Opinion of the German Trade Union Confederation (DGB) on Proposal for a Regulation on the

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German Trade Union Confederation National Executive Board Labour Market Policy Dept.

Alexandra Kramer

Head of Unit European Labour Market and Social Policy

alexandra.kramer@dgb.de Tel.: +49 30 24060-763 Fax: +49 30 24060-711 Henriette-Herz-Platz 2 10178 Berlin www.dgb.de

1. Background

Commission President Jean-Claude Juncker had announced his intention to set up a Eu- ropean Labour Authority for the first time in his State of the Union speech.¹ He spoke of the authority in connection with the revision of the Posted Workers Directive and the aim of implementing the principle of “equal pay for equal work in the same place”. The focus of the authority should therefore be on supporting cross-border fair mobility and combating abuses. On 13 March, the Commission presented the proposal for a Regulation establishing a European Labour Authority² as part of the Social Fairness Package. The Commission has not submitted its announced proposal for the introduction of a Euro- pean Social Security Number. However, according to the Commission, this was post- poned only for technical reasons and will be submitted later this year. The Commission's proposal to establish a European Labour Authority is, on the one hand, in the context of various European Commission initiatives in the field of labour mobility: The revision of the Posted Workers Directive³, the revision of the Regulation on the coordination of social protection systems⁴ and the Europe on the Move package, including the special directive on the posting of motorists in the international road transport sector⁵. On the other hand, the ELA is a concrete measure of the European Commission implementing the Eu- ropean Pillar of Social Rights (EPSR).

According to the Commission's proposal, the tasks of the ELA are focused on supporting the Member States and the Commission in the field of cross-border mobility and the coordination of social security systems. In particular, the ELA should undertake the following tasks:

1 13.9.2017; http://europa.eu/rapid/press-release_SPEECH-17-3165_de.htm

2 COM(2018) 131

3 COM(2016) 128

4 COM(2016) 815

5 COM(2017)277

statement

Opinion of the German Trade Union Confederation (DGB) on Proposal for a Regulation on the

establishment of a European Labour Authority from 13.3.2018 (COM (2018) 131)

establishing a European Labour Authority (ELA)

22.05.2018

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Page 2 of 9 the Stellungnahme dated 22.05.2018

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 Information and support for workers and companies in cross-border-situations.

 Improving administrative cooperation in the enforcement of EU law.

 To assist national control authorities in carrying out controls in a cross-border context; the implementation and support of joint controls.

 Mediation of disputes between Member States in the application of EU law.

 Preparation of analyses and risk assessments in the field of workers’ mobility.

According to the Commission, the ELA's role is to support the enforcement of existing law.

The ELA is not intended to justify new rights and obligations for companies and workers.

2. General assessment and summary of the DGB position

The DGB welcomes the establishment of a European Labour Authority if it is effectively in a position to combat cross-border wage and social dumping and promote fair mo- bility. Experience from consulting practice e.g. the Fair Mobility project⁶ and the EURES cross-border partnerships, demonstrate the urgent need for further effective initiatives to strengthen the rights of cross-border mobile workers and to combat abuse: Mobile workers are massively at risk from wage dumping, social security fraud and abusive practices regarding the payment of their wages and salaries. Especially long subcontracting chains and letterbox companies make the control and implementation of workers’ rights more difficult.

A European authority that supports and informs transnational mobile workers, as well as supports national authorities in controlling and prosecuting violations and abuses in a cross-border context, could fill an important gap in the enforcement of EU law. While companies and workers can move freely in the European single market, the competence of national supervisory authorities to control and enforce EU law end at the respective borders of the Member States. Despite various initiatives in this field, administrative cooperation re- mains inadequate and the exchange of information is far too lengthy and incomplete. In order for the ELA to bring about concrete improvements in the field of cross-border mobility, however, the content of the Regulation would have to be made more concrete and, above all, more binding. The DGB criticises the fact that the cooperation of the authorities among themselves, the cooperation of the authorities with the ELA, as well as the implementation of joint controls, should be of a voluntary nature. To improve the situation, more binding procedures and structures are required. One orientation may be the Europol Regula- tion⁷, which creates an effective form of cooperation between national authorities and Eu- ropol in the field of prosecution, without interfering with the investigative work of the national authorities. Also, in the field of consumer protection, more effective structures for cross-border cooperation between authorities have already been established that can serve

