Photo by  ETUC

European Trade Unions Demand End to Social Dumping of Millions of Workers

Millions of workers in Europe are losing out on pay because their employers are using EU loopholes to get round tax and employment laws that are not being enforced evenly across the union, a practice known as social dumping.

According to the European Trade Union Confederation (ETUC), despite years of protesting the EU has still failed to pull together a common agreement to put an end to social dumping (known in EU circles as ‘posting’), which affects millions in the construction and transport industries.

Ryanair: Low Wages Made Simple
At least 2,200 self-employed pilots work for Ryanair in Ireland. When they pass the company selection test, they become directors of their ‘own’ Irish micro-enterprise, which is a client of an interim agency (Brookfield aviation) that supplies pilots to Ryanair.
Ryanair selects an accountant to handle the micro-enterprise and gives the pilot instructions. The company pays Brookfield, which pays the pilot’s micro-enterprise. Ryanair has been regularly condemned for non-respect of labour legislation in Belgium, Spain, France, Italy and Norway.
 According to the National Union of Meat Producers, social dumping by Germany creates big competitive distortions, as the cost of labour in France is three times higher than in Germany.
The union further calculated that the cost of temporary labour in Germany is €7 per hour, while it is €20 in France for a minimum wage with social contributions, and €30 in Denmark. For these professions 80% of the added value is related to the cost of labour.

The issue was also raised in the construction sector. “The use of posted workers via European interim agencies or construction companies too often means very low wages, breach of the working time and security rules, as well as social contributions paid in a different country,” said Dider Ridoret, President of the Federation of the Construction Sector in Germany.
Loopy Brussels Loopholes
Social dumping takes place because of gaps and loopholes in EU legislation. Companies are able to artificially reorganise their corporate structures to take advantage of the freedom to provide cross-border services. For instance, EU law is not clear on letterbox companies.

A company is able to register its place of establishment in another Member State than where it conducts its commercial activities. The company can then evade the legal obligations (labour law, tax, social security etc.) that would normally be applicable in the country where workers are performing their tasks.
EU labour law relies on national enforcement, but ETUC says Member States do not invest enough in labour inspections. In addition, poor enforcement results from the EU legislator itself which too often considers national inspections tools as potential barriers to free movement of services, rather than as a necessary guarantee for fair competition.