1 adapt to wants Asscher Lodewijk Affairs To of pay, Social equal Minister guarantee clashing. are euro and the market internal the to relating principles fundamental as well as sensitivities national mobility, labour European on discussions Inthe reasons. several for task, adifficult itself setting is the subject, this on In focusing work’.equalon pay for ‘equal based field playing alevel promote work’, ‘decent advocating by and, Europe within conditions employment on competition fight ‘unfair’ to wants in 2016. Netherlands The of Ministers Council of the Presidency Dutch of the points main focal of the one is migration Labour 1. de Detacheringsrichtlijn’, 18 2015. June Detacheringsrichtlijn’, de over Thyssen Eurocommissaris aan ‘Brief Asscher, Minister and 16 2, 2015, p. June arbeidsmigratie’, Dutch Government, ‘Kabinetsreactie SER-advies SER-advies ‘Kabinetsreactie Government, Dutch and the “sending” countries and the role of labour migration in the EMU. in the migration of labour role and the countries “sending” and the “receiving” of the interests diverging the objectives, policy and social market internal between balance the include agenda Dutch the by posed challenges The Presidency. EU Dutch the of priority specific this to regard with of tension areas the identify to is brief policy aim of this The States. EU Member other from workers temporary governing conditions the regulates that Directive of Workers Posting current the to out goes interest Specific Europe. within conditions employment on competition ‘unfair’ prevent to has workplace same in the work for Equal pay equal Presidency. Dutch Union. European the of Presidency the willhold 2016 half of first Netherlands the In the Introduction A political and economic minefield economic and political A agenda European Asscher The NOVEMBER 2015 The sensitive topic of labour migration is one of the main focal points of the of the points main focal of the one is migration of labour topic sensitive The 1

3 2 social (relative) including of integration, side highlight social the increasingly to integration in European trend current the EMU. of the development further the on EU negotiations of the heart the to back state welfare and the regulation market labour levels, wage on EU debates old shifts thus plans Asscher’s States. EU Member other from workers temporary governing conditions the regulates that Directive of Workers Posting current the 1997, 138-141. pp. Theory, Practice, and Analysis website BNR Brussel’, met aan strijd gaat Asscher werknemers: buitenlandse ‘Goedkope K. Meijnders, 2015, and 18 June Detacheringsrichtlijn, de over Thyssen Eichengreen, B. J. J. B. Eichengreen, Eurocommissaris aan Brief Asscher, Minister , 27 February 2015. February , 27 European Monetary Unification: 3 The plans fit into into fit plans The . Cambridge, MA: MIT, MIT, MA: . Cambridge, 2

Adriaan Schout, Jan Marinus Wiersma & Mariana Gomes Neto Policy Brief Clingendael Policy Brief

minimum income and European solidarity.4 2. The EU Presidency and the The issue of employment conditions has Dutch social agenda always been closely linked to support for the EU.5 Given the growing doubts about public support for the EU, the Dutch agenda First of all, it is important for the Netherlands on levelling wages is a pillar of the Europe to be aware of the different roles it will play strategy of the Rutte-2 Cabinet. It thus links during the Presidency of the Council of the the debate on labour migration as a means European Union in 2016. Since the Lisbon of increasing labour mobility in the EU with Treaty, the Presidency’s efforts have mainly socially desirable limits. With the introduction focused on the rolling agenda. As already of the euro, and thus with the disappearance indicated by the Letter to the House of of the exchange rate mechanism, labour Representatives about the substantive mobility could be an important adjustment preparations, the role of the Presidency mechanism to absorb shocks within the EMU is largely that “of a reliable and efficient area. In particular many workers from the intermediary that forges compromises newest EU Member States have been making between the 28 member states and between use of the free movement of persons and the Council, Commission and European services.6 As a result, (wage) competition on Parliament”.8 Of course, each country wants the labour market has increased, including to emphasise certain points or draw extra complaints about ‘unfair competition’ and attention to specific issues of its own at a ‘race to the bottom’ on employment informal meetings.9 A well-thought-out and conditions.7 targeted selection of priorities can contribute to a successful Presidency.10 Against the background of the Dutch EU Presidency, we will briefly go into the The Dutch Presidency focuses, according discussions about the Posting of Workers to its own statements, on key issues,11 Directive (section 2). The labour migration and Minister Asscher has designated topics are analysed in section 3 in relation to working on a decent European labour tensions between the Dutch aspirations and market as his priority.12 In February 2015, EU legislation. The conclusions in section 4 he formulated four objectives: (1) expanding specify the challenges for the Dutch responsibility in a subcontracting chain, Presidency by stating that the official Dutch (2) operationalising the platform for fighting Presidency strategy on social standards undeclared work, (3) getting rid of PO box clashes with the Dutch wishes regarding the companies, and (4) reviewing the Posting of euro and with the priorities of other Member Workers Directive.13 States. The result is an unenviable starting point for the Presidency.