6 www.faire-mobilitaet.de

7 REGULATION (EU) 2016/794 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 11 May 2016 on the European Union Agency for Law Enforcement Cooperation (Europol) and replacing and repealing Decisions 2009/371 / JHA, 2009/934/JHA, 2009/935/JHA, 2009/936/JHA and

2009/968/JHA

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3 as role models for the ELA. For the ELA, social partners should also be given the opportunity at national level to report cross-border mobility violations and to initiate controls so that the ELA can take action towards national authorities or initiate joint or concerted checks. The ELA should be obliged to provide information to the social partners as to which measures it undertakes or why it may not take action.

The DGB regrets that the Commission has not presented the announced proposal for the introduction of a European Social Security Number. A European Social Security Number, linked to a European social security register, through which control authorities can access relevant data in real time, could, in compliance with strict data protection require- ments, make an important contribution to counter widespread abusive practices in the payment of social security contributions. The ELA should in future take over the administration of such a social security register.

The DGB demands that the focus of the authority is on the fight against cross-bor- der wage and social dumping. A European authority whose aim is to reduce barriers in the internal market is to be rejected from the point of view of the DGB. The ELA should not become an instrument for better enforcement of internal market freedoms by restricting national control competences or undermining collective bargaining autonomy. The DGB re- jects any reference to missed internal market instruments such as the European Services E- Card⁸ or the Enterprise Europe Network.

ELA support in advising and informing workers is generally to be welcomed if it is not limited to providing information only and does not conflict with existing national opportu- nities. It is necessary to provide comprehensive advisory services before, during and after employment, which should be promoted and supported by the ELA. In this context, the EURES cross-border partnerships make an important contribution to promoting cross- border fair mobility. They should be anchored in the ELA Regulation with their own budget in order to be able to implement their important information and advisory activities in the future as well.

From the point of view of the DGB, the proposed mediation procedure in the form provided is still too unclear for an actual added value to be identified. For example, it is not sufficiently regulated in which areas mediation procedures are permitted and how they will be enforced in concrete terms. In any case, it must also be ensured that the possi- bility of national and European legal action cannot be restricted by these mediation procedures.

The DGB also calls for closer involvement of the social partners in the ELA. Orienta- tion may be the tripartite structure of the related agencies EU-OSHA ⁹, Eurofound¹⁰ and Cedefop¹¹. The social partners, especially those in sectors which are particularly concerned

8 Recital 12 ELO Regulation

9 European Agency for Safety and Health at Work

10 European Foundation for the Improvement of Living and Working Conditions

11 European Centre for the Development of Vocational Training

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4 by wage and social dumping, must be represented in the governance structure of the ELA.

At the same time, it must be ensured that the ELA does not interfere with the collec- tive bargaining autonomy of the social partners.

The DGB welcomes the fact that the ELA is to be complementary to the EU-OSHA, Eurofound and Cedefop agencies. Since the ELA should explicitly assume tasks in other areas, the establishment of the agency should not result in any cutback at the other agencies.

3. DGB position on the Commission proposal

3.1. Improve compliance and enforcement of EU law in the field of cross-bor- der mobility

The DGB expressly welcomes the fact that a focus of the ELA is the better enforcement of EU social and labour law in the field of cross-border mobility. While many other areas, such as consumer protection, antitrust, prosecution, provide for efficient procedures and mecha- nisms for enforcing EU law, this does not apply to European labour and social law. Here, the competences of national control authorities are largely limited to the national territory.

3.1.1. Improved administrative cooperation

In principle, the DGB welcomes the fact that, according to Article 8 of the ELA Regulation, the Authority should facilitate cooperation between Member States, but does not consider the proposed measures sufficient to significantly improve the situation in practice.

