SOLIDAR strongly supports the analysis and concerns expressed in this report, in particular:

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1 SOLIDAR position on European Parliament Employment and Social Affairs Committee Report Challenges to collective agreements in the EU (2008/2085(INI)), 22 September 2008 Summary and key recommendations The European Parliament s Employment and Social Affairs Committee on 22 September 2008 voted a Report on Challenges to collective agreements in the EU. The Report focuses on the principle consequences of 3 European Court of Justice Rulings (ECJ) 1 on Posting of Workers Directive (PWD) 2. SOLIDAR strongly supports the analysis and concerns expressed in this report, in particular: 1. The highlight of both the economic and social dimension of the principle of non discrimination and equal treatment. 2. The need for a review of the PWD in light of the ECJ rulings, in order to (a) guarantee equal pay for equal work and allow all collective agreements to be taken into account when protecting workers' interests; (b) put stronger emphasis on the issue of social criteria in public procurement currently high on the European political agenda. 3. The concern regarding the re-establishment of a real balance between fundamental rights recognised in the European Charter of Fundamental Rights and by Member States and fundamental freedoms of the internal market. In addition to that, SOLIDAR is strongly concerned by the impact the ECJ rulings approach may have on public procurement policy: (a) Promoting of the competition at all price and the lowest-price based competition among potential tenderers; (b) Discouraging the ratification and application of ILO C94 (Labour Clauses in Public Contracts Convention) which asks that all tenders apply the best conditions of employment in force at the local level. SOLIDAR considers that cheapest offer criteria as main element for competition can result in unfair competition based solely on labour cost (i.e. wages); and in pressure to lower local labour cost and security standards (health and safety at work). 1 The Laval, Viking, Rüffert ECJ cases. 2 A worker is "a posted worker" when he/she is employed in one EU Member State but sent by his/her employer on a temporary basis to carry out his/her work in another Member State. For example, a service provider may win a contract in another country and send his/her employees there to carry out the contract. 1/6

2 We witness a risk of a race to the bottom competition which also increases the number of working poor and those working under precarious conditions 3. In this context mid- and long-term indirect costs for the society (to be finally borne by all taxpayers) are also often not sufficiently taken into account. SOLIDAR hence stresses the need to: 1. Broaden the legal framework of the PWD (in order to include the Free movement of workers instead of only the freedom to provide services within EU); 2. Reinforce social criteria in public procurement and respect the political will of legislators at all levels of Member States in view of the implementation of goals of social and employment policy when using public procurement procedures. 3. Ratification and implementation of up to date ILO conventions and namely convention 94 on Labour Clauses in public procurement. 1. Rationale SOLIDAR has welcomed the inclusion in the Lisbon Treaty of the Charter of Fundamental Rights (in particular the mention of labour rights such as stipulated in Art. 28, 31 and 34 4 ), the horizontal social objectives, non-discrimination and gender equality as well as the confirmation of the shared responsibilities of the Member States and the EU to set up conditions for a smooth and effective functioning of services of general (economic) interest (also including social, health, employment, and education services) 5 and Protocol No 9 on Services of General Interest. SOLIDAR considers that ensuring decent working conditions to workers independently from the nature of their job and their origin and social, health and employment and vocational training policies promoting social inclusion and social cohesion should be at the heart of European integration process. Nevertheless, the recent ECJ rulings on PWD have raised considerable concerns on the future of the European Social Model among Members of the European Parliament, but also from a broad range for stakeholders across Europe, in particular trade unions, but also from social NGOs and civil society organisations. SOLIDAR considers that the narrow readings of Community law given by ECJ will 1. Give at least indirectly priority to the realisation of fundamental freedoms of the internal market over fundamental rights. Restrictions to the fundamental freedoms can be only justified by invoking an overriding reason of general interest. In case of a conflict it seems as if the latter are not given equal legal value when it comes to counterbalancing them against the fundamental freedoms of the internal market. 3 Two examples from Germany to illustrate this development are the payment and working conditions offered by commercial postal service providers in Germany and by McCare in the field of long-term care. 4 Title IV/Chapter IV (= Solidarity) comprises: Article 27: Workers' right to information and consultation within the undertaking; Art. 28: Right of collective bargaining and action; Art. 29: Right of access to placement services; Art. 30: Protection in the event of unjustified dismissal; Art. 31: Fair and just working conditions; Art. 32: Prohibition of child labour and protection of young people at work; Art. 33: Family and professional life; Art. 34: Social security and social assistance; Art. 35: Health care; Art. 36: Access to services of general economic interest; Art. 37: Environmental protection; Art. 38: Consumer protection. 5 Art. 14 of the Treaty on the Functioning of the EU (TFEU). 2/6

