Towards free movement of workers in an enlarged European Union

1) On the occasion of the enlargement of 1 May 2004, 12 of 15 ‘old’ Member States have introduced transitional measures. Some new Member States have applied measures on the basis of reciprocity as a response. Before 1 May 2006 the Council will have to review the functioning of the transitional provisions on the basis of a Commission report. This report is expected to be published in January 2006. ETUC wants to contribute to the debate about the next steps with this resolution and the explanatory memorandum in the annex.

2) ETUC wants to stress that proper consultation of the social partners at all relevant levels about the functioning and the future of the transitional measures is indispensable, and urges the Commission to convey this message to Member States.

3) ETUC recognizes that transitional measures to the free movement of workers are a derogation - although of a temporary nature, and based on the Accession Treaties - of the right to free movement of persons and the right to equal treatment of all EU citizens as enshrined in the EU Treaty and Charter of fundamental rights, and must therefore be justified on important and objective grounds. So should their continuation.

4) The transitional measures have been introduced by Member States to protect their labour markets. Some ETUC affiliates, especially in the border regions with the new Member States, have reported that the transitional measures have had a positive effect for them, because they have reduced the pressure of migratory flows from the new Member States, in a situation of stagnating economic growth and growing unemployment rates that are especially high under migrants and their descendents, thereby allowing their labour markets to gradually adapt without creating major shocks and imbalances.

5) However, other ETUC affiliates have reported to the ETUC that the transitional provisions with regard to the free movement of workers in their Member States seem to have an adverse effect: they create and maintain a situation of second and third class citizenship for workers from the new Member States, or make legal admission for work impossible for them, thereby stimulating:
  unfair competition on wages and working conditions to the detriment of the working classes in the old Member States,
  an increase in undeclared work and false self employment which disturbs local and sectoral labour markets,
  exploitation and discriminatory treatment of workers from the new Member States.

6) At the same time, experiences in many countries - including those that have not taken any transitional measures - show, that there are serious concerns with regard to the protection of workers and industrial relations systems, arising from increased cross border mobility and the emergence of a European labour market, although often in the framework of the free movement of services, that threaten social cohesion and the support of citizens and workers in many Member States for the European project, and that demand for measures to be taken at national as well as at EU level.

7) Clearly there has to be a judgement at national level about the effects of the transitional measures and the need for their continuation. But the ETUC is of the opinion that such measures should not only be adopted or continued to ‘buy time’ and to postpone to a later date the moment at which free movement of workers will have to be a fact, thereby allowing Member States not to properly analyse the underlying problems and not to develop more sustainable policies to address them.

8) According to the ETUC, there is an urgent need to develop as soon as possible at national level as well as at EU level an appropriate framework of firm and fair rules to accompany the coming about of a genuine internal market, in which goods, capital, services and workers can move around to the benefit of citizens, economies and societies. Such a framework should help create confidence that mobility in a globalizing world is not necessarily a threat, even if it will bring about change.

9) ETUC’s ambition is, to help bring about such a European labour market on four key conditions:
  that it is based on the principle of equal wages and working conditions for equal work in the same workplace and on the same territory
  that national collective bargaining and industrial relations systems are fully respected, and valued as an indispensable and dynamic tool to manage change
  that it provides equal access of all workers to social benefits
  that it provides stakeholders at all relevant levels, including the social partners, with proper instruments and tools for monitoring and enforcement.

10) According to the ETUC, Member States in cooperation and coordination with the European Institutions should invest in measures that provide for proper management and basic order on the national and European labour markets, combining open borders within the EU with adequate protection, which would pave the way for no longer relying on transitional restrictions.

11) At national level, governments should - together with their social partners - investigate how national regulations and practices and the national industrial relations system can be strengthened to cope with the challenges of cross border mobility. In the attached explanatory memorandum several issues are mentioned that should be addressed.

