The fightback against EU's subcontracting poverty spiral

Migrant, seasonal and other mobile workers often access the labour market through an informal and non-transparent recruiting process carried out by labour intermediaries whose activity remains largely unregulated.

These actors ensure the link with the employer — while charging workers significant fees, often paid trough debts that trap them in a poverty spiral with no escape. In the worst cases, these informal intermediations end up in gangmastering.

During a recent EFFAT event on mobility and migration, El Abbas Echmouti, a migrant worker in the Spanish agriculture sector, shed a light on the situation: "Most workers in the Spanish agriculture sector get a job through informal labor intermediaries, that charge them excessive fees and trap them in exploitative labour relationships.

"Temporary work agencies (TWA) also play a significant role in the sector. However sectoral collective agreements are not respected, and wage deductions often applies for transport or working tools".

Unregulated labour intermediation often colludes with abusive subcontracting.

While subcontracting should ideally involve specialised expertise, evidence indicates that it is increasingly used for core business activities. Through subcontracting, employers are able to circumvent applicable labour standards and collective agreements, while cutting costs and escaping liability.

This means longer working hours, lower wages and more insecurity for workers across the subcontracting chains.

Alongside, abusive subcontracting is a direct threat to union organising. It pits workers within the same company and sector against each other, ultimately lowering conditions for all workers, including those in direct employment.

Christopher Warnakulasuriya, a Sri Lankan meat worker in Italy, testified the downward spiral of working conditions associated with subcontracting. He said: " We perform the same tasks in the same factory, but the conditions are vastly different from those of directly employed workers. The sector-specific collective agreement that applies to us is often related to logistics or multi-services, resulting in worse conditions compared to other workers covered by the food sectoral collective agreement.

However there is hope.

When governments decide to act, they can curb exploitation in subcontracting. This is what happened in Germany where a law enforced in 2021 banned subcontracting in the meat sector.

Cristina Chirita, a Romanian meat worker confirmed this positive development: "When I started in Germany as meat worker, the biggest issue was wage theft and unrecorded hours. Every month 20-30 hours were missing! With the new law on subcontracting, I'm no more with the contracting company. I feel safer and earn better".

Shortcomings in EU legal framework

Abusive subcontracting and unregulated labour intermediaries have expanded over the last few years across Europe. Moreover, the lack of effective labour inspections across the EU results in insufficient enforcement of existing rights. Equal treatment can work in practice only if there is political will to address existing gaps in EU social policy, labour mobility and migration frameworks.

The EFFAT recently presented a proposal for an EU Directive, aimed at regulating labour intermediaries and ensuring fair working conditions in subcontracting chains.

EFFAT is calling for a binding initiative that includes the following demands:

1. Establishing full equal treatment throughout subcontracting chains. Subcontracting should be prohibited for companies' core activities and the chain should be limited. Joint and several full chain liability must apply.

2. Regulating the roles of all labour intermediaries and addressing the shortcomings of the TAW Directive. An EU register of labour intermediaries should be set and intermediaries should provide information to workers on their rights in their own language.

3. Increasing the frequency and efficacy of labour inspections across the EU. The EU should use the ILO reference of at least one labour inspector per 10,000 workers as minimum threshold. Digital data and cross-checking between enforcement authorities operating in different areas should be used to identify potential labour abuses and support workplace inspections.

The EU has made major advancements on the social agenda over the last few years. However, abusive subcontracting and illicit labour intermediation undermines our social acquis and are major obstacles to equal treatment at work.

Addressing these issues should be a top priority for political groups as they prepare for the 2024 EU elections. Doing so would aid in combatting the normalisation of exploitation in key sectors of the EU economy.