Requests for information from the authorities of the countries of origin, e.g. the economic activity of a company or the authenticity of an A1 certificate¹² are often lengthy and still crucially dependent on the will of the authorities to co-operate. The development of technical instruments, such as the Internal Market Information System (IMI), has not contrib- uted to a significant improvement of the situation in practice. In order to effectively combat wage and social dumping and distortions of competition, it is essential to improve administrative cooperation and further develop technical tools. This applies in particular to combating the widespread practice of abuse by employers in the field of social security. At present, there are hardly any possibilities for the control authorities to check the authenticity of an A1 certificate and the information given in it. In order to enable effective and short-term control, the DGB calls for the introduction of a European social security register in which the required data can be requested in real time by the control authorities in compliance with strict data protection regulations. The register should be introduced under the announced initiative for a European Social Security Number and managed through the ELA.

It must be examined whether the EESSI system¹³ is suitable for taking on this role in the future. It should also be examined whether such a register should cover further information relevant to the control authorities.

12 Certificate of payment of social security contributions in the home country

13 Electronic Exchange of Social Security Information (IT system for exchange of social security data)

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5 The DGB criticises the fact that Art. 8 does not provide any deadlines for requests for information. Nor is there sufficient guidance as to how the ELA should support the enforcement of existing obligations for Member States under other legal bases, in particular Article 6 of the Enforcement Directive on the Posted Workers Directive¹⁴. For a more binding administrative cooperation, public authorities must be obliged to respond to requests for information within a reasonable period of, for example, two weeks or, in urgent cases, within 24 hours. The ELA should assist administrations to exchange information through innova- tive technical solutions. The ELA should have the competence to intervene in the case of refusal to provide information by a national authority and, if necessary, to impose sanctions on the Member State concerned.

It should also be examined what role the ELA can play in enforcing civil law claims in the field of cross-border mobility.

The DGB welcomes the secondment of national liaison officers to the ELA (Article 33 ELA Regulation) as a step towards improving the exchange between Member States and between the ELA and the Member States.

3.1.2. Carrying out joint inspections

One of the main tasks of the ELA is to coordinate concerted and joint inspections (Articles 9 and 10 ELA Regulation). In principle the DGB welcomes the fact that joint inspections by the ELA should be promoted. The implementation of joint and concerted inspections can make an important contribution to the fight against transnational abusive practices. It is to be welcomed that the ELA should provide logistical and technical support for the implementation of joint and concerted controls.

The national social partners should be given the opportunity to request national authorities to carry out joint inspections through the ELA.

3.1.3. Empowerment of the authority

The DGB criticises the fact that the ELA Regulation does not foresee any proper com- petence of the European Labour Authority for inspections and joint controls.

From the point of view of the DGB, however, the ELA should at least have the competence to also request individual Member States to carry out inspections or to initiate investigations. An orientation can here be provided by Art. 6 of the Europol Regulation (Regulation 2016/794), according to which Europol can invite the competent national authorities to initiate, conduct or coordinate criminal investigations. The competent authorities shall inform Europol without delay of the decision on the request and, in the case of a refusal, they must give reasons to Europol. This procedure could also be applied to the ELA. The social partners at national level should be given the opportunity to report possible EU infringe-

14 DIRECTIVE 2014/67/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 15 May 2014 on the enforcement of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services and amending Regulation (EU) No 1024/2012 on administrative cooperation through the Internal Market Information System (“IMI Regulation”)

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6 ments in the field of cross-border mobility to the ELA in order to request the national authorities to carry out controls. This should also apply to the implementation and coordination of joint inspections. The ELA should be required to provide information to the social partners as to which measures it has ordered or carried out or why it may not take action.

3.1.4. Support to national controls/ capacity building

According to Article 12 of the ELA Regulation, the Authority supports the Member States in developing capacity for law enforcement in the field of cross-border mobility. This will include, among others, the development of guidelines for controls, the exchange of experience, the promotion of exchange programmes, and the secondment of staff between public authorities, the development of sectoral and cross-sectoral training programmes and mate- rials. The DGB welcomes the proposed measures as steps in the right direction. However, the effectiveness of these measures will depend to a large extent on their design in detail.

Here, the expertise of social partners and other relevant actors, such as contact points for workers, should be used. Article 12 should also include the obligation for national authorities to provide sufficient capacities to enforce the law in the area of cross-border mobility.

