French President Emmanuel Macron went to Central and Eastern Europe recently to ask officials there to support his plan to change the legislation regarding posted workers, to prevent it being abused.
In essence, the posted workers’ directive allows one company in a member state of the European Union to send its workers to work on projects in another member state, but still pay them less than local workers. This is because, while the company has to abide by local minimum wage rules, things like tax or social security payments are still made in the country of origin.
This directive was created for short-term, specific projects, to allow companies to offer services in other member states. It was never meant as a way to undercut local wages, or allow employers to pay less tax — but critics say that this is how it is being used now.
Macron said the fact that companies pay social security and tax for workers “posted” to richer countries in lower-cost countries imposes unfair competition on companies in states like France or Germany.
Last year in March, the European Commission proposed changes to the directive which would mean that the rules on remuneration that are applied generally to local workers will also have to be granted to posted workers.
But Macron believes this doesn’t go far enough and wants posted workers’ terms to be limited to one year, as well as toughen up the rules against fraud in the field.
If he can push these changes through, Macron can hope to get back some of the popularity he lost at home a short time after he was elected. But posted workers represent only 1% of the total EU workforce. Perhaps a bigger priority for him should be reforming the labour market in France, to make it easier for young people to get jobs.
Currently, there are still thousands of young French people who prefer to look for jobs in other countries, because it is so difficult for them to enter the French job market. Older French workers are protected by contracts that give them so many rights, that companies are afraid to take on new employees unless it’s absolutely necessary.
Of course, initiatives to improve European legislation to make it more difficult for unscrupulous employers to abuse it are a good idea. But when they are targeted at foreigners, they smell of the populism that led people in Britain to vote themselves out of the European Union.
Macron should be careful what path he takes.
Things to watch next week:
— Another round of negotiations on Brexit
— Eurozone inflation data for August
— Eurozone unemployment data for July