Differences in EU social and labour systems pose big problems for mobile workers

Anke Hassel on a European Labour Authority and why the Commission's proposal falls short. 

A few months ago in his State of the Union address, EU Commission President Jean-Claude Juncker announced plans for a European Labour Authority (ELA) to ensure that EU rules on worker mobility are enforced in a fair, simple and effective way. On 13 March 2018, the European Commission presented a proposal for legislation to establish such an authority.

The ELA should take on four specific tasks. First, it should improve cooperation between national authorities; second, pool existing instruments for cross-border mobility in order to create a single point of contact; third, fight abuse of labour and social legislation, and organise joint border controls; and fourth, improve existing structures in this area.

Worker mobility in the EU shows that Juncker is right on some points. During the past 15 years, various EU regulations have facilitated cross-border mobility for businesses and workers. This has led to workers repeatedly switching between various social and labour legal systems and acquiring claims to unemployment and pension insurance in different countries. If posted to another country, a worker's employment conditions correspond partially to legislation in the country of origin and partially to the country of destination. This makes it extremely difficult for them to claim their entitlements. In addition, switching between different systems is an invitation for fraud and exploitation by businesses that deliberately take advantage of the gaps in regulation and monitoring.

Thus, the Commission correctly recognised that an institution is needed at the European level to support cross-border cooperation on monitoring businesses and ensuring employee rights. Focusing on investigating authorities is also correct. This is important because as long as cross-border controls do not function, letterbox companies - with no physical presence in the countries where they operate - will continue to flourish, and worker postings will be a way to circumvent regular local working conditions and wages. It also makes sense to pool existing instruments for communicating and sharing information, in orde to clarify responsibilities and avoid redundant structures.

However, from the German perspective, the EU Commission's current draft legislation does not include enough opportunities for action that would to strengthen the rights of mobile workers. In the German context, the legislation would do nothing more than slightly expand the German liaison office of the Finanzkontrolle Schwarzarbeit (FKS, Financial Control of Illegal Employment).

At the same time, the draft presents an opportunity to actually improve labour conditions for mobile EU citizens. The ELA could specialise in the effective implementation of European law, for example. This would make it responsible for monitoring the implementation of the new Posting of Workers Act in the EU, and as contact point for fraud cases, to safeguard the rights of workers. However, the ELA would need to be endowed with a great deal more power than is currently provided for in the draft.


Anke Hassel is Professor of Public Policy at the Hertie School and Academic Director of the Hans Böckler Foundation’s Institute of Economic and Social Research.

Bettina Wagner co-authored this article and is a research associate for the project "Workers' Voice" at the Hertie School.