Macron Gains Support in Bid to Revamp EU's Cheap-Labor Rules

  • Austrian chancellor backs limiting supply of ‘posted’ workers
  • French president gets resistence from Hungary, may see more

French President Emmanuel Macron picked up support in his bid to overhaul European Union rules on cheap labor in the first leg of a diplomatic blitz across the region. Now comes the hard part.

Kicking off the effort in meetings with Austrian Chancellor Christian Kern in Salzburg Wednesday, the 39-year-old French president discussed “detached” or “posted” workers, which typically involve laborers from low-wage eastern European countries being brought to higher-cost ones such as France or Austria to perform tasks that would be more expensive to hire for locally. He may be about to see push-back from Eastern countries whose workers have benefited.

Current practices ultimately drive down wages and social standards, Kern and Macron said. For Macron, that ultimately stokes the populist and anti-EU sentiment that spurred British voters to opt out of the bloc last year and dominated France’s 2017 presidential election.

“The directive as it stands is a betrayal of the fundamental spirit of the European Union,” Macron said at a press conference with Kern. “The objective of the single market is not to favor countries that have the least social rights. We see that this feeds populism and erodes confidence in the EU.”

There are an estimated 300,000 such workers in France and Kern estimates that there are 166,000 in Austria. For employers, the advantages are obvious. The minimum wage in France is about 1,480 euros ($1,740) a month. In Poland, it’s about 450 euros.

Austrian Support

Kern backed Macron’s call to limit each posted worker to one year of work in every two in the host country and increase cooperation to ensure that minimum wage and social charges are applied through cooperation between EU governments.

“What’s at stake there is social fairness in Europe,” he said. “Our concern is, based on evidence, that there’s a risk of undermining wages and social standards in Austria and that’s why we have a big interest to come to a solution quickly.”

The Czech and Slovak governments have also indicated a willingness to tighten the rules. The Czech government is willing to be flexible if other EU countries stop demanding specific quotas for accepting migrants, a diplomat told reporters Tuesday.

Slovakia is ready to strike a compromise if per diem and other payments are included in the calculation of a posted worker’s total compensation. It also asks that truck drivers and other transport workers be dealt with separately.

Macron also met with Czech Prime Minister Bohuslav Sobotka and Slovak Premier Robert Fico on Wednesday. Speaking at a press conference afterwards, both premiers indicated that differences remained but that an agreement on the issue at the EU’s October summit is within reach. Sobotka said that ultimately Europe needs a convergence in living standards, something that Macron himself is calling for.

“What’s important is to continue the convergence of wages and standards of living in Europe,” Sobotka said. “There are huge differences in living standards in Europe. That’s the fundamental problem.”

Notably missing from this leg of Macron’s trip are meetings with the leaders of Poland and Hungary, two governments that he has said fail to respect the EU’s democratic values and which are vehement defenders of the bloc’s single-market rules.

“We’re partners in any negotiations but we’re against and we’ll block any initiative that discriminates against Hungarian workers and which would undermine the four freedoms,” including the free movement of labor, Hungarian government spokesman Zoltan Kovacs said Wednesday. “This idea of social dumping is silly,” he added. “For centuries, eastern European workers have gone west and performed the same work for less.”

The French president may also get more resistance Thursday and Friday as he heads to Romania and Bulgaria, which are also significant sources of cheap labor within the EU’s 28-nation bloc.

— With assistance by Michael Winfrey, Ladka Mortkowitz Bauerova, Andrea Dudik, and Zoltan Simon

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE