The Quest for Hard Evidence on Social Dumping in Europe Marek BENIO, PhD Department of Public Economy and Administration Cracow University of Economics Riga, 25 November 2016 This study was funded by the National Science Centre NCN: "The use of interactive methods of governance in shaping social policy" No. UMO-2011/03 / B / HS5 / 00899

Social dumping - definition Import of migrant workers Free movement of workers Free movement of services Export of operations Free movement fo capital Freedom of establishment

Getting competitive advantage on the basis of the lower labour costs strenghtens external EU competitiveness =no social dumping ____________________ Lowerring the labour costs illegaly - weakens it = social dumping bogus selfemployment and forced labour

Social dumping - questions Is posting of workers the concept covers a wide range of intentionally abusive practices and the circumvention of existing European and national legislation (including laws and universally applicable collective agreements), which enable the development of unfair competition by unlawfully minimising labour and operation costs and lead to violations of workers' rights and exploitation of workers ? Guillaume Balas Report Posting of workers is the best cohesion tool EU has

Social dumping - definition No legally recognised and universally shared definition of social dumping the concept covers a wide range of intentionally abusive practices and the circumvention of existing European and national legislation (including laws and universally applicable collective agreements), which enable the development of unfair competition by unlawfully minimising labour and operation costs and lead to violations of workers' rights and exploitation of workers Guillaume Balas Report

Inspiration for the survey In our Union, the same work at the same place should be remunerated in the same manner Jean Claude Junker COM proposal minimum rates of pay -> remuneration Equal pay? Equal terms of pay?

GOALS AND EFFECTS We need more posting, not less Fairer rules A level playing field The proposal will create a legal framework for posting that is clear, fair and easy to enforce (…) These changes will provide better protection for workers, more transparency and legal certainty and ensure a level playing field between domestic and posting firms while in full respect of Member States' wage-bargaining systems Marianne Thyssen

THE SURVEY 16 20 623 PD A1 2013 2014 2015  

THE SURVEY + ‚ - real costs high quality sample reliable service providers long activity domestic and foreign controlls posting based on PD-A1 high service standards few companies self selectection 20 632 PD-A1 16 questionaires

REMUNERATION € 5,98 € 9,97 net

LABOUR COSTS STRUCTURE Crossborder Fixed Crossborder Variable ____________________________________________ Tax & Constributions Net wage

tax & contributions Social security contributions Personal income tax advance Health insurance contribution Labour Fund contribution Guranteed Employees’ Allowances Fund contribution National Disabled Rehabilitation Fund dues Health tests, Safety trainings, Company Social Allowances Fund dues

CROSS-BORDER COSTS OF LABOUR Variable 27% Fixed 2% Accommodation Travel Board Compensation for fixed term contract Holiday compensation Translation Notification costs Mandatory Contact person to represent with local inspection Complemenary fixed costs: Apply for PD-A1 Insurance of foreign claims Cross-border debt collection Legal advice, opinions, analyses Translation other than the employee documentation Foreign exchange differences, conversion Logistics on site

29 %

http://www.tresor.economie.gouv.fr/File/425307

Cost comparison

(…) the cost of hiring a worker on a smic (minimum rate of pay) – posted to France by an enterprise localised in Portugal, Romania, Poland or Spain is equivalent to the cost of hiring a worker of a French established enterprise. „Au total, en termes de coût du travail, pour un employ rémunéré au Smic, recourir dans un cadre légal à un travailleur détaché en France par une entreprise localisée au Portugal, en Roumanie, en Pologne ou en Espagne est equivalent à faire appel à la main d'oeuvre d'une entreprise localisée en France, pour une prise en charge des dépenses encourues au titre du détachement qui s'élèverait seulement à 100 € par mois (hypothèse qui paraît faible)”

CONCLUSIONS Posted workers earn more than we think, more than minimum rates of pay NET = 10 EURO/hour There are costs of labour which are related solely to the fact that the service is delivered in another Member State Crossborder = 29% total

COMPETITIVE ADVANTAGE MYSTERY „same same but different” the same total cost different cost structure rates of pay margin social security/taxes work efficiency

VS. Greedy Capitalist Scrooge COMPETITIVE ADVANTAGE MYSTERY Xenophob aka Economic Patriot VS. Greedy Capitalist Scrooge aka Homo Oeconomicus When do you choose a foreign company? Price Quality (time + flexibility) No local provider

Can posting of workers contribute to social dumping? Is equal pay fair? Marek BENIO, PhD Department of Public Economy and Administration Riga, 25 November 2016 mail to: marek.benio@uek.krakow.pl