3 2. Produce a de facto restriction to the fundamental right for trade union to undertake industrial action to ensure decent working condition to workers even in the framework of free circulation of services. 3. Put further pressure on wages and on health and safety at work standards. 2. SOLIDAR position on the Report on Challenges to Collective Agreements in the EU In this context, SOLIDAR welcomes European Parliament Report on Challenges to Collective Agreements in the EU of 22 September 2008 and fully supports its main conclusions and proposals as well as the emphasis on the need to adopt legislative measures to avoid similar narrow interpretations in the future. In particular, SOLIDAR shares the report s reading of the rulings as to an imbalance between fundamental freedoms of the internal market on the one hand and fundamental rights (as enshrined in individual and collective labour law) of workers on the other. Such an approach does not do justice to the highly political nature of many questions involved and largely ignores the importance of common values of the EU such as solidarity, equality and non-discrimination and the strengthened legal base concerning a broad range of fundamental rights. As a network promoting social justice, SOLIDAR would like to emphasise the following aspects of the Report as well as ECJ rulings The level playing field argument: the trans-national provision of services The promotion of the transnational provision of services needs a climate of fair competition and a level playing field for all enterprises and the staff they employ, independently of their nationality of regular residence. This means that on a given territory the same conditions have to apply to all competitors. This principle is applied in the field of services of general interest (SGI) when it comes to state aid rules, public procurement rules and the application of fundamental freedoms of the internal market, such as the freedom to provide services or the freedom of establishment. Under certain conditions and by making reference to general interest concerns, public authorities are allowed to set restrictions to these fundamental freedoms of the internal market. In doing so they also have to respect general principles of Community law (transparence; non-discrimination; proportionality). Based on settled ECJ case law, general interest concerns/objectives can be counterbalanced against the fundamental freedoms of the internal market. In the political debate on the policy and legal framework for SGI and in particular for social services of general interest (SSGI) it is even generally accepted (Commission President J. M. Barroso; Commissioner V. Špidla) that in case of conflict between the application of Community rules in the field of competition, state aid, public procurement or internal market, the general interest has to prevail. 6 Comments below mainly focus on the ECJ ruling Rüffert of 3 April 2008 [C-346/06]. 3/6

4 This line of thought was not followed in the ECJ ruling Rüffert. The Rüffert case could also have clearly detrimental effects on locally based and operating enterprises, in particular SME and to all economic actors respecting legal obligations, collective agreements and the outcome of collective bargaining for a given territory. There is the clear danger that also ethical collateral damage is produced by undermining the principle of rule of law and benefits of such behaviour. Enterprises and their employees will lose out, with again indirect detrimental effects for the financial basis of social protection schemes and tax revenues. 2.2 The national competencies argument SOLIDAR is worried by the narrow and purely formal interpretation of terms used in the PWD, in particular concerning the terms applicable collective agreements and other collective agreements which are considered the most representative. Such a narrow and legalistic approach does not do justice to the diversity of national (or even regional) models, usual instruments and legal frameworks of collective bargaining and wage setting. In tendency it disadvantages models building primarily on the social partners by indirectly favouring legislative measures ( to be on the safe side ). This is also working against the implementation and promotion of full-fledged flexicurity models, having as precondition strong and autonomous social partners and produces diminished scope of action for national governments to regulate collective bargaining (according to own policy preferences!), this being a field where the Community lacks competence. Moreover, the legislator, the Parliament of the State of Lower Saxony (Land Niedersachsen), explicitly defined working and remuneration conditions to be respected by contractors and their sub-contractors to allow a fair competition and to realise general interest objectives, even thought this might not have put that explicitly in the legislation (but there can be no doubt about it when analysing the genesis, preparation work and the decision making process for this specific piece of legislation). This at least implicit reference to the general interest and a deliberately taken political decision by democratically elected representatives of European citizens were not appropriately or not at all taken into account. SOLIDAR is concerned by the narrow interpretation of the possibilities for trade unions to demand better conditions for posted workers than only a minimum set of rules. The ruling indeed is single-eyed and does neglect the second aim of the PWD, namely the protection of workers. 2.3 The fundamental rights argument SOLIDAR shares the report s request not to allow an imbalance of different fundamental rights on the one hand and fundament freedoms of the other, leading to a restriction of government s and trade union s competencies and margins of manoeuvre in view of ensuring non-discrimination and equal treatment. SOLIDAR clearly defends the principle equal pay for equal work. Nondiscrimination and equal treatment are core values of the EU, they are cornerstones of the European Social Model trade unions and social NGOs are fighting for. Allowing for a 4/6

