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Social Dumping Without Borders

19 July 2016

Social dumping is an issue that has affected the European Union for a long time, particularly because the freedom of movement, as beneficial as it may be, actually exacerbates it. While there is no universal definition of social dumping present in the EU law, in a written answer to a Parliament Question, Marianne Thyssen, European Commissioner for Employment, Social Affairs, Skills and Labour Mobility defined social dumping as ‘unfair competition due to the application of different wages and social protection rules to different categories of workers’. This means those engaging in social dumping exploit the difference in wages and working conditions between the home and host country for financial gain, particularly in those who joined the EU more recently.

Why does social dumping occur?

While freedom of movement has introduced opportunities for those seeking to work abroad, it has also produced opportunities to exploit people from countries where income levels are lower and labour laws are less stringent. Whether by employing the services of a provider situated abroad or by relocating own activities abroad to supply domestic markets, social dumping gives a company a competitive edge, although an unfair one, and promotes stagnation of working conditions.

This is why in late 2015 the European Parliament Employment Committee (EMPL) started working on an own-initiative (INI) report focusing on the topic of social dumping within the EU. Both the Transport Committee (TRAN) and the Gender Equality Committee (FEMM) decided to give opinions on the initiative. TRAN’s opinion comes as a result of the transport sector being highly affected by the issues of social dumping, while FEMM stated that gender inequality also exacerbates the problem.

What does the report promise?

MEP Guillame Balas’ report presents substantial suggestions on how to tackle social dumping. These include a call to create a European body of cross-border labour inspectors, which would offer a centralised solution to deal with cross-border social dumping. It also proposed to create a “European transport agency” and setting “a minimum wage in some border areas associated with highly mobile workers.”, which offers a way to deal with ‘hot spots’ of social dumping sources. The report also calls for clarification of terminology to increase clarity of law.

State of Play

The work on the initiative is still ongoing and adoption of the draft report by the EMPL Committee is expected to happen in mid-July with the Parliament due to vote on the initiative in September. However, the adoption of Mr. Balas’ report is unlikely to have a major and immediate impact since it is an own-initiative report, which is non-binding. The lack of support for major ideas such as cross-border minimum wages and a European transport agency makes it less likely these legislative proposals will be tabled at all.

Instead, the report is more likely to work a way to attract attention to lesser-acknowledged issues which may impact future policy making and the types of initiative that will appear.  As a long-term impact, the report may play a role in the Commission’s mid-term review of the 2011 White Paper on Transport, and the review could lead to new initiatives being put forward in these areas.

Darius Mikulenas, Transport Policy Executive
Darius Mikulenas
Transport Policy Executive

Darius Mikulenas leads on the Transport, Security and Defence portfolio for the DeHavilland EU team. Darius has experience working with an industry association representing the Waste-to-Energy sector in Brussels.