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“We Should Stop Over-Promising”


ELISABETH MORIN-CHARTIER, a French member of the European Parliament, and PAUL-JOACHIM KUBOSCH, an adviser to the EU Commission, discuss the future of posted workers in the European Union – one of the main themes of the recent presidential election in France.

Artwork © Arnaud Dechiron

Why was the posted workers directive such a big issue in France’s presidential campaign, and why is it so important for President Macron to make changes here?

Elisabeth Morin-Chartier: I am an MEP and the Committee on Employment and Social Affairs’ rapporteur on the posted workers directive, so my position is a very European position. I can’t just be a French MP and think only of the French position – it’s my job to manage the situation of posted workers, while keeping in mind the internal European market with its guarantee of free movement of services and workers. Of course, I watch what’s going on in France. But I also have to know what’s going on in the Czech Republic and Poland and Ireland and so on. So I have two pairs of glasses: one pair for looking at France and all the other countries from the inside, and another pair for building a united Europe and improving the situation of posted workers.

Why is it important to review the directive? Because we don’t have a choice! The bill under review dates from 1996; it’s about 20 years old. What was the EU in 1996? It consisted of fifteen member states with a wage gap of 1:3 , meaning that workers in the richest country earned on average three times as much as in the poorest country. Today Europe has a wage gap of 1:10. The text of the directive under review dates from before EU enlargement. It hasn’t been reviewed since the EU expansion towards the east, and that expansion has widened the minimum wage gap. The minimum wage of a worker in Hungary, Bulgaria, or Romania bears no relation to the minimum wage of a worker in Sweden or France. And this wage gap has fundamentally disrupted the interior market in two ways: some businesses have suffered from the unfair competition between east and west, while others have profited from it.

The second problem is that there has been social dumping among workers. In the revised directive we have a clear goal, set by Jean-Claude Juncker: the same wages for the same work in the same workplaces. That is extremely important. In the new revised directive there will be no second-class workers in Europe.

Why is this issue so prominent in France right now?

Paul-Joachim Kubosch: It’s not a new issue, it’s more than 20 years old – in fact, it’s even older. In the 1990s it took us several years to agree on a first version of the directive, and then we were only 15 countries. Today this already difficult issue has become more complicated by the simple fact that there are more member states and there is a difference in living conditions; the cost and the salaries of the different member states are so far apart from each other that it’s much more difficult than it was 20 years ago. The debate has been nasty and very difficult. The member states have different interests – within the member states you have social partners and special interests, employees and enterprises; there are those who say that what’s happening is unfair competition, while others are fine with subcontracting.

Of course, worker unions find the present situation very unfair. But from the point of view of the Eastern member states, low wages are one of their few advantages. There are many reasons they are not yet competitive in other areas, but one point for them is that they are cheaper. What we see as a solution in France and Germany is a problem for them. This is why this debate was so intense and sometimes polemic.

But it isn’t just a question of rich countries and poor countries; it goes deeper than that. There’s also a specific French aspect.

Morin-Chartier : France was in the middle of the presidential campaign, and what changed is that, contrary to expectations, President Macron put the question of Europe at the center of the presidential debate. There was a real political split between the parties in France – but it reflected a real split in the society. What can be done to make sure that posted workers were treated as fairly as national workers? There was a broad swath of society saying that in times of crisis, jobs should be reserved for the French. We pro-Europeans said: free movement of workers and free movement of services are two of the four founding freedoms of the EU.

The situation has been exacerbated by some unfortunate decisions made by the regional and local MPs, who came up with the “Molière clause.” What is the “Molière clause”? It’s a requirement to speak French on building sites. If you don’t speak French, you can’t come to work. Some have even made a link between this clause and the right to compete in calls for tender. There’s a better way to manage social dumping and unfair competition between companies. What I did in reviewing this directive was to take the other path, which is to build up social equality and fair competition. The question of equality among workers is quite straightforward: a posted worker’s salary should be in line with a national worker’s salary, because that’s where competition starts. That’s a major change; the main feature of the 1996 directive was that posted workers were to have the same minimum wage as national workers. But the minimum wage is no longer the only point of reference. As a result of collective bargaining and social dialogue, there have been improvements to the minimum wage: bonuses, a thirteenth month, a hardship allowance, a risk allowance, a winter allowance etc. Posted workers earning the minimum wage must also have access to the bonuses that come with it. That means that we don’t refer to a minimum wage in the updated directive; we speak of remuneration. Now remuneration is protected: minimum wage plus bonuses and allowances, treated separately. The European Parliament has even specified that the allowances should be brought into line with those of the host country. That means that a meal received by a Hungarian posted worker does not cost the price of a meal in Hungary, but instead the price of a meal in Germany, France, Spain, or Denmark.

