On September 20, 2023, the European Labour Authority (ELA) published a report on the provision of information, enforcement, social security coordination and cooperation between member states in relation to the posting of workers in the EU construction sector.
Overview of the analysis from ELA
The study, conducted between October 2022 and May 2023, identifies a number of shortcomings in enforcement and dissemination activities, as well as measures to overcome them. It also includes cross-border matching initiatives to address labour market imbalances in the sector.
The results of the study are significant for the ELA as they provide guidance on how to improve its support to Member States in these activities.
Why was the ELA analysis necessary
This analysis was necessary because the construction sector plays a key role in the EU economy, employing about 13 million people and contributing about 5.5% of gross value added (GVA). In 2021, approximately one in four A1 portable documents were issued for services in the EU construction sector.
This equates to a rough estimate of 833,000 A1 models issued in the sector.
Furthermore, it is important to note that a relatively high percentage of third-country nationals are employed in the EU construction sector and posted in Member States other than their country of residence.
In this context, posted workers and their employers are not always fully aware of their rights and obligations, despite numerous initiatives to improve the communication of relevant information by social partners, Member States and the European Commission. The sector also struggles with labour and skills shortages and, although some cross-border initiatives exist to address these shortages, they are often hampered by language and cultural differences as well as limited recognition of skills and qualifications.
ELA highlights violations and abusive practices in the construction sector across Europe
In addition to the above, there are the most widespread violations and abusive practices highlighted by the ELA analysis, namely:
- the creation of fictitious companies, also known as ‘letterbox companies’,
- the non-respect of working conditions,
- the fictitious self-employment,
- the fraudulent use of the A1 portable document,
- the fraudulent posting of third-country nationals.
Labour inspectorates can inspect and sanction these violations and abusive practices, but they often lack sufficient financial and staff resources. They often face difficulties in identifying certain factual elements in these posting contexts (e.g. the place of registration of companies, the number of executed contracts, whether posted workers return to work in the Member State of origin or not) in order to properly carry out their inspection activities. Moreover, the imposition of sanctions and their effective enforcement may be difficult in a cross-border situation.
The initiatives from Member States
Member States have already implemented several initiatives, including skills development, training opportunities and cross-border cooperation. There are also several initiatives to make the recruitment of third-country nationals possible, often through bilateral agreements with third countries.
However, the issues mentioned need further remedial measures.
ELA identified measures to prevent non-compliance
The report identified several measures that could prevent non-compliance. Among these, the following are highlighted in particular:
- the provision of social identity cards to posted workers,
- subcontracting chain liability schemes to make it possible to identify the actors in these chains,
- limitations on subcontracting,
- specific rules on public procurement.
Another necessary measure is the information and awareness-raising of workers and employers. In the past, Member States, together with social partners and the European Commission, have taken several measures to better disseminate information to workers and employers about their rights and obligations in the context of posting.
Despite this, workers and employers in the construction sector are still not considered well informed. Moreover, serious shortcomings in communication tools and methods have been identified, which lead to confusion and difficulties in accessing relevant information, e.g. the use of complex legal language, lack of translations and scattered sources of information.
Results of the study
The results of this study suggest that the European Labour Authority (ELA) could play a more active role in supporting a better implementation of the posting rules in the construction sector in the Member States, in communicating information to workers and employers concerned and in helping to improve the collection of data on labour mobility in the construction sector.
In conclusion, the ELA’s strategic analysis series tracks emerging trends, challenges and gaps in the areas of labour mobility and social security coordination. The analyses contribute to the risk assessment to inform the operational activities of the ELA and the work of the competent national authorities and, where appropriate, the social partners.
The study concludes with a set of operational conclusions drawn on the basis of the results of the analysis and its main evidence. These considerations were formulated with the mandate of the ELA in mind, but may be useful to inform a broader set of actors.
For further details, please refer to the report in its full version downloadable from the official ELA page.