned above, posted workers constitute a minor part of the labour force in the perspective of the whole European Union. Simultaneously, limitations in the liberty of competitiveness caused by imposing additional regulations on posting workers may directly influence specific areas of economy and groups of enterprises. It is Poland which posts the biggest number of workers. Most frequently, they are workers from the areas of: constructions, industry, health education, social works and services. They are the areas which would suffer from introducing the European Commission’s propositions the most. It is also worth noticing that this proposition impacts the whole sector of micro, small and medium enterprises which don’t have their branches in different Member States, and for which the possibility of posting workers to other countries is the only way for competing in the foreign markets. It is often that taking up such competition is the only way for their further growth and development.
Road forwarding sector is another issue. In the European Commission’s proposal, it is directly addressed only in the preamble of the document. They have mentioned its special character, difficult to regulate within the issue of posting workers. In this context, it’s worth to mention that on the European market the position of Polish forwarders is very high. 30 thousand of entrepreneurs have a fleet of more than 180 thousand vehicles. It is vital for Poland to maintain the leading position of our forwarding entrepreneurs on the European market.
To conclude, we evaluate the presented project of revising 96/71/WE directive as potentially leading to significant limitation of freedom of providing services and competitiveness in the common European market. As a result, it strikes not only the foundations of the common market, but also particular groups of entrepreneurs from a specified region of Europe.
Fot. thepismire/ na lic. Creative Commons/ flickr.com