8 Dutch government, ‘Kamerbrief betreffende inhoudelijke voorbereidingen Nederlands EU-voorzitterschap 2016’, 28 January 2015. 9 Schout, J.A., S. Vanhoonacker (2006) ‘Evaluating Presidencies of the Council of the EU Revisiting 4 Macron, E. and Gabriel S., ‘Europe cannot wait any Nice’, Journal of Common Market Studies, 449(5), longer: France and Germany must drive ahead’, 1049-1075. The Guardian, 3 June 2015. 10 Rood, J.Q. and Van Keulen, M., ‘Nederland op de 5 Pellikaan H., H. Vollaard and S. Otjes, Europe in voorzittersstoel’, Internationale Spectator, no. 6, The Netherlands, : Scientific Council for 2004, p. 290. Government Policy (WRR), May 2007, p. 42. 11 Rijksoverheid, ‘Koenders: ‘EU-voorzitter Nederland 6 Berntsen, L., ‘Agency of Labour in a Flexible zet in op hoofdzaken, innovatie en band met Pan-European Labour Market’, Phd diss. Faculty burgers’, 28 January 2015. of Social Sciences of the University of Jyväskylä, 12 Rijksoverheid, ‘Kabinet zet in op beperking duur June 2015, p. 58. detachering EU werknemers’, 16 June 2015. 7 Rijksoverheid, ‘Onderzoek arbeidsmigratie: 13 Asscher, L., ‘Toespraak van minister Asscher (SZW) verdringing door ongelijke concurrentie’, op het symposium Arbeidsmigratie Limburg’, 20 November 2014. 9 February 2015.

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Via a motion, tabled by the PvdA of rules helps to sustain such abuse.20 (Dutch Labour Party), Asscher has The adoption of the Enforcement Directive in already gained wide support from the 2014 was meant to improve the application House of Representatives for prioritising of the Posting of Workers Directive, e.g., a fundamental review of the Posting by arranging cross-border collection of of Workers Directive during the Dutch fines, chain responsibility (in the building Presidency.14 According to the Cabinet, the industry), national possibilities for control, current Directive leads to unfair competition and identification of PO box companies.21 between Dutch workers and posted workers However, the European trade union from other EU countries.15 The Dutch movement called the compromise reached government aims to reduce differences in ‘disappointing’, pointing to the remaining pay between these groups and to ensure that problems of under-payment and abuse.22 the principle of equal pay for equal work in Mijke Houwerzijl also points out that these the same workplace will apply throughout small steps probably amount to not much the entire EU.16 more than “mere drops in the ocean”.23

The Posting of Workers Directives regulates Another controversial issue is the fact the temporary hiring of foreign workers at a that, under current European regulations low cost.17 Article 3, para. 1 of the Directive governing posted workers, for a period of stipulates that only a basic package of two years no social security and pension employment conditions of the receiving contributions need to be paid in the country shall apply to the posted worker. country of employment, but only in the These are so-called hard or key conditions country of residence.24 This promotes legal of the receiving country, such as minimum competition on the payment of social security wages, maximum working hours and a contributions25 and is regarded as unfair. minimum number of holidays.18 Practice It makes posted workers cheaper than Dutch shows, however, that the Directive’s staff, which, according to Asscher, amounts provisions are often not complied with. to “a complete overhaul of the market”.26 A few concrete examples of abuse named by the Social and Economic Council (SER) are failure to apply hard employment conditions, wrongful designation of travel and subsistence allowance as wage and 20 Houwerzijl, M. S. (2014). Concurreren met behulp wrongfully acting as a foreign service van detacheringsarbeid. In J. Cremers, I. van den provider via a PO box company.19 In addition, Burg, C. Hamans, & A. Pilon (Eds.), Voorbij de it is stated that the inadequate enforcement retoriek. Sociaal Europa vanuit twaalf invalshoeken. (Vol. WBS Europa Fonds, pp. 91-105). : Van Gennep Amsterdam, p. 119. 21 Rijksoverheid, ‘Betekenis bereikte akkoord over de 14 Motion by MP Maij et al. about a renewed handhavingsrichtlijn’, January 2013. Posting of Workers Directive, Kamerstuk 34166-6, 22 ETUC, ‘Provisional deal on posting of workers will 2 April 2015. not put an end to social dumping’, 5 March 2014. 15 Rijksoverheid, ‘Onderzoek arbeidsmigratie: 23 Houwerzijl, M. S. (2014). Concurreren met behulp verdringing door ongelijke concurrentie’, van detacheringsarbeid. In J. Cremers, I. van den 20 November 2014. Burg, C. Hamans, & A. Pilon (Eds.), Voorbij de 16 Minister Asscher, ‘Toespraak van minister Asscher retoriek. Sociaal Europa vanuit twaalf invalshoeken. (SZW) op het symposium Arbeidsmigratie Limburg’, (Vol. WBS Europa Fonds, pp. 91-105). Amsterdam: 9 February 2015. Van Gennep Amsterdam, p. 102. 17 Houwerzijl, M. S. (2014). Concurreren met behulp 24 SER, Advies arbeidsmigratie, Advice 2014/9, van detacheringsarbeid. In J. Cremers, I. van den December 2014, p. 32. Burg, C. Hamans, & A. Pilon (Eds.), Voorbij de 25 Kremer, M. and Schrijvers, E., Policy Brief 1 - retoriek. Sociaal Europa vanuit twaalf invalshoeken. Making Romanian and Bulgarian Migration Work in (Vol. WBS Europa Fonds, pp. 91-105). Amsterdam: The Netherlands, The Hague: Scientific Council for Van Gennep Amsterdam, p. 92. Government Policy (WRR), January 2014, no. 1, p. 8. 18 Ibid. 26 Meijnders, K., ‘Goedkope buitenlandse 19 SER, Advies arbeidsmigratie, Advice 2014/9, werknemers: Asscher gaat strijd aan met Brussel’, December 2014, p. 36. BNR, 27 February 2015.