12) The EURES network, in which ETUC and the ITUCs (Interregional Trade Union Councils) participate actively, should be strengthened, and should play an important role in supporting these national policies, as well as the interregional and European policies.

13) At EU level, The European Commission, supported by the Council, and where appropriate in cooperation with the European Parliament, and in consultation with the Social Partners, should develop an EU-wide supportive legal framework for cross border mobility of workers, both in the framework of free movement of services and free movement of workers.

Such supportive framework should consist of:
  a set of minimum standards established at EU level,
  the establishment of clear principles of equal treatment in wages and working conditions applying to the place where the work is done,
  the obligation to respect the host country’s industrial relations systems, i.e. the rules and regulations with regard to collective bargaining and industrial action,
  mechanisms and instruments, including liability of principal contractors, for cross border monitoring and enforcement of working conditions and labour standards.

14) In the explanatory memorandum further elements for such a framework are listed. However, as a matter of high priority, the Commission and European Institutions should: a. ensure that the Services Directive will not in any way infringe on labour law, collective agreements and industrial relations systems, including mechanisms for monitoring and enforcement and the right to take industrial action, b. exclude from the scope of the Services Directive sensitive services for the exploitation of migrant labour, such as temporary agency work; c. put adoption of a strong Temporary Agency Directive as a high priority on the agenda

15) These actions and policies need to be embedded in much broader economic, employment and skills policies with regard to enlargement, which will have to ensure that economic development and growth in the new Member States will also benefit workers and their families, and will prevent the current developments of ‘brain drain’ and ‘youth drain’.

16) The ETUC and its affiliates should build on its Helsinki 1999 congress resolution (“Trade unions without borders”) and its recent resolution on economic migration (March 2005: ‘Towards a proactive EU policy on migration and integration”) and develop mutual support systems cross border on a bilateral as well as multilateral basis, thereby bringing about solidarity and mutual understanding and contributing to social cohesion within an enlarging European Union.

17) In its evaluation next year, the Commission should check if some of the current transitional provisions that are put in place by Member States are in compliance with the EU Treaty and Accession Treaties: the ETUC has some specific doubts with regard to the legal validity of some restrictive measures in the area of social security and social assistance.

18) Furthermore, the Commission should ask those Member States that next year want to continue the application of transitional measures to report about the arguments and justifications that have led at national level to the decision to continue the transitional measures.

They must in particular be asked to report on the following questions:
  how they foresee to prevent possible adverse effects;
  what measures they are planning to take to provide all workers on their territory, their own nationals as well as other EU citizens including workers from the new Member States, with adequate and equal protection under the law, as they are obliged to do according to the EU Treaty and the Charter of fundamental rights;
  which measures they intend to take to be able in the future to no longer rely on transitional restrictions.

19) The domain of free movement of workers shows that employment and mobility policies should be dealt with both at national as well as European level. Indeed, as the single market is a EU competence, creating order in it for all situations of cross border working at EU level is paramount. Hiding behind deceptive arguments that there is no European social model but only a variety of national ones in Member States ducks the intellectual and political challenge of handling mobility issues properly.

20) The current cases before the ECJ, i.e. the Vaxholm case and the Viking case, as well as other recent cases that have come up in various Member States, such as the Irish Ferries case, have created major social unrest and are endangering social partnership models. They cannot be treated as matters only for courts. They demand from politicians and social partners at all relevant levels to take up their responsibility and develop appropriate policy responses.

21) Therefore, the Commission should - on the occasion of the evaluation of the transitional measures, and in the framework of its 2006-Year of Mobility - acknowledge that there are serious problems with regard to cross border mobility that demand for urgent action to be taken at EU level. She should therefore call upon all stakeholders at EU level - Member States and Social Partners - to work together to create a positive framework to support the coming about of a European labour market, based on the principle of equal treatment and the harmonizing upwards of working conditions and social systems.

22) The EU should provide its constituent Member States as well as its citizens with the instruments and tools to cope with the challenges of the 21-st century in a way that is consistent with its primary goal: to improve the living and working conditions of its peoples in all EU Member States and accession countries, and in that way help bring about peace, prosperity and solidarity.

