Juncker’s promise to truckers (in the West)

The fight against populism goes on the road.

Brussels is looking for ways to persuade Europe’s citizens it’s working for them — and beefing up rules to protect West European truckers from so-called social dumping may be just the way to do it.

The European Commission presented its mobility package on Wednesday, revamping some of the rules that apply to international transport drivers.

In a major concession to France, Germany and Austria, the Commission proposed a very tough policy for applying the Posted Workers Directive to truckers, making local labor rules and minimum wage rates apply after only three days out of their home countries.

The original suggestion from the Commission’s transport department was for seven days. But that was cut in what sources say was pressure from Western Europe, where politically powerful trucking industries feel under threat from shippers based in low-wage countries in Central Europe like Poland and Romania.

“There is no place for social dumping in the EU. There is no room for nomadic drivers in the EU either,” said Transport Commissioner Violeta Bulc.

The other big rule change suggested Wednesday applies to cabotage — the term for trucks making additional deliveries and drop-offs while on foreign runs. The proposal is for unlimited deliveries over five days, while current rules allow truckers to perform up to three such operations within a seven-day period.

Europe’s road transport sector employs around 5 million directly, with some 560,000 companies registered throughout the bloc. Many of these are small or family-owned firms, according to Bulc.

That’s a powerful blue-collar electorate. In a time of post-Brexit turbulence, the Commission is keen to show that the EU matters in everyday issues of concern to ordinary people. It’s especially pressing following elections where voters saw off Marine Le Pen’s populists in France and Geert Wilders in the Netherlands.

Brussels is making similar efforts in other areas, like its mobile roaming policy that cuts rates for foreign calls, and tentative plans for free travel tickets for young people.

The mobility package proposal is in line with Commission President Jean-Claude Juncker’s promise of “equal pay for equal work in the same place.”

Paris-Berlin axis

As well as illustrating many of the Juncker Commission’s priorities, the package also shows how the EU’s Franco-German core can clash with the interests of poorer, newer member countries in Central Europe. They see the new laws proposed Wednesday as an attempt to appease Berlin and Paris by helping protect their labor markets, rather than tackling social problems in the road transport market head on. The Commission is keen to stress the plan will help exploited truckers too.

“It’s because Polish transport companies, Czech logistical companies, and Romanian IT companies are starting to become more competitive and are succeeding in the EU,” Polish Deputy Prime Minister Mateusz Morawiecki said last week in Brussels. “Because of that there’s an effort to try to limit that competition on the part of the countries of Western Europe.”

The term “social dumping” is used in high-wage Western Europe to describe competition from companies registered in low-wage Eastern Europe, where workers are paid lower salaries even when working in the wealthier part of the bloc.

In the road transport sector, that often means Poles, Slovaks and Romanians ferrying goods across France, Germany and Austria. The problem is that they are paid their home country wages, either by local businesses or by so-called letterbox companies registered as outposts in low-wage markets by Western firms to take advantage of cheap labor.

One Austrian study claims that skirting existing rules displaces 14,000 jobs in the country and costs the national economy €500 million a year. But so far enforcement has been all but impossible because agencies aren’t cooperating efficiently and a paper-based registration system is difficult to manage.

The losers are the drivers: both those in the West who are out of jobs and those from cheaper countries working under what German Green MEP Michael Cramer called conditions of “modern slavery.”

“There was a truck driver on the road for eight months who wasn’t allowed home even when his first child was born. He was paid the Romanian local wage of €233 per month,” said Cramer.

Bulc calls the current system “a mess,” with intensifying opposition to the liberal market from some Western European countries provoking consternation in the East where some countries feel they are being shut out despite having a legitimate competitive advantage in their lower labor costs.

“It’s a political issue in my view, because President Juncker made this promise,” said Zsolt Darvas, a senior fellow at the Bruegel think tank. “It’s very topical in some countries like France, Belgium and the Netherlands. Politicians in these countries see there is a problem with posted workers and that it can undermine the functioning of the single market.”

West-East clash

Germany, France and Austria have already brought in laws mandating that truckers have to earn local minimum wages for every hour they work in the territory of those countries in an effort to appease angry hauliers. The Commission has opened infringement cases against them, calling the laws disproportionate. The reforms proposed Wednesday aim to bring order to the issue.

“These are serious challenges to the single market,” said Bulc.

The fight is throwing up unusual coalitions. In addition to the now-traditional East-West cleavage, Portuguese and Spanish truckers will struggle just as much as Lithuanians or Romanians to make it back from Germany and France in a three-day window. Booming road haulage sectors in some countries could be quickly cut back.

One group of countries, led by France, wants increased enforcement. Another group of largely Central and Eastern European countries spearheaded by Poland wants to keep the market open and argues any restriction to work undermines the internal market. A third, loose grouping, composed of in-betweeners such as Ireland and the Czech Republic, is looking for a compromise.

“There’s a lack of trust on both sides. What we want is a fair debate,” said a Central European diplomat.

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