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In a letter to Commissioner Thyssen of the hardening debate and of the reduced 18 June 2015,27 Asscher again set out his support mobility as integration principle. wishes. He emphasised, amongst others, the abuse of the Posting of Workers Directive, Many see labour migration as a threat, and the use of ‘bogus constructions’ and the abuse gets a lot of media attention due to inadequate enforcement. To level wages its socially sensitive nature. The discussion among workers as much as possible, the thus increasingly revolves around national focus will be on expanding the key conditions support.31 On several occasions, Minister in the Posting of Workers Directive so as Asscher expressed his concerns about the to further limit competition on conditions declining support among the population of employment. Likewise, Asscher wants for labour migration, and these concerns to attach stricter time limits to postings.28 are echoed by the SER.32 These feelings In addition, in an interview he said he are further exacerbated by well-known wanted to put an end to people working in examples such as underpaid East Europeans the Netherlands but paying social security in the Eemshaven and the exploitation of contributions in their own country.29 Portuguese people working on the new A2.

One of the concerns of the Netherlands and 3. Labour migration and the the other so-called ‘receiving Member States’ challenges for the Presidency relates to substitution on the labour market. Already in 2013, Minister Asscher issued a ‘code orange’ because less skilled workers The ‘decent work’ agenda is part of a more in the richer EU Member States would be fundamental discussion on labour migration disadvantaged by the free movement of in the EMU. The free movement of persons workers.33 He stated that “our weakest and services is inextricably linked to the citizens would not be able to compete with functioning of the euro and of the internal better skilled people from elsewhere”.34 This market. At the same time, these freedoms makes low wage competition in the service have been under pressure for a long time. industry a controversial issue. EU citizens are In 2004, temporary restrictions were imposed much more negative about importing free on the newly acceded countries. Today, in movement of services than free movement many EU Member States the drawbacks of goods.35 of the four freedoms (free movement of persons, goods, services and capital) that 3.1 Sending countries, receiving support the market have been gaining countries and the European attention, due to the euro crisis and rising Commission unemployment. As a result, the speed with In wanting to adapt the Posting of Workers which the various freedoms are realised Directive the Dutch Presidency is faced greatly varies. Since 1990, capital movement with several challenges. The first challenge has been liberalised at a rapid pace, but concerns the differences between Eastern in new member Croatia, for instance, free and Western Europe. Not so long ago, movement of workers can only be fully Asscher seemed alone in his wish to adapt realised in 2020, in line with what has been agreed.30 This example is characteristic of

31 Letter Ministry of Foreign Affairs, “Kamerbrief Inhoudelijke Voorbereidingen Nederlands EU-voorzitterschap 2016”, 28 January 2015, p. 11. 27 Minister Asscher, Brief aan Eurocommissaris 32 SER, Advies arbeidsmigratie, Advice 2014/9, Thyssen, 18 June 2015. December 2014, p. 10. 28 Ibid, p. 3. 33 Editorial, ‘Asscher: code oranje heeft gewerkt’, 29 Meijnders, K., ‘Goedkope buitenlandse Trouw, 9 May 2014. werknemers: Asscher gaat strijd aan met Brussel’, 34 Ibid. BNR, 27 February 2015. 35 Calmfors, L. et al., ‘Trade in Services and in Goods 30 Euractiv, ‘Labour ministers hammer out agreement with Low-Wage Countries– How Do Attitudes Differ on posted workers’, 10 December 2013. and How Are They Formed?’, SIEPS, 2009:6, p. 8.