Sufficient financial, technical and above all human resources of the control authorities is a prerequisite for carrying out efficient controls.

3.2. Information and advice for mobile workers

The DGB sees the support and coordination of cross-border controls and the promotion of information exchange between public authorities as the primary task of the ELA. In addition, the DGB welcomes the ELA playing a central role in promoting and coordinating information and advisory tasks. Although this is enshrined as an objective in the ELA Regulation, the DGB regards the concrete measures as insufficient. Cross-border mobile workers are often confronted with labour and social provisions that they do not know or do not understand due to a lack of language skills. The legal situation is particularly compli- cated for posted workers, but also for frontier workers, because provisions from the country of origin and the place of work apply. In order to reduce exploitation and abuse here, workers need comprehensive information and advice before, during and after employment.

Often, the need for advice arises only after taking up an employment. It is both the respon- sibility of the Member States and of the European Union to provide a sufficient supply of information and advice (face-to-face), as well as networking of national and regional contact points. At this point, the ELA should play a central role in promoting and coordinating information and advisory tasks, among others, in order to better enforce standards laid down by collective agreements. Support for cross-border mobile workers should not be limited to providing information, as provided for in the draft Regulation, but should be in the promotion and support of comprehensive advisory services before, during and after employment.

Art. 6 of the ELA Regulation specifies information on cross-border labour mobility. From the point of view of the DGB, workers should also be explicitly provided with “relevant information on labour rules and the living and working conditions applicable to workers in

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7 cross-border labour mobility situations, including posted workers” and not, as provided for in the draft Regulation, only employers.

Art. 7 of the ELA Regulation specifies the activities of the labour authority with regard to access to services in the field of cross-border labour mobility. From the point of view of the DGB, advice for workers should be included in the catalogue of services before, during and after employment, and it criticises the fact that here the clear focus is only on placement.

3.3. Integration of EURES in the ELA/ EURES border partnerships

The draft Regulation provides for the integration of EURES into the ELA. EURES¹⁵ is a Eu- rope-wide network founded in 1993 that promotes intra-European labour market mobility across borders. Network partners include public employment services, trade unions, and employers' organisations. The network is coordinated by the European Commission. Many border regions have EURES cross-border partnerships. These are usually composed of public employment services, trade unions, and employers' organisations from at least two Member States. In the border area they offer multilingual information, advice and mediation for employees, jobseekers and employers.

The DGB criticises the fact that, in the ELA Regulation, unlike other elements of EURES, the EURES cross-border partnerships are not mentioned and requires their in- clusion in the Regulation.

According to the European Commission, there are 1.4 million frontier workers in Europe who work in one country and live in another country, to which they usually return daily, but at least once a week. Since frontier workers are not statistically recorded in some countries, the real number of frontier workers is likely to be significantly higher. Frontier workers are confronted with specific labour and social problems resulting from the competence of both place of work and residence. Accordingly, they need specific information and advisory services in order to claim and enforce their rights.

In view of the objectives of the ELA enshrined in Article 2 of the Regulation, the EURES cross-border partnerships provide services in the border regions to ensure and facilitate fair labour mobility in the internal market. In the border regions, they ensure the access of indi- viduals and employers to information about their rights and obligations, as well as to relevant services, by providing multilingual information, advice and placement to workers, jobseekers and employers.

The employment services, trade unions and employers cooperate in the EURES cross-border partnerships (Article 3 (7) of the EURES Regulation¹⁶). In addition, they are – across borders - in contact with regional control authorities in order to investigate violations of applicable law. In doing so, they also provide on-the-spot support for cooperation in cross-border enforcement of relevant EU law.

15 EURopean Employment Services

16 COM (2016) 589

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8 The EURES cross-border partnerships are therefore key operational actors for implementing the objectives and measures of the European Labour Authority on the ground and should therefore be enshrined in the Regulation and integrated into the European labour Authority as a cross-border regional body.

Currently, cross-border partnerships are receiving financial support through the European Programme for Employment and Social Innovation (EaSI). In the future, the EURES bor- der partnerships should have their own budget under the ELA in order to con- tinue to implement their important information and advisory activities as well as the coordination and cooperation between the institutions involved, while supporting the ELA.