Explanatory memorandum

1. Introduction

Following the accession negotiations with the ten new Member States that were entering the EU as from 1 May 2004, Member States could apply transitional measures with regard to the free movement of workers for a maximum period of seven years. From the 15 old Member States only Sweden, the UK and Ireland have not introduced any transitional measures. However, the UK and Ireland have introduced restrictions with regard to the access to social benefits. The other 12 Member Stares have applied some form of transitional measures with regard to free movement of workers. In addition, Austria and Germany have also introduced restrictions to certain cross border services. Some of the new Member States have applied restrictions on the basis of reciprocity as a response (Hungary, Poland and Slovenia).

The Accession Treaty stipulates that, before a two-year period following the date of accession comes to an end, the Council will review the functioning of the transitional provisions on the basis of a Commission report. The Treaty also states that, after this review and by the end of this two year period at the latest, Member States will have to inform the Commission if they intend to continue applying restrictions for workers from the new Member States. The Commission has announced that its report will be presented in January 2006.

ETUC wants to contribute to the debate with the attached resolution. It recalls previous resolutions, in which related issues were addressed:

In its resolution of 13-14 December 2000 on the post-Nice enlargement of the EU the ETUC stressed the need of social partner involvement in all aspects and dimensions of the enlargement process, referred to the importance of achieving free movement of workers as one of the Internal market’s four fundamental freedoms as laid down in the EU treaties, and stated that “if transitional periods are unavoidable, they should be as flexible as possible and appropriate to the economic and social situation” of the Member State concerned.

In its resolution of March 2005 on the Green Paper on economic migration the ETUC called for a pro-active EU policy on migration and integration, and mentioned among other things that such policy:

a) should be based on the recognition of fundamental social rights of current citizens as well as newcomers and should be embedded in strong employment and development policies;

b) should prioritise investing in the capacities and qualifications of those who are already present on the national and EU labour market, unemployed or underemployed EU citizens including those from a migrant or ethnic minority background, as well as third country nationals including refugees and irregular migrants; c) should be established in close consultation with social partners; d) should guarantee the free movement of all persons who are either citizens of an EU Member State or third country nationals who are legal residents, in a framework of non-discrimination and equal treatment; e) should provide for a clear legal framework of equal treatment in working conditions and respect for the host country’s rules and regulations and industrial relations systems.

In this resolution, the ETUC also stressed the major importance of strengthening the European social model in providing and maintaining basic protection for all Europe’s inhabitants, to counter increasing feelings of social insecurity by millions of workers that may feed into racism and xenophobia, and to help the trade union movement play its cohesive role.

2. Social partners at every level should be consulted about the review!

ETUC has consulted its affiliates about their experiences and views with regard to the transitional measures. One key issue was raised by many: the majority of national confederations has not been properly consulted at the time of the adoption of the transitional measures in their member state, nor are they currently consulted on the review. On an issue that so clearly regards the major areas of interest of the social partners, such negligence is unacceptable. Therefore, the ETUC urges the European Commission to convey the message to Member States that proper consultation of the social partners at national level about the review of the transitional provisions is indispensable.

3. Experiences in Member States

The transitional measures have been introduced by most ‘old’ Member States to protect their labour markets. Some ETUC affiliates, especially on the direct borders with the new Member States, have reported that the transitional measures have had a positive effect for them, because they have reduced the pressure of migratory flows from the new Member States, thereby preventing disruptions of their labour markets. They foresee the need to continue steering the influx of workers from the new Member States because of persistent high unemployment on their national labour market.

However, trade unions in many old and new Member States have come to the conclusion that the transitional provisions seem to have an adverse effect. Rather than protecting workers and labour markets in the old Member States, they create and maintain a situation of second and third class citizenship for workers from the new Member States, thereby stimulating:
  unfair competition on wages and working conditions to the detriment of the working classes in the old Member States,
  an increase in undeclared work and false self employment which disturbs local and sectoral labour markets, and
  exploitation and discriminatory treatment of workers from the new Member States.