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the Posting of Workers Directive.36 However, in 2014, it may be assumed that a large he is now gaining support from other number of these sending Member States receiving Member States. A letter on this will not support Asscher’s policy agenda matter addressed to Commissioner Thyssen in 2016. The question is whether the Dutch was co-signed by France, Germany, Sweden, Presidency will be able to stay neutral in this Belgium, Luxembourg and Austria.37 In the matter. recent past, receiving Member States also independently tried to protect their labour For a Presidency, good cooperation with markets. For instance, in anticipation of the European Commission is essential.43 the adoption of the Enforcement Directive Initially, there was little evidence of that in in spring 2014, France announced stricter the field of labour migration. The Barroso national rules for migrant workers.38 Commission seemed little enamoured with Minister Asscher’s ‘code orange’ and with The traditional ‘sending countries’ are his remarks about ‘the Dutch dykes that not very enthusiastic about such tighter were on the point of collapse’ as a result measures. In 2013, the ranking list of net of labour migration.44 Commissioner Neelie migration countries was headed by Poland, Kroes compared Asscher with a Hansje followed by Slovenia, Portugal, Hungary, Brinker putting his finger in the wrong dyke, Slovakia and Romania.39 Where the thus telling Asscher he ought to first take Netherlands refers to ‘distorted’ or ‘unfair’ a look at the problems on the Dutch labour competition, these Member States see their market.45 Former Commissioner Laszlo Andor cheaper labour as a legitimate competitive moreover accused Asscher of ‘xenophobia’.46 advantage.40 The sending Member States’ All in all, the previous Commission had opposition to restrictions also became its reservations about adaptations and evident when the Enforcement Directive pointed to the importance of the national for postings was adopted in spring 2014. enforcement mechanism.47 The current Hungary, the Czech Republic, Latvia, Estonia, Commission wants to play a more prominent Slovakia, Malta and the United Kingdom political role and seems open to the Dutch voted against.41 The Directive was adopted efforts. Upon his appointment, Juncker was at the last minute with the help of Poland, explicit in his wanting a targeted evaluation but according to then French Minister of the Posting of Workers Directive because Repentin “the deal was extremely difficult there is no room for ‘social dumping’ in to reach” and the balance was fragile.42 the European Union,48 and Commissioner Considering the voting pattern when Thyssen underlined that European legislation the Enforcement Directive was adopted

36 Rijksoverheid, Brief aan Eurocommissaris Thyssen, 18 June 2015, p. 3. 43 IOB Ministerie van Buitenlandse Zaken, Primus 37 Ibid. inter pares: Een evaluatie van het Nederlandse 38 Euractiv, ‘Deal on posted workers set for before EU voorzitterschap 2004, no. 314, July 2008, p. 42. elections’, 3 March 2014. 44 Asscher, L. and Goodhart, D., ‘Code Oranje voor vrij 39 European Commission, Report Posting of Workers: verkeer werknemers’, Volkskrant, 17 August 2013. report on A1 portable documents issued in 2011 and 45 Kroes, N., ‘Hansje Brinker herrijst’, Financieel 2012, December 2014, p. 15. Dagblad, 31 August 2013, and De Koning, P., 40 Houwerzijl, M. S. (2014). Concurreren met behulp ‘Niemand mag mij een xenofoob noemen’, NRC, van detacheringsarbeid. In J. Cremers, I. van den 10 December 2013. Burg, C. Hamans, & A. Pilon (Eds.), Voorbij de 46 Editorial, ‘Asscher: code oranje heeft gewerkt’, retoriek. Sociaal Europa vanuit twaalf invalshoeken. Trouw, 9 May 2014. (Vol. WBS Europa Fonds, pp. 91-105). Amsterdam: 47 Editorial, ‘België pakt sociale fraude verkeerd aan’, Van Gennep Amsterdam, p. 95. De Redactie, 25 September 2014. 41 Euractiv, ‘Labour ministers hammer out agreement 48 Juncker, J.C., ‘A New Start for Europe: My Agenda on posted workers’, 10 December 2013. for Jobs, Growth, Fairness and Democratic 42 Barbiere, C., ‘France moves ahead on posted Change. Political Guidelines for the Next European workers without waiting for EU’, Euractiv, Commission. Opening Statement in the European 14 January 2014. Parliament Plenary Session’, 15 July 2014, p. 7.

