France’s Macron sets sights on EU rule on detached workers

The regulation has come under fire from critics in rich nations, who say it amounts to “social dumping” in which payments to costly health and welfare systems are avoided.

Faced with faltering ratings at home, Macron seeks to drum up support for his plan to overhaul the rule during a diplomatic blitz through eastern and central Europe.

“The European directive on detached workers in its current format is a betrayal of the European spirit,” Macron said in the Austrian city of Salzburg at the start of his tour.

He heads to Romania on Thursday and Bulgaria on Friday.

“The single market and the free movement of people weren’t created to help countries promoting the lowest social rights. This is what stokes populism in our countries,” he told reporters at a joint press conference with Austrian Chancellor Christian Kern.

“Austria and France are on the same wavelength,” Macron added.

Both countries are among the EU’s key recipients of so-called “posted workers” from central and eastern European nations.

The directive was launched in 1996 to help stimulate cross-border business activity.

But at the time the EU’s membership comprised countries of broadly similar living standards.

Critics argue that the bloc’s expansion in 2004 opened the system to abuse.

Firms in the former Communist countries of eastern and central Europe pay salaries that are far lower than in western Europe.

They thus start with a huge competitive advantage when bidding for work abroad in wealthy countries — and do not contribute to the cost of maintaining the local social safety net.

– Trend on the rise –

Although the posted workers issue affects less than one percent of the EU’s workforce, experts say the trend is on the rise.

Austria has seen the number of posted workers rise from around 106,000 in 2014 to 166,490 in 2016 in a workforce of four million, according to the Vienna-based research institute L&R Sozialforschung.

France meanwhile employed some 286,000 temporary workers in 2015 under the directive.

Backed by Vienna and Berlin, Paris now wants the job duration to be limited to 12 months, half the period proposed by the European Commission.

However, the so-called Visegrad Four group — Hungary, Poland, Slovakia and the Czech Republic — say the proposal goes too far and tries to undercut their interests.

Along with Kern, Macron discussed the sensitive issue with the leaders of Slovakia and the Czech Republic in Salzburg on Wednesday afternoon, hoping to win their backing.

Notably absent from the French president’s tour are meetings with the hard-right and conservative leaders of Hungary and Poland, with whom Macron has repeatedly clashed.

Poland is the country that benefits most from the Posted Workers Directive.

An estimated 500,000 of its nationals are employed by Polish companies in other EU members.

– ‘Protective Europe’ –

Top officials in Brussels on Wednesday welcomed Macron’s reform push.

The European Commission and its president, Jean-Claude Juncker, “have made the fight against social dumping one of their key priorities”, said Alexander Winterstein, a spokesman for the EU’s executive body.

Macron hopes to seal a reform deal at a summit on the EU directive in Brussels on October 19-20.

Ahead of the crucial meeting, he will host leaders from Germany, Spain, Italy and the Netherlands later this month.

Franco-German unity is seen as a pre-requisite for an overhaul of the rule.

Paris and Berlin are “completely” in agreement, according to French diplomats.

Pierre Vimont, a senior fellow at the Carnegie Europe think tank, called changing the directive “a symbolic case” for Macron whose popularity ratings have plummeted since he took office in May.

“Macron needs to deliver for French public opinion,” Vimont said.

The move is a crucial part of Macron’s broader push to create a new “protective Europe” that helps shield citizens from the effects of cut-throat international competition.

The 39-year-old centrist is pushing for a new mechanism to screen non-EU investments, particularly from China, into strategic areas of the European economy, as well as tougher measures to block the dumping of cheap imports on the continent.

He also wants much deeper integration of the eurozone, including giving the 19-country currency bloc its own budget, finance minister, parliament and borrowing capacity.