Major problems that are reported from the ‘old’ Member States are the following:

a) Open or hidden forms of replacement of workers by workers from the new Member States on lower salaries and/or outside collective bargaining coverage; b) An increase in self employed persons and one-man firms at the expense of wage-workers; c) An increase in the use of agency work and subcontractors, providing user enterprises with very low wage workers from the new Member States; d) Non-respect and/or non-application of the Posting of workers Directive.

However, the simple abolition of the transitional measures will not solve all the problems arising from free movement of workers and services.

Experiences in the UK have shown:
  That newcomers are very vulnerable to exploitation because of lack of proper information;
  there are many abuses by employers, especially via the use of intermediaries and agencies, therefore there is an urgent need to enforce the new Gangmasters Bill and to provide for European minimum rules on agency work;
  gaining legal status does not remove all threat of abuse, but gives confidence to people to find out about their rights and to seek proper remedy.

The experiences in Sweden (Vaxholm-case), Finland (Viking case) and Ireland (Irish ferries) have shown that, even in countries without barriers to free movement of workers or services, major conflicts may arise with regard to the implementation of the Posting Directive, the applicability of national collective agreements and respect for the national industrial relations system and the right to industrial action, and its compatibility with the Internal market rules.

In Sweden this has put into question the very basis of the Swedish model and its place within the European architecture, in Finland this has prevented Finnish workers to exercise their constitutional right to take collective action, whereas it threatens in Ireland the social partnership model.

Whereas in all the above-mentioned cases workers are fighting important and legitimate causes, defending the fundamental right to collective bargaining and industrial action and demanding the observance of minimum labour standards, the media and right wing political parties are presenting these fights as ‘protectionist’ and directed against migrant workers from the new Member States. The ETUC is very concerned about this development, and its potential divisive impact on the international trade union movement, and considers it of the utmost importance to develop trade union actions and activities, both at national and at European level, that show mutual support and solidarity, and the joint interest of trade unions and workers all over Europe to work towards improved living and working conditions for all.

The ETUC is of the opinion, that - although in some Member States, especially those neighbouring the new Member States, the adoption of transitional measures has come about on the basis of elaborate consultation with social partners and was directed towards the prevention of disruptions of the labour market - in other Member States the introduction of transitional measures has been a short-term policy solution by governments to deal with public sentiments about the enlargement and has created a false image of protection. This has prevented them from taking appropriate measures necessary to deal with the effects of increased cross border mobility of workers and services. At the same time, experiences in most countries - including those that have not taken any transitional measures - show that there are serious concerns with regard to the protection of workers and industrial relations systems that demand for measures to be taken at European level, to preserve the European social model.

4. Back to basics: free movement, fair competition and non-discrimination

The EU Treaty recognizes four fundamental freedoms: the free movement of capital, free movement of goods, free movement of services and free movement of persons. Already in 1968 EU citizens got the right to move around within the EU borders in order to work on the territory of another Member State. This right was complemented from the very beginning with the right to equal treatment compared to nationals of the host EU Member State. The right to mobility cannot exist without the complementary recognition of social rights and social protection.

When Member States on the verge of the enlargement eastwards were given the option to introduce transitional measures for the free movement of workers, these basic principles have been put into question. Lessons could have been learnt and conclusions drawn from previous experiences (for instance the enlargement southwards including Spain and Portugal, where transitional measures rapidly turned out to be superfluous), and the few realistic impact assessments that were made of the potential migratory flows from the new Member States showed that fears were probably unfounded. But many governments of the old Member States that had announced not to make use of the possibility to introduce transitional measures bowed in the last minute to the pressure of public opinion, and introduced some form of transitional measures, which often did not offer concrete solutions for concrete problems (such as addressing insufficient implementation of the Posting Directive, or providing for additional monitoring and enforcement mechanisms with regard to posted workers), but in effect established a situation of official discrimination between workers from the old and (8 of the 10) new Member States.