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was not meant “to promote social dumping.49 become symbolic of the tense relationship In the meantime, the latter is making between the social and economic objectives haste with a mobility package including of the EU and EMU. When, in the recent past, an evaluation of the Posting of Workers Member States did their best to introduce Directive.50 equal or better employment conditions for posted workers, these always conflicted 3.2 Internal Market versus social with the provisions on free movement.56 objectives The judgment of the European Court of The EU Treaty stipulates that the EU shall Justice in the Laval case showed that work for a highly competitive social market competition arising from national differences economy, aiming at full employment and in wages and employee protection are social progress.51 Where in the early years acceptable as long as the minimum the emphasis of the European integration standards of the Posting of Workers Directive process was largely on economic objectives, are observed.57 According to Houwerzijl attention for the social aspects appears to be and Van Hoek, the Court’s case in this growing.52 The enlargement, euro crisis and and similar cases evidenced “a positive growing pressure on the labour market have assessment of wage competition as impetus increased the focus on the social side of the to move services to, or offer them in another EU,53 and the European Parliament is looking Member State”.58 The Court thus endorsed for ways to incorporate the social dimension the promotion of the freedom of services as into the European economic coordination.54 main objective.59

The Posting of Workers Directive fits into Previously, the Commission also seemed to the search for a balance between market focus on the primacy of the internal market forces and social objectives. Its goal is as regards the free movement of workers twofold: stimulating the free movement of and services. Former Commissioner Andor services while safeguarding the protection of made clear that Member States “cannot the posted worker.55 The Directive has now cherry pick which of the freedoms they want”.60 The Dutch Cabinet is in favour of free movement of workers but does set limitations. According to the Netherlands, 49 Troost, N., ‘Detachering mag in Europa niet tot free movement should go hand in hand with verdringing leiden’, Volkskrant, 6 March 2015. better protection of workers.61 50 Juncker, J.C., ‘A New Start for Europe: My Agenda for Jobs, Growth, Fairness and Democratic Change. Political Guidelines for the Next European Commission. Opening Statement in the European 56 See, e.g., European Court of Justice, Case C-341/05, Parliament Plenary Session’, 15 July 2014, p. 7. Laval (2007) ECR I-11767-11894, para. 80, and 51 Art. 3(3) TEU. European Court of Justice, Case C-346/06, Rüffert 52 Goudswaard, K.P. ‘De Europese Unie: Economisch (2008) ECR I-1989, para. 32-33. en sociaal?’, SMA, 2006, p. 408. 57 Houwerzijl, M.S. and Van Hoek, A.A.H, 53 Juncker, J.C., ‘A New Start for Europe: My Agenda ‘Loonconcurrentie als motor van de interne markt: for Jobs, Growth, Fairness and Democratic Een tweeluik – Deel 1: de Arresten Viking, Laval en Change. Political Guidelines for the Next European Ruffers, verdragsaspecten’, Nederlands tijdschrift Commission. Opening Statement in the European voor Europees recht, no. 7/8 2008, p. 201. Parliament Plenary Session’, 15 July 2014, p. 7. 58 Idem, p. 205. 54 European Parliament, ‘Social dimension of EMU: 59 Houwerzijl, M. S. (2014). Concurreren met behulp more specific proposals needed, MEPs say’, van detacheringsarbeid. In J. Cremers, I. van den 5 November 2013. Burg, C. Hamans, & A. Pilon (Eds.), Voorbij de 55 Van Den Eeckhout, V., ‘Internationaal arbeidsrecht retoriek. Sociaal Europa vanuit twaalf invalshoeken. gemangeld tussen vrij verkeer van personen, (Vol. WBS Europa Fonds, pp. 91-105). Amsterdam: vrij verkeer van diensten, vrijheid van vestiging Van Gennep Amsterdam, p. 95. en non-discriminatie. Enkele aantekeningen 60 Andor, L., ‘Labour Mobility in the European Union – vanuit ipr-perspectief bij de uitspraken Viking, The Inconvenient Truth’, speech, 10 February 2014. Laval, Rüffert en C./Luxemburg’, 2009, p. 10, and 61 Nieuwsbericht Rijksoverheid, ‘Zeven Europese European Court of Justice, Case C-341/05, Laval landen voor eerlijke detachering EU-werknemers’, (2007) ECR I-11767-11894, para. 74-76. 19 June 2015.

