European Trade Union Institute, ETUI.

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16 September 2014

EU internal market rules may give rise to social dumping

social dumping

Two new ETUI policy briefs argue that certain elements of EU internal market regulation, in particular the rules on labour mobility, employee posting and the freedom of establishment, mayrepresent a threat to national labour and employment standards and encourage social dumping.

The two policy briefs build on the conceptualisation of social dumping developed by ETUI researcher Magdalena Bernaciak in her recent working paper ‘Social dumping and the EU integration process’. They both endorse the definition of social dumping as ‘the practice (…) of undermining or evading existing social regulations with the aim of gaining a competitive advantage’.

The first brief by Jan Cremers (Senior Researcher at the Amsterdam Institute of Advanced Social Labour Studies, University of Amsterdam, the Netherlands) looks at the use of letter-box companies to circumvent social rules in the sectors of international road transport and construction.

Cremers concludes that the ‘freedom of establishment has created an industry of incubators able to deliver ready-made companies whose sole purpose is to circumvent national regulations, labour standards and social security obligations’. The author recommends creating ‘ firm regulations that define the real and genuine undertaking and to implement liability schemes in case of fake posting by letter-box companies or bogus self-employed’. He also advocates ‘effective execution of sanctions (…) and closer cooperation among labour inspectorates’.

The second policy brief by Torben Krings (Assistant Professor at the Department Economic and Organisational Sociology, Johannes Kepler University, Linz, Austria) focuses on social dumping threats related to labour mobility. Krings has analysed the impact of post-enlargement immigration in Ireland on the regulation of employment standards in two sectors: construction and hospitality. His conclusion is that immigration did not lead to major displacement of the native working population, but that it made it easier for employers to pursue social dumping practices which contributed then to informalisation and casualization of work in some areas of the Irish labour market.

The topic of social dumping will be debated during one of the panels of the ETUC-ETUI conference ‘Europe at a crossroads’ from 24-26 September.

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