3.4. Mediation and dispute resolution

Article 13 of the ELA Regulation provides for the establishment of a mediation procedure for the settlement of disputes between Member States “on the application or interpretation of Union law in areas covered by this Regulation”. From the point of view of the DGB, the proposed mediation process needs to be specified at crucial points, so that a precise added value can be identified. The Commission proposal cannot be accepted in this unpre- cise form. In particular, the scope, the procedure and the impact of the mediation procedure, as well as its relationship with the national and European jurisdiction, are not sufficiently clearly defined in the Regulation. In the view of the DGB, the clear focus of mediation procedures in the ELA must be on the enforcement of labour and social legisla- tion and must be in line with the objectives of the ELA. Mediation procedures should not be an instrument for Member States to remove market barriers. It also needs to be made clear that the possibilities of taking legal action on national and European level are not restricted through these mediation procedures. In the event of failure of a mediation procedure, the ELA should have the competence to request the Commission on a case-by-case basis to examine the initiation of infringement proceedings against the Member State concerned. If the EU initiates infringement proceedings, the ELA should be granted the status of litigation party. This should apply both to the pre-litigation procedure of the European Commission and to the procedure before the European Court of Justice.

3.5. Cooperation in the case of cross-border labour market disruptions

According to Article 14 of the ELA Regulation, the ELA “may, at the request of the national authorities, facilitate cooperation between relevant stakeholders to address labour market disruptions”. In the view of the DGB, the article requires urgent clarification regarding in which cases and in which way the ELA can provide support. In any case, it must be ensured that this does not interfere with the autonomy of the social partners, or affect the work of work councils and staff committees.

3.6. Expertise and abuse analyses

The DGB welcomes the fact that the authority is to carry out analyses and risk assessments in connection with cross-border labour mobility (Art. 11 ELA Regulation). From the point of

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9 view of the DGB, the focus here should not be on removing obstacles to mobility, but more importantly on combating cross-border wage and social dumping, for example analyses and reports on common abusive practices (if appropriate, sector- or region-specific) and the corresponding development of recommendations for action for the Commission and Mem- ber States. The ELA should work closely with social partners and other relevant actors, such as contact points for workers.

3.7. Management and structure of the ELA/ involvement of social partners The management of the ELA is to be carried out by a management board, an Executive Di- rector, and a Stakeholder Group (Art. 17 ELA Regulation). The social partners are involved via the stakeholder group (Art. 24 ELA Regulation). The group will consist of six representatives of the European social partners¹⁷ and two representatives of the Commission. The group should, inter alia, draw up recommendations on subjects relevant to the ELA.

The DGB criticises the inadequate role of the social partners in the ELA and calls for closer involvement of the social partners at national and European level. By contributing their expertise, the social partners, as key labour market actors, can significantly contribute to achieving the objectives set out in the ELA Regulation. This applies above all to the national social partners with regard to the labour market situation of their countries. In addition, it is important to ensure that the social partners from sectors particularly affected by wage and social dumping are included in the governance structures of the ELA. The tripartite structure of the related agencies EU-OSHA, EUROFOUND and Cedefop can provide orientation for the governance of the ELA. However, the social partners must be represented at least in the two designated bodies (management board, stakeholder group) with decision-making powers.

3.8. Budget of the ELA

With normal operation of the ELA expected to be achieved by 2023, according to the Com- mission, the ELA will have an annual budget of €50.9 million. Sufficient financial resources are prerequisites for an effective European Labour Authority. Part of the ELA's costs are to be met, at least in this medium-term financial framework (2019-2020), by reallocating existing measures currently under the EaSI programme and autonomous financial lines for employment and transport (70%). Here, the DGB demands comprehensive transparency as to which measures are specifically affected by the redeployment and to what extent they continue to be funded under the ELA. In the context of the negotiations for the new Multi- annual Financial Framework 2021-2027, the setting up of the ELA should not be an argu- ment for budget cuts in the related agencies EU-OSHA, EUROFOUND and Cedefop or other social and employment budgetary funding.

17 Three representatives of the unions and employers