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Employers and employees have widely 3.3 The EMU versus labour divergent views on labour migration and migration the operation of the Posting of Workers In practice, the adaption of posting Directive. The Confederation of Netherlands regulations will hamper labour migration. Industry and Employers (VNO-NCW) The Eurozone in particular will feel the believes that Asscher “is going too far” resulting negative effects because, within and puts too much emphasis on the the EMU, labour migration is one of the disadvantages.62 In a reaction to the most important adjustment mechanisms ‘code orange’, employers recognised that for absorbing asymmetrical shocks in the differences in employment conditions and Member States.67 The plans for a “decent wages may be considerable, but stated that European labour market” are thus at it was more important to “critically examine odds with the Dutch objective as stated whether Dutch collective labour agreements in the State of the Union to achieve the are still sufficiently capable of adaptation, “strengthening, deepening and institutional and whether our social security system design of the Economic and Monetary Union is still adequate”,63 seeing that, through (EMU)”.68 posting abroad, employers can gain cost benefits.64 Employees, on the other hand, Together with other Member States and emphasise the need to counteract abuse the EU institutions, the Netherlands has and fraud. The unions are therefore in worked hard to reform economic and favour of applying the principle of country financial policy through measures like the of employment rather than that of country Six-Pack, Two-Pack, European Semester of residence: if you work somewhere, the and the Banking Union, and in this respect rules of that country should apply to you.65 convergence – Member States growing They have said to be disappointed with the closer together – is an important goal.69 fact that the Commission only speaks of a Within the Dutch Cabinet, the views limited evaluation of the Posting of Workers on further strengthening the EMU are Directive, because this would not be enough divided. While Prime Minister Rutte’s to tackle the social dumping problem and intent is “to retain and restore as many realise equal pay for equal work.66 market incentives as possible”70, Minister Asscher emphasises the dangers of ‘unfair’ Of course, the question is whether a balance competition. The room for determining own can be struck between economic and policy is more limited now that monetary social considerations. The preparations policy is being defined in Frankfurt. for the Presidency at the Ministry of Social Countries with rising unemployment Affairs and Employment in consultation are therefore looking for new European with like-minded countries and with the instruments. The recently issued ‘Five Commission should bring clarity about the Presidents’ Report’ advocates, following the room for manoeuvre. Van Rompuy Report of 2012, a Brussels fiscal

62 Editorial, ‘Asscher slaat door over arbeidsmigratie’, 67 Fernandes, S. and Maslauskaite, K. Policy Paper Forum (VNO-NCW), 19 May 2015, p. 4. 98. A Social Dimension for the EMU, Notre Europe, 63 Ibid. September 2013, p. 5. 64 Kremer, M and Schrijvers, E., Policy Brief 1 - Making 68 Letter of the Dutch governement, ‘State of the Romanian and Bulgarian Migration Work in The Union 2015’, 23 February 2015, p. 10. Netherlands, Scientific Council for Government 69 D’Alfonso, A. ‘Rationale behind a euro area Policy (WRR), January 2014, no. 1, p. 9. “fiscal capacity” Possible instruments including 65 Editorial, ‘Vakcentrales aan Europees Parlement: a dedicated budget’, European Parliamentary Detacheringsrichtlijn niet scherp genoeg’, FNV, Research Service, 26 June 2013, p. 2. 21 March 2012. 70 Brief Ministerie van Buitenlandse Zaken, ‘Verslag 66 FNV ‘FNV Europa Nieuws’, FNV, 15 January 2015, van de Europese Raad d.d. 13 en 14 december p. 5. 2012’, 18 December 2012, p. 2.

