29th Sep 2023

Subcontracting rules allow firms to bypass EU labour rights

  • Long supply chains make it difficult to trace abuses — or identify the actual employers responsible (Photo: Pexels)
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Last April, around 60 drivers of Uzbek and Georgian origin protested for over a month at a motorway rest area near the German city of Frankfurt.

Their Polish employer failed to provide them with minimum working conditions and had not paid their wages for weeks.

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This transport group was a subcontractor within the supply chain of large multinationals such as Volkswagen.

On a larger scale, during the summer of 2022, the exploitation of a group of non-EU workers in a factory in the Belgian city of Antwerp was revealed.

Migrants from countries such as Turkey, Bangladesh and Ukraine were underpaid or unpaid, had no work security and suffered from bad housing.

These practices are "no longer the exception in the European Union", wrote leftwing MEP Marc Botenga in an op-ed for EUobserver.

Subcontracting is not bad in itself. It was originally conceived as a way of outsourcing tasks for which the main company was not specialised, or as a temporary solution to a market need.

But its use has changed in recent years.

"Today, subcontracting is mostly used to actually hire and find cheap and precarious labour," Tom Deleu, general secretary of the European Federation of Building and Woodworkers (EFBWW), told EUobserver.

"It used to be a transparent short chain with a main contractor and a few companies," Deleu said. "Now it is a long and very complex chain."

The shift in companies' use of subcontracting complicates enforcement — one of the main problems identified by a study commissioned by the EU executive to look at how to improve the regulation of subcontracting in the EU.

The study has not yet been published, but was presented in the European Parliament last week (Tuesday, May 30) at an event on subcontracting organised by the S&D group and the EFBWW.

"Subcontracting can be used to increase profits by lowering costs, leading to downward wage pressure," attendees heard.

The practice is most prevalent in price-sensitive and labour-intensive sectors such as construction, manufacturing or meat-processing, says Monica Andriescu, one of the authors.

Another study, commissioned by The Left group, notes: "Subcontracting makes controls by labour inspectors more difficult, as the relationships between companies are often unclear and the relevant labour laws and working conditions are obfuscated".

Long supply chains make it difficult to trace abuses and identify the actual employers and people responsible for them.

Subcontracting allows companies to gain power and profits without taking on the associated risks and responsibilities, highlights the study called: 'Subcontracting: exploitation by design. Tackling the business model of social dumping'.

A situation that stems from both breaches of legislation, but also from gaps in the legislation, and even from the absence of a social clause to ensure that public procurement (and taxpayers' money) guarantees good working conditions.

For the EFBWW, now is a good time to ensure that direct and subcontracted workers have the same working conditions, as the commission is reviewing the Posted Workers Directive.

This is a "vague" regulation that is "interpreted differently" by member states and employers, restricting trade union action and collective agreements, Socialists & Democrats MEP Ilan de Basso told EUobserver.

"We would like to see a legislation at EU level that limits subcontracting to maximum one or two levels, to what's needed technically speaking," Deleu said.

Such provisions already exist in countries such as Italy, Belgium and Spain, but without European legislation to strengthen national rules, there will be no minimum conditions guaranteed in the 27 countries.

Moreover, liability rules, the tool used by posted workers to claim their rights, are not always effective because of their scope and conditionality.

In a new policy brief from the European Federation of Food, Agriculture and Tourism Trade Unions (EFFTA), authors recommend "replacing the current fragmented approach to subcontracting chain liability with a general EU system of joint and several (full chain) liability covering both cross-border and domestic situations".

The conclusions of the commission's study also set out a number of important points for future consideration — such as providing more information and transparency in supply chains and improving data collection to understand the scale of the situation and make comparisons across borders.


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