Middle-east Arab News Opinion | Asharq Al-awsat

Low-Cost Workers … Macron’s Problem with Eastern Europe | ASHARQ AL-AWSAT English Archive 2005 -2017
Select Page
Media ID: 55382333

Emmanuel Macron, center, in May as a presidential candidate, touring a glassmaker in Albi, France. Credit Eric Feferberg/Agence France-Presse

Washington- Visit nearly any big construction site in France, and chances are that many employees hail from low-wage East European countries. In Britain, farms employ labor from Poland, Romania or Bulgaria when the harvest comes. Nearly half of the drivers of trucks coming in and out of Spain are from nations to the east.

The principle underpinning all of that — the freedom of citizens from European Union countries to work anywhere in the 28-nation bloc — is a pillar of the union itself. In theory, it allows workers to move across the region to find employment and benefits businesses by providing a wider talent pool.

But companies have also long profited from rules that allow them to “post” workers from one country to another. Now, a backlash is growing across northern Europe amid increasing evidence that employers are taking advantage of the rules to hire low-wage foreigners rather than local citizens.

The French president, Emmanuel Macron, who promised to protect his compatriots from “unfair competition” from the east, is moving aggressively to focus attention on these posted workers as he begins a three-day tour of Central and Eastern Europe on Wednesday.

The push comes as higher-salary countries like France, Austria and the Netherlands face political pressure to curb “social dumping,” a widespread practice in which companies hire subcontractors in lower-wage European Union member-states and post them in a more costly one. The practice increases profit margins, but often exploits the workers by keeping their wages and social protections low.

Anxiety over the rising number of foreign workers, especially from Eastern Europe, who are posted to jobs in agriculture, construction and other labor-intensive sectors was a pivotal factor in Britain’s vote last year to leave the European Union.

That point is not lost on politicians, including Mr. Macron, whose public-approval rating has dropped precipitously in his first months in office. In an interview with several European newspapers in June, the French leader urged Eastern Europe not to treat the bloc as a “supermarket,” and warned that governments would face consequences if they flouted regional values.

“Do you think I can explain to the French that businesses are closing in France to move to Poland while construction firms in France are recruiting Polish workers because they are cheaper?” he said during the interview. “This system does not work right.”

But the charge has infuriated the leaders of Poland, Hungary and the Czech Republic, widening a rift with West European countries that broke out during the Continent’s refugee crisis, when both sides clashed over plans to distribute asylum seekers across the region.

East European leaders accuse Mr. Macron of protectionism. They question why France and its neighbors have not cracked down on employers abusing the system.

They argue that their countries, which joined the bloc in 2004 during the European Union’s largest single expansion, should be allowed to compete on lower wages to stoke growth and catch up. When Poland and nine other Central and East European countries joined, many older members initially restricted access to their labor markets.

On Wednesday, Mr. Macron sought to smooth the frictions, saying he wanted to push for new rules to combat fraud and to limit to one year the length of time an employee could be posted to another European Union country. His three-day itinerary includes stops in Austria, Romania and Bulgaria, and meetings with the prime ministers of Slovakia and the Czech Republic while in Austria.

“I deeply believe,” Mr. Macron said, “the time of the European reconstruction has come.”

“The posting of workers directive, as it functions, is a betrayal of the European spirit,” he added, during a joint news conference with Chancellor Christian Kern in Salzburg, Austria.

While posted workers make up less than 1 percent of Europe’s labor force, eastern bloc leaders have vowed to fight any efforts to restrict the rights of their citizens to work across the region.

The European Parliament has found numerous questionable practices used by companies to recruit cheaper labor. These include setting up fake mailing addresses in low-cost member-states and bouncing workers between several countries to avoid the increased costs that permanent employment would bring. Other companies force workers to declare themselves as self-employed so the firms can avoid paying social security contributions.

The practice can easily spiral into exploitation when posted workers lack the social protections given to local hires. The host country also loses tax revenue and social security deposits to the East European countries where the workers’ pay slips are based.

The issue has long been politically charged in Europe, but it flared anew during the French presidential election when Mr. Macron and his far-right opponent Marine Le Pen cited the free movement of cheap labor as a source of joblessness and unfair competition.

A high-profile labor abuse case in March also raised scrutiny.

One of the biggest French construction companies, Bouygues Travaux Publics, was fined around 30,000 euros, or $35,000, after lengthy government investigations found it had contracted with exploitative, low-cost employment agencies to hire hundreds of Polish and Romanian workers.

The workers, who were enlisted to help build a nuclear power plant run by Électricité de France, known as EDF, in Flamanville, a town on the country’s northwest coast, received little to no health care coverage from 2009 to 2011, when the facility was being constructed. The employment agencies were also charged with bilking the French state of social security contributions totaling nearly €12 million.

Last year, the European Commission proposed reforming the system to require that posted workers be paid on par with local ones, and that any posting occur “within a climate of fair competition and respect for the rights of workers.” But Central and East European countries halted the proposals, and asked Brussels for a further review.

Some member-states are taking matters into their own hands.

Austria recently tightened measures to deter domestic companies from contracting low-cost European laborers. This month, the government fined an Austrian engineering group, Andritz, €22 million for using a Croatia-based contractor to hire around 200 Croatian workers for a €7 million construction project, citing a violation of national fair labor laws.

An Austrian industry body has appealed, saying the government crackdown violated European Union rules, hindered entrepreneurship and jeopardized jobs in Austria.

In Spain, the National Union of Spanish Transport Associations has warned that social dumping is the most serious problem facing the sector. The group estimated that half of all truck drivers coming into and out of the country hailed from Eastern Europe, where wages were as little as an eighth of those in Spain.

Many of the truckers are employed by Spanish companies that set up a head office in Poland or another eastern country. The companies then pay the lower taxes and social security charges of the cheaper country, avoiding the higher Spanish fees.

It is the type of practice that Mr. Macron wants to limit.

“A Europe that protects,” the French president said, “is a Europe which is able to solve the issue of posted workers.”