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capacity to absorb economic shocks in the as [she] live[s]”.78 In a similar vein, Rutte Member States.71 argued that a euro budget is not necessary79 because this would take away the incentive It is clear, however, that the Eurozone to reform. He even went so far as to say that Member States have very different views introducing euro bonds at this moment was on this alternative adjustment mechanism. “madness’.80 Therefore, in a reaction to the European taxes to finance a European social Van Rompuy Report,81 the Dutch Cabinet policy are not popular in the Netherlands.72 particularly emphasised strengthening the And Germany, too, sees growing opposition internal market, including greater flexibility to a transfer union (Ausgleich). There, the of the labour market.82 According to the Bundesministerium der Finanzen has strongly Advisory Council on International Affairs criticised the transfers between the Länder (AIV), labour mobility from weak to strong because they take away incentives to reform economic regions is even a precondition for and have not led to convergence.73 This does the long-term sustainability of the EMU.83 not provide a solid basis for a discussion on a European Ausgleich. At the same time, the EU is struggling with its rigid labour market. Although over the France, Italy and other, especially Southern past years the number of intra-European European countries, however, regularly call migrant workers has risen from 4.7 million in for a certain degree of wealth transfer from 2005 to 8 million in 2013, this development North to South to facilitate reforms in the strongly lags behind the situation in the Southern Member States.74 However, in US.84 By way of comparison: in the EU, the current political reality the chances of 4 per cent of the professional population a budgetary union being realised any time live in another Member State while in the soon is believed to be extremely small.75 US over 30 per cent of the active population The Northern Member States find the idea live in a state other than where they were of Northern tax income disappearing to the born.85 The permanently low labour mobility Southern Member States hard to stomach. within the EU is all the more striking since Member States such as Germany, Finland76 unemployment in many Member States has and the Netherlands will not easily be forced to accept a European Ministry of Finance, the introduction of euro bonds or a European form of debt division.77 Merkel 78 Editorial, ‘The Coming EU Summit Clash: Merkel said she does not want euro bonds “as long Vows ‘No Euro Bonds as Long as I Live’ Der Spiegel Online, 27 June 2012, and Grässler, B., ‘Merkel affirms her rejection of eurobonds in budget debate’, Deutsche Welle, 24 November 2011. 79 Kamerbrief Rijksoverheid, ‘Kamerbrief over het 71 Juncker, J. et al., ‘Completing Europe’s Economic tussenrapport Toekomst van de EMU’, 15 October and Monetary Union’, June 2015, pp. 10-14. 2012, p. 5. 72 Press conference M. Rutte after the Council of 80 Editorial, ‘Rutte: eurobonds misschien over Ministers, 26 November 2010. tien jaar’, RTL Nieuws, 5 June 2012. 73 Der bundesstaatliche Finanzausgleich, Berlin: 81 Van Rompuy, H. et al, ‘Towards a genuine Economic Bundesministerium de Finanzen 2015. and Monetary Union’, 5 December 2012. 74 Probyn, C., in Wolzak, M., ‘Welvaartsoverdracht 82 Kamerbrief Rijksoverheid, ‘Kamerbrief over het van noord naar zuid is onvermijdelijk’, Financieel tussenrapport Toekomst van de EMU’, 15 October Dagblad, 1 December 2014. 2012, p. 5, and Editorial, ‘Eurotop over omstreden 75 Ibid. plan Van Rompuy. Krijgen we nu politieke unie?’, 76 Press release Finnish Permanent Representation NRC, 13 December 2012. to the EU, ‘Prime Minister Katainen in Brussels: 83 Advisory Council on International Affairs (AIV), Finland against the introduction of eurobonds’, Advisory Letter. Towards a stronger social dimension 24 May 2012. of the EU, no. 23, 23 June 2013, p. 8. 77 Evans-Pritchard, A., ‘Blaming the Spanish victim as 84 Andor, L., ‘Labour mobility within the EU’, speech, Europe spirals into summer crisis’, Daily Telegraph, 10 February 2013. 22 July 2012, and Editorial, ‘Soros: ‘Germany should 85 Arpaia, A. et al. ‘Labour mobility and labour market accept Eurobonds or leave the euro’, Euractiv, adjustment in the EU’, European Commission, 22 April 2013. Economic Papers, no. 539, December 2014, pp. 5-6.

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seen a sharp increase following the outbreak in unemployment.93 Over the past decade, of the financial crisis. At the beginning of income and wage discrepancies94 between the crisis, labour mobility even decreased by Eastern and Western EU Member States have 41 per cent in the EU area.86 been the main drivers of labour migration.95 Also, interestingly, despite the various The low labour mobility between Member restrictions on labour mobility, it is precisely States is partly due to language and cultural postings that have strongly gained in differences,87 and is moreover hindered popularity.96 Since the mid-eighties, by country-specific barriers related to the temporary migration through free movement design of social security systems, national of services has increased.97 Compared to rules and regulations, and the transparency 2010, the number of postings has risen of labour markets.88 The European sharply, amounting to 1.3 million postings Commission has therefore launched a policy in 2013.98 aimed at removing these barriers, e.g., by introducing European rules on pensions,89 Both the European Commission and the recognition of professional qualifications, and Netherlands say they want to stimulate the EURES system that serves as a platform labour mobility. This can be done by further for labour mobility.90 promoting temporary migration. However, if the focus shifts to levelling wages as much Labour migration in the EU is not primarily as possible, one of the main drivers of labour driven by unemployment. Although labour migration will disappear. OECD research migration from Southern Europe increased (1999) showed that, as a result of income by 73% in 2011 and 2012, the largest group convergence and smaller wage differences of migrant workers still comes from Eastern in the euro area, the motives to migrate as Europe.91 Within the EMU, the rise in mobility existed among South Europeans in the fifties from the South is, however, not enough to and sixties have disappeared.99 In the longer cause a substantial reduction in the average run, further wage convergence may put the unemployment percentage of 11.3%.92 brakes on labour mobility.100 This, in turn, The current trend in labour migration seems raises the question of who will be bearing the mostly the result of major wage and income social costs for emigration countries within discrepancies between Eastern and Western the Eurozone. Member States rather than of differences

