SEB: Posted workers deal tantamount to customs duty on services ({{commentsTotal}})

Mihkel Nestor.
Mihkel Nestor. Source: ERR

The agreement on the directive on posted workers achieved in the EU will undermine the competitiveness of Estonian businesses, as it effectively costitutes a customs duty levied on services, SEB analyst Mihkel Nestor said.

"[French President] Emmanuel Macron, who otherwise stands for economic liberalism, has described a situation in which a Polish construction worker receives a lower wage working in France as betrayal of European spirit," Nestor said in a press release on Friday. "From Estonia's viewpoint, however, this is one of the main means of catching with the richer Europe."

According to Nestor, labor costs are one of the determining factors in competition among nations, and imposing equal wages supports the richer countries.

"Equal pay effectively is a customs duty imposed on services, which makes posting a worker to another country pointless," he continued. "In what way should a small poor country catch up with a richer one then?"

According to the analyst, the sector affected most by the deal on posted workers in Estonia is the manufacture of wooden houses.

"The export of wooden houses to Scandinavia, which includes their on-site assembly as a service, has been one of our biggest success stories in recent years," he noted. "While it seems likely that businesses will find ways to bypass the new rules, would it be possible for us to speak of a big success with export as well if the competitive advantage resulting from labor costs did not exist?"

Following 11 hours of deliberations on Monday, the labor ministers of EU member states reached a compromise on the rights and responsibilities of posted workers.

"I believe that we have found a balanced compromise," said Estonia's Minister of Health and Labour Jevgeni Ossinovski, who led the meeting. "We have strong support for the achieved agreement."

Poland, Hungary, Latvia and Lithuania were against the measure, however, while the U.K., Ireland and Croatia abstained from the vote. The remainder of EU member states supported the compromise.

According to the agreement, a worker temporarily posted to another country should receive the same payment for their job as the corresponding local worker.

The most disputes emerged concerning questions on how long a posting should be for the worker to be treated equally to local workers. The time limit was reduced from two years to one year at France's proposal, however this period may be extended to one and a half years.

The European Parliament and ministers of member states are to continue negotiations concerning the final wording of the posted workers directive.

Editor: Aili Vahtla

Source: BNS

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