The Internal Market at a Social Turn? Social dumping and the protection of workers
| Author | Catherine Jacqueson |
| DOI | 10.1177/1388262720974684 |
| Published date | 01 December 2020 |
| Date | 01 December 2020 |
| Subject Matter | Articles |
Article
The Internal Market at a Social
Turn? Social dumping and the
protection of workers
Catherine Jacqueson
Welma research Centre, Law Faculty, Copenhagen University, Copenhagen, Denmark
Abstract
Free movement should in theory enable individuals to fight poverty at home by finding
employment in another Member State. Yet, free movement is not always that easy and can
in practice lead to social dumping in specific sectors where posted workers ultimately push
salaries to the bottom. Such a race to the bottom might also arise outside a free movement
context when workers are falsely qualified as self-employed thus undercutting wages. This
article argues that EU economic law both creates risks of social dumping and remedies
them. It calls for a rebalancing of the liberal ethos of the principle of free movement and
competition law on the one hand, and the social objectives of the EU, on the other hand. A
key question is whether it is possible to redress the balance between the economic and the
social from within the internal market logic or whether the social push has to come from
outside.
Keywords
Social dumping, posted workers, bogus self-employment,socialmarketeconomy,unfair
competition, equal treatment and equality, enforcement, abuses, platform work, collective
bargaining
1. Introduction
It is the very aim of the free movement rules to ensure a better allocation of workforce, which both
benefits the economies of the Member States and the workers. Yet in real life, the picture is more
blurred, as it is not always so easy to activate the right of free movement. It might be easier for
workers to escape poverty at home through the provision of services enabling their home employer
Corresponding author:
Catherine Jacqueson, Professor of EU law, Welma research Centre, Law Faculty, Copenhagen University, Njalsgade 76,
2300 Copenhagen, Denmark.
E-mail: Catherine.Jacqueson@jur.ku.dk
European Journal of Social Security
2020, Vol. 22(4) 403–420
ªThe Author(s) 2020
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DOI: 10.1177/1388262720974684
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to find them temporary work in other Member States.
1
Yet, this flexible allocating mechanism
known as posting has inherent flaws, as the posted workers are in principle not ensured equal
treatment in the host State. Thus, posting can in practice lead to social dumping in specific sectors
where posted workers ultimately push salaries to the bottom. Such a race to the bottom can in turn
lead to poverty on the part of the workers. There is indeed a strong correlation between decent
working conditions, decent wages and social security protection, and the fight against poverty and
social exclusion. Thus, a deterioration in such conditions and salaries in the host State might
negatively affect the local workers. Social dumping is in fact possible because of the important
differences in salary and social protection within the EU, which are still regulated at national/local
level. In a free movement context, this leads to tensions between sending and recipient Member
States, essentially between East and West but also between North and South, and fuels claims of
illegitimacy of the EU and its internal market logic. Social dumping is broadly defined here as
unfair competition between undertakings on labour costs potentially leading to a race to the bottom
of wages and eventually the replacement of the workers.
2
Thus, differences between countries in
salary levels, social security protection and personal taxation may imply that the labour costs of
someone ‘temporarily’ doing a specific job in a host country can be substantially lower than the
labour cost of someone doing the same job in the host country for an employer established there.
3
Moreover, in this contribution social dumping is not limited to a free movement context and
includes situations of ‘false’ self-employed. The latter usually enjoy a competitive advantage
compared to employees in a similar position through the absence of labour costs. The ‘false’
self-employed thus undercut prices with the risk of pushing to the bottom the social protection
of those with employee status.
Competition on labour costs might to a certain extent be legal from an EU law perspective, but it
presents a challenge for a ‘highly competitive social market economy aiming at full employment
and social progress’, as enshrined in Article 3(3) TEU. This was recently acknowledged by the EU
institutions and the Member States, where the interests of businesses to a greater extent have to
give way to the interests of the workers. Both the Revised Posted Workers Directive and the EU
action plan for the collective bargaining of certain self-employed are evidence thereo f.
4
This
article argues that EU economic law can both create social dumping and remedy it. It calls for
a rebalancing of the liberal ethos of the principle of free movement and competition law, on the one
hand, and the social objectives of the EU, on the other, addressing key concepts such as equal pay
for equal work and unfair competition. It also looks at the issue from an institutional perspective
assessing whether the ECJ and the legislator are in tune in this respect. A key question is whether it
is possible to redress the balance between the economic and the social from within the principle of
free movement and the internal market logic or whether the social push has to come from outside.
1. In this sense, see De Wispelaere and Pacolet (2020).
2. For the manifold definitions of social dumping, see the briefing note of the European Parliament (2017). https://
www.europarl.europa.eu/RegData/etudes/BRIE/2017/599353/EPRS_BRI(2017)599353_EN.pdf
3. Thus, social dumping is here defined differently from the mechanism of social dumping on competition between
industries where differences in i.e. social security and taxation between countries imply, in a single market, that some
goods and services are produced more cheaply in one country as compared to another.
4. Directive (EU) 2018/957 of the European Parliament and of the Council of 28 June 2018 amending Directive 96/71/EC
concerning the posting of workers in the framework of the provision of services [2018] O.J. L 173/16. On the 30.6.2020,
the Commission launched a process to address the issue of collective bargaining of the self-employed: https://ec.eur-
opa.eu/commission/presscorner/detail/en/IP_20_1237 (last visited 8 October 2020)
404 European Journal of Social Security 22(4)
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