86 Andor, L., ‘Labour mobility within the EU’, speech, 10 February 2013. 93 Andor, L., ‘Labour mobility within the EU’, speech, 87 SER, ‘EU-regelgeving en resterende belemmeringen 10 February 2013. voor arbeidsmobiliteit’, p. 52. 94 Eurostat, ‘Wages and labour costs’, May 2015. 88 Munz, R., ‘Memos to the EU leadership: To the 95 European Commission, Employment and Social Commissioner in charge of mobility, migration, Developments in Europe 2013, 21 January 2014, leadership, asylum and border management’, Chapter 5, Box 3, p. 284. Brueghel. 96 Berntsen, L., ‘Agency of Labour in a Flexible 89 E.g., Directive 2014/50/EU of the European Pan-European Labour Market’, Phd diss. Faculty Parliament and of the Council of 16 April 2014 of Social Sciences of the University of Jyväskylä, on minimum requirements for enhancing worker June 2015, p. 57 and pp. 63-64. mobility between Member States by improving 97 European Commission, Memo: Labour Mobility the acquisition and preservation of supplementary within the EU, 25 September 2014. pension rights. 98 European Commission, Study on the economic and 90 EURES is the European portal for labour mobility. social effects associated with the phenomenon of It is an online vacancy system for people looking for posting of workers in the EU, March 2011, p. 1. work in another country within the European Union. 99 OECD, EMU: Facts, Challenges and Policies, 1999, 91 Van der Hulst, A., De nieuwe gastarbeiders komen pp. 121-138. uit Zuid-Europa’, NRC, 11 December 2012. 100 Kremer, M and Schrijvers, E., Policy Brief 1 – Making 92 Arpaia. A. et al, ‘Quarterly Report on the Euro Area’, Romanian and Bulgarian Migration Work in The European Commission, Volume 14, No. 1, 2015, p. 19, Netherlands, Scientific Council for Government and Eurostat, Unemployment statistics, March 2015. Policy (WRR), January 2014, no. 1, p. 20.

9 Clingendael Policy Brief

4. Conclusion social objectives. The Dutch government is now particularly working to limit wage With the Asscher agenda the Netherlands competition, thus exactly underlining the is facing a complicated job in the run-up to social component of the internal market. the EU Presidency in 2016. It is important Many regard Asscher’s agenda, which for an EU Presidency to strike a balance aims to improve protection of workers, between expectations of neutrality, political as restricting labour mobility because it leadership and own interests. The sensitive reduces certain competitive advantages dossier of labour migration will be on the of low-wage countries. This raises the Dutch Presidency’s agenda. The forces question of whether adaptation of the at work in this regard promise to provide Posting of Workers Directive as intended by quite a challenge. The Netherlands itself is the Netherlands conflicts with an important considered a frontrunner in limiting ‘unfair’ objective of the EU to increase labour competition and this potentially reduces mobility. labour mobility, while other countries and the Commission, in contrast, are in favour Finally, reducing labour migration is at odds of increased mobility. Despite the fact that with the Dutch government’s wish to prevent the Netherlands is trying to forge coalitions, the EMU from becoming a transfer union. the tensions are considerable. Substantial Wage flexibility and labour mobility are opposition to the planned limited review of important adjustment mechanisms within the Posting of Workers Directive may be the EMU. The Dutch efforts in the EMU and expected from the ‘net sending Member the European Semester are directed towards States’, which are in the majority. ensuring that countries solve their own problems, e.g. by relying on labour mobility. Minister Asscher’s agenda is moreover a However, Asscher’s proposals aim to reduce delicate one because the balance between wage differences. Wage convergence social and economic objectives may change. imposed by Brussels can reduce labour In the past, the Posting of Workers Directive migration. In short: the Dutch ambitions seemed mostly meant to promote free conflict with each other, which is not a good movement of services rather than realising starting position.

10 About Clingendael

Clingendael is the Netherlands Institute of International Relations. We operate as a think-tank, as well as a diplomatic academy, and always maintain a strong international perspective. Our objective is to explore the continuously changing global environment in order to identify and analyse emerging political and social developments for the benefit of government and the general public. www.clingendael.nl

About the authors

Adriaan Schout is Senior Research Fellow and Coordinator Europe. He combines research and consultancy on European governance questions for national and European institutions. He has worked on projects addressing issues of the EU presidency, EU integration and Improving EU regulation, amongst others.

Jan Marinus Wiersma is Senior Visiting Fellow at the Clingendael Institute. For fifteen years he served as Member of the European Parliament and its Committee for Foreign Affairs.

Mariana Gomes Neto is a Research Fellow at the Clingendael Institute. Her research focuses on the role of the European Parliament, EU social policy, migration and the rule of law.