5 growing number of workers on a same territory the application of different conditions is undermining this principle, with negative effects on the individual and societal levels. 2.4 Social criteria in public procurement The ECJ rulings shed new light from a different perspective on the debate on social consideration criteria in Public Procurement. SOLIDAR believes that Public Procurement policy can play an enormous role in ensuring fair competition while ensuring safety and health at work and decent working conditions. For this reason, SOLIDAR welcomes the Commission initiative to explore further the incorporation of social criteria in public procurement through a feasibility study to be issued by the end of The categories of social clauses identified and analysed by the study includes among others (a) the promotion of decent working conditions (e.g. equal pay; realisation of individual and collective labour law; prohibition of forced and child labour), (b) the support of social inclusion for disadvantaged persons (e.g. from ethnic minorities) or groups (e.g. handicapped persons). SOLIDAR therefore encourages work and legislative initiatives toward the recognition of a broad range of social clauses, amongst them related to decent working conditions, not least as strengthened reference point when applying the PWD. More in particular, SOLIDAR believes that 2004 European public procurement directives should be reinforced in order to: 1. Explicitly exclude from public procurements those undertakings which have been sentenced for violation of workers safety legislation (article 45.1, Directive 2004/18/CE). 2. Extend the application of exclusion criteria as per article 45 Directive 2004/18/CE to subcontractors. Subcontractors should be included in the tenderer s offer and present all documents related to labour law legislation in the tenderer s offer (especially those related to health and safety at work) during the award procedure. 3. Reinforce tenderer s responsibility with respect to subcontractors violation of social legislation. 4. Prohibit the exclusive application of the lowest price principle as adjudication criteria (as it used to be in the Italian legislation). 5. Introduce the possibility to use social criteria as award criteria (article 53 of Directive 2004/18/CE), namely those related to job stability. 7 Back in 2007 DG Internal Market had commissioned a study to obtain a better overview on the legal framework under current Community law and on the actual usage of social considerations across all economic sectors in different countries of the EU, ranging from agriculture to construction work, from catering to personal social services. Building on this analysis, Commission Services will elaborate a guide by the end of /6

6 3. Conclusion SOLIDAR expresses its full support of the analysis and concerns in the Report in particular 1. The need for a review of PWD in light of the ECJ cases, to guarantee equal pay for equal work and allow all collective agreements to be taken into account when protecting workers' interests. 2. The need to update the PWD by taking into account the debate on social criteria in public procurement. 3. The need to reinforce the social criteria and the application of the European 2004 Public Procurement Directive. SOLIDAR welcomes European Commission s commitment to host a Forum on the issue of collective bargaining beginning of October and commit itself to follow closely the debate within that forum and recommends that the Report will be adopted with no further amendments at EP plenary session in October. 4. Reference documents 1. SOLIDAR media release (04/04/2008): ECJ ruling another blow to decent work in Europe, see 2. Article in SOLIDAR Weekly Round Up (06/06/2008), See 3. SOLIDAR letter of 30 October 2007 to European Commission President M. J. Barroso concerning services of general interest and social services of general interest (SSGI), see SGI-SSGI-Barroso-31%2010%2007.pdf 4. SOLIDAR analysis of social and citizenship dimension of Lisbon Treaty, see Treaty-tiempo-de-paz-E.pdf Contacts: Mathias Maucher, Social Policy Coordinator, Barbara Caracciolo, Development Education Project Officer, Published on 8 October 2008 SOLIDAR is a European network of 47 NGOs and labour movement organisations working towards all people around the world being able to live in dignity. SOLIDAR promotes solidarity, equality and social justice in the fields of social policy, international cooperation and education. SOLIDAR works in Europe and worldwide in alliance with trade unions, organisations of the labour movement and civil society. For more information visit 6/6

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