22nd Mar 2023

The 'digital frontier worker', a response to address EU labour shortages

  • Since 2019, telework has grown to reach 13.5% of workers in the EU. (Photo: Pexels)
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Around 1.5 million Europeans cross a physical border within the continent every day to get to work. They are known as frontier workers.

For a while, Carla and Oriol, a Spanish couple in their early 20s, were two of them. They used to live in Thionville, a French commune of more than 135,000 inhabitants located about 70 kilometres from Luxembourg, where they crossed daily to work.

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The decision not to live in the Grand Duchy came at a glance at the cost of basic foodstuffs and rent. "We were saving about 600 euros a month by paying French rent," he tells EUobserver. "We were losing out on quality of life, though," he adds.

On the map, the hour's drive to Luxembourg City became up to three and four hours a day due to traffic jams and poor transport connections, the couple says.

When the pandemic hit, frontier workers like them became remote workers in many cases and went from crossing a physical border daily to crossing a digital one.

"After the coronavirus, new and uncommon ways of working appeared", explains Xosé Lago, subdirector of the European Grouping of Territorial Cooperation Galicia-North of Portugal, about the situation in this region, where not only teleworking grew, but also self-employed workers with payers in both countries.

The potential was there, but so were the obstacles. "We observed that companies either gave up on hiring these remote or dual-payer workers due to a lack of understanding, or they did it in a way that was very burdensome for the worker," says Lago.

For those who telecommute, social contributions and taxes are paid to the country where the worker lives for more than half of the year; and they are given the status of posted worker, multinational worker, or normal employee if the company is based in that country.

However, under the traditional frontier worker category, both are paid to the country of employment.

Under the force majeure, these obstacles, mainly related to bureaucracy, taxes, and social security, quickly disappeared. But back to the 'new normal', it never rains but it pours, and those who work remotely from another EU country on a permanent basis still do not have a specific legal status.

The proposal put forward by the Brussels-based economic think tank Bruegel is therefore to introduce the 'digital frontier worker' concept.

A status with much more scope than the traditional one, limited to neighbouring countries. "While traditional cross-border work accounts for less than 1% of EU employment, the potential for remote cross-border work is much greater," says the think tank's analysis.

Moreover, the data already show teleworking is here to stay. Although with variations from country to country, since 2019, this modality has grown to reach 13.5% of workers in the European Union and still has a potential of 39%.

The challenge lies in boosting this potential, which could help to find a better match between the skills of European workers and the demands of EU-27 employers, as shortages amount to 14% of the EU workforce.

For Bruegel researcher Tom Schraepen, a supportive legal framework will be necessary to remove existing barriers for employees ー not self-employed.

The distinction is important, he explains to EUobserver, because workers are now increasingly being pushed into self-employed status by the rise of platform economies, or the increase in teleworking from anywhere in the world (aka digital nomads).

A less interesting option for European countries, as they lose revenue from the tax incentives offered to attract these nomads, but also for the workers, who lose their benefits as they often work remotely as self-employed in order to travel the world.

"It would be more interesting to be organised at the EU level," said Bruegel's researcher.

Introducing a specific legal status could clear up the uncertainty surrounding these workers and helps to boost their potential.

Ideally, says Lago, the solution would be to create an EU regulation that would serve as a guide for all member states.

However, since these issues are closely tied to national competences, what the EU can do is to ensure that there is a "level playing field" among member states, so the economic value created is distributed fairly and equitably, Schraepen explained.

This means establishing common principles so that imbalances are not created between countries with lower standards of living, which attract these employees to live, and higher ones, which employ them.

In practice, Lago believes that intermediate solutions will be the answer, such as bilateral agreements—including something like a cross-border workers' statute—, or the creation of working groups or ad hoc groups that pool their knowledge and challenges, and disseminate how to act in each case.

"These are what we might call small solutions to big problems," he concluded.

Read all the stories as we publish them throughout the week in the Work Week section (or on the homepage, you do you)


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