This form of discrimination is only established with regard to ‘workers’ since the free movement of persons (students, pensioned persons, researchers, self-employed persons) has come into force on 1 May 2002! All other parts of the active population are not covered. For instance, self employed persons can go to any Member State and perform work and provide their services, without any barrier. This difference has led to distortions in several national and regional labour markets, especially in the border regions to the new Member States, where there has been an enormous increase in so called self employed persons, mostly ‘disguised workers’, from the new Member States, providing several sectors with an easy exploitable workforce for which social security coverage, taxation and legal and collective agreed working conditions can be easily evaded and avoided.

Where workers are allowed to work, they are often submitted to additional rules and regulations, that demand their registration, limit their employment opportunities to certain quota’s and/or certain sectors, or only allow them to work when they have certain qualifications.

In several countries, restrictions have been introduced that limit the access of workers from the new Member States to social assistance, thereby establishing a second form of official discrimination.

5. The way forward: a European labour market requires European rules of the game, combining open borders with adequate protection

According to the ETUC, there is an urgent need for a broad ranging constructive debate about the conditions that have to be put in place to accompany a genuine internal market, in which goods, capital, workers and services can move around to the benefit of citizens, economies and societies. Such an internal market for labour cannot be built on national rules only, nor can an internal market for services be built on a simple ‘country of origin principle’. In many sectors, there is increasingly a reality of cross border labour markets, where the mobility of labour and the provision of services are intertwined (agriculture, construction, tourism, commercial services, etc.). What is urgently needed is a European framework of ‘rules of the game’, in which transparency and security for workers are put centre stage. Such a framework should help create confidence that mobility in a globalizing world is not necessarily a threat, even if it will bring about change.

ETUC’s ambition is, to help bring about such a European labour market, on four key conditions:
  that it is based on the principle of equal wages and working conditions for equal work in the same territory
  that national collective bargaining and industrial relations systems are fully respected, and valued as an indispensable and dynamic tool to manage change
  that it provides equal access of all workers to social benefits
  that it provides stakeholders at all relevant levels, including the social partners, with proper instruments and tools for monitoring and enforcement.

According to the ETUC, Member States in cooperation and coordination with the European Institutions should invest in measures that provide for proper management and basic order on the national and European labour markets, combining open borders with basic protection, which would pave the way for no longer relying on transitional restrictions.

At national level, governments should - together with their social partners - investigate how national regulations and practices and the national industrial relations system can be strengthened to cope with the challenges of cross border mobility.

The following issues should be addressed, among other things:
  providing proper and transparent information to all actors on the labour market about applicable rules and working conditions,
  invest in the quantity and quality of labour inspectorates,
  implement the Posting Directive in its extensive scope (including collective agreements in all sectors) and ensure that its provisions are properly monitored and enforced;
  address unemployment and underemployment among all workers that are already on their territory: national citizens, EU citizens including those from a migrant or ethnic minority background, as well as third country nationals including refugees
  create ‘bridges’ out of ‘irregular situations’ for undocumented migrant workers and their families, while respecting their basic human rights;
  address persistent situations of racism and discrimination towards migrant and ethnic minority workers and communities, and provide them with a perspective of social and economic integration.

At EU level, The European Commission, supported by the Council, and where appropriate in cooperation with the European Parliament, and in consultation with the Social Partners, should develop an EU-wide supportive legal framework for cross border mobility of workers, both in the framework of free movement of services and free movement of workers. Such supportive framework should consist of:
  a set of minimum standards established at EU level,
  the establishment of clear principles of equal treatment in wages and working conditions applying to the place where the work is done,
  the obligation to respect the host country’s industrial relations systems, i.e. the rules and regulations with regard to collective bargaining and industrial action;
  mechanisms and instruments, including liability of principal contractors, for cross border monitoring and enforcement of working conditions and labour standards.