Would you think that sort of approach supports the principle of free movement, or would that sort of undercut it?

Kubosch: Well, one issue for the commission is always to avoid making things too complicated – but this issue is complicated even without the European level. Let’s take the situation in Germany: even within a single enterprise you don’t have the same working conditions or the same salary conditions for all the workers. It depends in some cases whether you’re a member of a union, or of which union.

In reality it’s difficult to figure out what the working conditions should be. With whom do you compare Polish workers if you have different conditions in Germany? So this really is a problem, and it’s probably impossible to write a piece of legislation that would deal with this issue completely. The goal of the commission is to find good ideas without making things more complicated or too complicated.

Will the new directive end up limiting migration within the EU?

Kubosch: That could be one of the results. If workers from less developed member states migrate because other states wanted to employ them cheaply, this might lead to less migration. But if private migration is based on unfair conditions, then maybe that’s O.K.

But we think this will not be the case, for the simple reason that we need workers in many states like Germany and France for certain sectors. For instance, you can’t find enough Germans to work in the agricultural sector. We think that migration will continue, because without these workers from other member states, these sectors cannot be sustained.

That’s even true for the UK, which is already having problems finding enough people to pick strawberries. So maybe strawberries will become more expensive?

Kubosch: If the low price was due to unfair working conditions, then maybe they will be more expensive. It’s probably impossible to produce a piece of legislation that will find solutions that are convenient and practical for everybody. Another very important question will be the application of European regulations in the states. Even the old directive was not always applied well in Germany due to the absence of staff and conflicts of interest among public authorities. On the one hand, they wanted to control working conditions – but on the other hand, buildings for public authorities are cheaper if the work force is cheaper. This is a problem that still exists at least in Germany, and maybe in other member states.

If we follow your advice, wouldn’t we need some sort of offer for the eastern European members, a compensation for this change?

Morin-Chartier: When Commissioner Marianne Thyssen first presented this bill, eleven yellow cards were sent to the Commission from eleven countries – ten eastern European countries plus Denmark – opposing the changes made to the directive. But the Commission made clear that it was determined, and we’ve needed to be very determined indeed, because this is the third time we’ve presented the bill; the two preceding reviews were unsuccessful. We’re making progress, though. We now have a bill that strikes a balance between east and west, between employees and businesses.

I’ve been careful to keep things streamlined for businesses. I know businesses from the inside. Businesses need clear guidelines to avoid penalties, so we’ve taken a lot of precautions and gone into a lot of detail. Maybe that makes for a slightly more complicated bill, but at least we know it’s been set down in black and white that the collective agreements apply on a national level, that businesses will be fully informed, and that if they are penalized, they can only be sanctioned on a national level.

It is important to me that Europe isn’t geared toward the lowest bidder. You can always find someone poorer than you to come and work at a lower cost. But you can’t have policies of European cohesion and at the same time completely neglect the social side. I know this is going to raise a few eyebrows at the Commission, but that is the reason we expanded the legal basis of the bill at the European parliamentary level. At the moment, the legal basis of the directive is free movement of services, but we wanted a double legal basis that also takes into account the workers of “social Europe.”

I spend four days a week at the European Parliament. The three remaining days, if I’m not in Paris, I’m in my electoral district. For years I’ve seen that the employment problem – which now spans three generations – has a negative impact. It’s a cause of anxiety in families, young people can’t find their way into the job market, their parents are unemployed, their grandparents worry about the younger generations. This corporate, bureaucratic Europe seems rather far removed from their world. What result does that have? The rise of populism! The rise of anti-Europeans. The economic crisis and the impact it has had on Europe require us to take into account the employment problems. That’s true in France, but it’s also true all over Europe. So yes, I’m in favor of rewriting European social policy and European employment policy, and on that point I am 300 percent behind Jean-Claude Juncker when he says, in his capacity as the president of the European Commission, “What I want is for Europe to have a social triple-A rating.”

