The Posted Workers Directive and the Transport Sector? Not a Match Made in Heaven

It was anticipated by some national leaders and policymakers that the European Union’s recent reform of the Posted Workers Directive (PWD) would cover all industrial sectors. However, hopes for an all-inclusive package were effectively dashed once it became clear that member states were unlikely to reach a compromise on the status of the transport sector unless it is dealt with separately.

That said, applying a similar version of the PWD to transport is unlikely to solve problems related to fair work and business conditions across the EU. On the contrary, new barriers would minimise competition, endanger jobs and businesses and increase disregard for legislation. Indeed, the Single Market’s aim of stimulating economic growth and competitiveness can only be fully achieved by addressing emerging social concerns. Applying the new PWD to transport without carefully assessing its sector-specific particularities will not help the EU to meet these key objectives.

Not About East vs. West

It has been argued that the PWD reform has caused a battle between the EU’s Eastern and Western flanks. With broad strokes, some stakeholders have painted a picture of Eastern Europeans paying social security in their home countries and having to work for lower wages than Western counterparts, a scenario which perpetuates unfair competition. However, the votes cast for and against PWD reform at the October 23, 2017 meeting of Ministers of Employment and Social Policy tell a slightly different story. Eastern partners like Poland, Hungary, Latvia and Lithuania joined Portugal and Spain in voting against the reforms, while Croatia joined the UK and Ireland in abstaining. Bulgaria, Romania, Slovakia, the Czech Republic, Estonia and Slovenia joined the rest of the Western states and accepted the new conditions.

Meanwhile, a Mutual Declaration against applying the PWD to transportation has been circulating and gaining steam. Trade associations, chambers of commerce and employers’ confederations from 17 European countries have signed the document. To this end, the make-up of the signatories is particularly intriguing with 10 coming from Central and Eastern European states (including Slovakia) and 7 from the West. Clearly, this signals that the problem with the directive in the transport sector lie elsewhere.

New Barriers, New Burdens

The current cross-border regulations for those working in the transport sector are not simple. They attempt to keep the operators safe and accountable. For example, drivers are required to carry various documents translated into languages of the countries that they pass through. The Czech Republic recently conducted checks on truck drivers and concluded that Eastern European drivers have the documents prepared in several languages. Conversely, Western European drivers do not follow regulations on the required documentation and translations.

Applying the PWD to international transports will mean accounting for numerous national legislations to calculate monthly salary and minimum paid holidays, extra track-record procedures for operators, additional controls by various authorities, and more. If employees in the transport sector have a hard time to follow the rules now, is it necessary to introduce even more complications, new records, calculations and technical limitations?

For example, if the PWD as it currently stands is applied to the transport sector it will disproportionally increase the burden on operators. Imagine the effort required to adhere to 20 different national legislations to calculate the salaries and paid holidays of transport operators. This does not include many sub-category calculations based on seniority of the driver, the type of truck and load.

Increased burden will not yield positive results for economic growth and fair competition. Small- and medium-size businesses will not have the capability to handle the new rules, regardless of whether they are based in Slovakia, Italy or Denmark. This will lead to an increased number of operators leaving the business. Consequentially, international services provided by the transportation sector will slow down while prices increase. The result will negatively impact the final consumer—the EU citizen.

To avoid some of the abovementioned limitations, operators will have to alter their business models. One way to do this will be to become a ‘self- employed’ driver contracted by a company. However, this solution does not help to fight unfair competition. On the contrary, it contributes to unfair labour conditions and lack of protection.

The proposed PWD, as it stands, is not suitable for the transport sector. In earlier negotiations, member states from the North, South, West and East strongly opposed the blanket-style application of the reformed directive. The solution will have to be sector-specific. The balance between freedom of movement of people, goods and services on the one hand, and workers’ protection in the transport sector on the other, will have to be achieved through alternative measures.