As a matter of high priority, they should:

a) ensure that the Services Directive will not in any way infringe on labour law, collective agreements and industrial relations systems, including mechanisms for monitoring and enforcement and the right to take industrial action,

b) exclude from the scope of the Services Directive sensitive services for migrant labour exploitation, such as temporary agency work,

c) put adoption of a strong Temporary Agency Directive as a high priority on the agenda.

Furthermore, they should:

d) ensure the proper enforcement of existing EU legislation with regard to situations of cross border working (Regulation 1408/71 on social security, and the Posting of workers Directive);

e) address existing weaknesses in the Posting of workers Directive, and put proposals on the table for strengthening it; among other things, the exclusion for merchant navy vessels should be deleted;

f) explore ways of addressing abuses in cross border subcontracting and temporary agency work by responsibilizing main contractors and user enterprises with regard to the payment of taxes, social premiums and wages, for instance by introducing systems of so called ‘chain responsibility’ or ‘client liability’;

g) revisit the need for a EU framework Directive on manning conditions for regular passenger and ferry services operating between Member States;

h) develop protection of economically dependent and self employed workers to counter the increased use of forms of false self employment;

i) bring about a European social inspectorate that can support Member States and national labour inspectorates in the application and enforcement of national and European minimum rules and protection;

j) start an information campaign, to inform the general public in EU Member States about myths and realities with regard to mobility and migration, as well as support campaigns of Member States and social partners that provide workers and enterprises with information about the minimum rights of workers.

These actions and policies need to be embedded in much broader economic, employment and skills policies with regard to enlargement, which will have to ensure that economic development and growth in the new Member States will also benefit workers and their families, and will prevent the current developments of ‘brain drain’ and ‘youth drain’.

6. Actions to be taken by ETUC and its member organisations The ETUC and its affiliates should build on its Helsinki 1999 congress resolution (“Trade unions without borders”) and its recent resolution on economic migration (March 2005: ‘Towards a proactive EU policy on migration and integration”) and develop mutual support systems cross border on a bilateral as well as multilateral basis, thereby bringing about solidarity and mutual understanding and contributing to social cohesion within an enlarging European Union.

Good practices already developed by affiliates, such as by the Finnish unions who have established an office in Estonia to give information and advice to Estonian workers that are interested in working in Finland, or Polish trade union officers that have gone to London to work together with the TUC in giving information and advice to Polish workers in the UK, or Austrian unions who have made an agreement with Hungarian unions to give legal advice and support to Hungarian trade union members employed in Austria, and who have developed a wide range of cross border activities such as language and professional training and cultural activities in close cooperation with unions in the neighbouring countries, should be brought together and help bring about more elaborate and widespread forms of mutual aid.

It could also be considered to develop an ‘Early warning system’: on the one hand for situations arising in old Member States, to warn affiliates from the new Member States as soon as workers from their country are involved in cases of exploitation and ‘social dumping’, to consult them and imply them in any actions to be taken, and thereby prevent potential divisions between workers from the old and the new Member States to be set up against each other. On the other hand for situations arising in the new Member States and accession countries, to warn affiliates from the ‘old’ Member States, as soon as enterprises from their countries ‘misbehave’ on the territory of a new Member State for instance by denying basic trade union rights and the observance of minimum social standards.

7. Make 2006 a genuine “European year of mobility”!

In the view of the ETUC, the Commission must take its proclaimed 2006 as Year of Mobility seriously.

The Commission should - on the occasion of the evaluation of the transitional measures, and in the framework of its 2006-Year of Mobility - acknowledge that there are serious problems with regard to cross border mobility that demand for urgent action to be taken at EU level. She should therefore call upon all stakeholders at EU level - Member States and Social Partners - to work together to create a positive framework to support the coming about of a European labour market, based on the principle of equal treatment and the harmonizing upwards of working conditions and social systems.