Kubosch : Just to add one thing: why are we always talking about problems in Europe? We haven’t even spoken about those who would gain from this legislation. There are two types of winners: in the East and in the West. In the West there are those enterprises that have been exposed to unfair competition whose situation will improve. Workers in the West will also gain. But there are even more winners in the East, those workers who have been sent to the West for unfair and in some cases really criminal employment. They’ll be the winners because they will leave their homes for jobs with a good salary and fair conditions. What remains is a problem of communication. There are not so many people in the Eastern states opposed to this new piece of legislation; it’s governments, not the workers. Those who were the winners of the old situation – enterprises that earn money by paying people poorly and sending them to the West – will be losers, but those are not people we should protect in Europe. So it’s a question of communication to explain to the public in the Eastern member states that what we are doing is meant to help them.

They don’t see it that way.

Kubosch : We should invest more energy in explaining this. It’s not easy – you need media, you need local and national politicians, parties, governments to spread the information, and they are not always helpful. But you could have partners: workers unions, for instance, are on our side, and they can serve as multipliers.

But it takes energy, and it requires knowledge of each member state, because the networks of communication are different from member state to member state. If you just try to communicate from Brussels, you are not in a position to relate to this sort of local population. Fifteen years ago the Swedish vice president   was already saying we should go more local with our communication, and that remains the best idea for good communication. This directive is one of many examples where communication should address critical comments. We should also explain how the directive is in their favor and their interests. At the end of the day, the fact that we could find a majority in the council shows that, to a certain extent. Communicating and finding friends in member states works, even if there’s still a lot to be done on this directive and for many others.

My last provocative question is: Can Europe afford a social Europe? Or with populism challenging the EU, are we simply forced to?

Morin-Chartier: There can be no such thing as a “social Europe” as long as there are no jobs. And who creates jobs? Businesses! So all we can do at a European level to ensure an active labor market for the 23 million SMEs and SMIs is to create an atmosphere of global competition. The only thing Europe can’t afford is internal competition; what it needs is dynamics of innovation, supported by employment and labor policies whose aim is to introduce fair competition. Europe must go down this path; otherwise it will wither and curl in on itself and die – wither in global competition and curl in on itself in backward-looking nationalism.

I come from the same region as Jean Monnet, one of the founding fathers of Europe. The spirit of Europe is something I feel in my body and in my heart. And it’s something we communicate at a local level using concrete examples. Eighteen months ago I felt a great distance from France when my friends from my own political party drew up the Molière clauses to reject posted workers. But today, more people understand that there is another way to introduce fair competition between businesses.

I’ve gone to great lengths to understand why the countries in Eastern Europe sent those yellow cards to the commission. What those yellow cards were trying to say was: whatever you do in that directive, keep your hands off posted workers.

Today, in the European Parliament, our bill goes further than the council’s; the council’s bill tends to focus on national interests, and the negotiating mandate that I now have for the final phase of the review of this directive is for discussions to bring the bills in line with one another. We got it through the European Parliament with 95 percent of the votes. 95 percent of the votes! It doesn’t often happen, and it means that East and West have found a way of talking to each other – and that’s what Europe is all about, knowing how to talk to each other to move the European project forward.

Kubosch: One or two things on social Europe. First, one mistake that was made in the past was that we promised too much. Some papers by the commission are describing a wonderful image of how a social Europe could look – but at the end of the day, we know this is far from the reality, for the simple reason that the member states’ starting points are very far apart. And by promising it, we create disappointment. We’re reading papers that the commission wrote ten years ago, and some expectations were OK and came out right, but some things reappear and reappear – we’re promising things we know will not arrive, a complete harmonization where the living and working conditions are the same. This is not the reality.

So we should stop over-promising, and should organize a Europe that is just making progress towards bringing conditions closer together. That’s something we can achieve and we did achieve in the past, but over the last few years the economic crisis interrupted the process. But until 2008, the gap between poor and rich member states was shrinking every year. So we should return to that situation where the gap is shrinking. This will mean good social and internal market policy – indeed, in some areas you cannot divide the two: good internal market policy will make the social differences shrink. The member states will still be in different positions for some time, but bringing things closer together is a large improvement for all the member states – for the poor member states, where working conditions are less advanced, but for the rich member states as well.

I was sent as a national expert by the Bavarian Ministry for Social Affairs to Brussels to work for the commission. When my ministry sent me, they said, look: your job is to improve the social situation in other member states. This was in 1989. There were only twelve states at the time, and  as you said the wage gap was one to three. My ministry warned that it would be enormously difficult to downgrade the status quo of our social policies in the rich member states. But this would create such a problem of competition that at the end of the day, we would not be able to keep our system in place. So it’s in the interests of the rich member states to have the others catch up.