[article]A present from our Charlie

simu

This is an article from today's Irish Times about the EU services directive - new legislation proposed to make conditions easier for businesses operating in different EU countries.

Certainly, from the way it's explained in this article, it sounds like a disastrous plan that would diminsh the rights of workers in Ireland and elsewhere yet we don't seem to be aware of what's going on at all in this country. What are people's thoughts?

A present from our Charlie
Mary Raftery


With the Government flailing about on the nursing homes debacle, Charlie McCreevy must be thanking his lucky stars that he got out when he did.

It was, after all, his imperious edict that medical cards be granted as of right to all over-70s that opened up this particular can of worms like a knife through butter.

That is not to say it is all sweetness and light in Brussels for Kommissar McCreevy, as he is referred to on the EU website. Coming down the tracks at us is a particularly nasty piece of European law which could wipe away overnight many of the hard-won rights secured by Irish workers. And it is our very own kommissar who has the job of seeing it through.

This is the EU services directive, introduced by McCreevy's predecessor at the commission, Dutchman Fritz Bolkestein, now a figure of hate across large swathes of Europe, a fate McCreevy must be eyeing with some nervousness.

The directive seeks to enhance competition in service provision across Europe, allowing companies to do business anywhere in the EU without restriction. But of course wage levels and standards of workers' protection vary enormously throughout the EU. Decades of trade union activity in many European countries, including Ireland, have secured wage levels and worker rights far in excess of several of the newer members of the EU, predominantly the eastern Europeans.

The services directive confronts this discrepancy head on. If differing rights and benefits structures hinder the free movement of business operations, these rights must simply be dismantled. To level the playing field, it proposes the "country of origin principle". This states that companies will be subject only to the laws of their country of origin, rather than to the standards applying in those countries where they do business.

What this means is that in the case, for example, of a Polish company operating in Ireland, the pay and conditions of its employees need only be in line with legal minimums applicable in Poland. This would apply regardless of the nationality of the workers. The only factor determining their rights would be the location of the company's headquarters.

This immediately opens up the appalling vista of businesses relocating to countries with the lowest wages and worker protection legislation within the EU. Minimum wages could become a thing of the past. Countries might well compete in a race to the bottom to attract companies to locate within their borders. It is conceivable that Irish companies could slash wages and abolish employment rights for Irish workers simply by relocating their headquarters outside Ireland. The potential consequences flowing from the directive, including civil unrest, could be catastrophic.

During the European Parliament hearings on his job as Internal Market Commissioner last October, McCreevy described the services directive as a "visionary" piece of legislation. Arguing that it would facilitate those doing business by removing red tape, he robustly denied that it would have any negative consequences for workers and their rights.

The governments of France, Germany, Sweden, Greece, Belgium, Denmark and Portugal strongly disagree. Now mired in controversy, there are indications of divisions in the commission, with McCreevy beginning to distance himself from the directive. The Financial Times has denounced him as craven. He prefers to describe his U-turn as pragmatic.

But what about Ireland in all of this? Debate here as been almost non-existent. To their credit, both SIPTU and Labour MEP Proinsias De Rossa have tried to bring it to public attention and have expressed their strong opposition to the "country of origin principle".

The Government has been very quiet. Mary Harney appeared to support the directive last September, saying it was an important step in increasing competitiveness.

It has generally been the case that the bulk of EU directives have been of benefit to ordinary Irish people, through providing increased levels of protection across a range of social and environmental areas. The debate over the services directive goes to the heart of what kind of Europe we should have - whether it should seek to protect and enhance the rights of its citizens, or whether it should prioritise the interests of business across the EU.

As part of the "Lisbon Agenda" on economic development, the services directive indicates the most aggressive shift into the pro-business camp which the EU has so far displayed. That any serious debate on this should have passed Ireland by is a poor reflection on a Government which will shortly be expecting us to march, sheep-like, into the polls to pass another piece of EU legislation - its new constitution.

With the row over the services directive already threatening to derail French support at the polls for the constitution, we can get some idea of just how concerned the rest of Europe is at the commission's apparent willingness to sacrifice the rights of many of its citizens. It is about time we in this country woke up.

(from here )

Roisin Dubh

I really dislike this proposal with respect to the "country of origin" principle. I fear it would lead to the kind of cheap labour immigration competition I constantly warn about.

However, otherwise I agree with the idea of unrestricted entry into the electricity, gas, bus etc. markets across the EU except maybe the rail sector. We are supposed to be a single market in the EU after all.

Barriers to entry into markets were identified by the Competition Authority as a reason for prices being kep artificially high e.g. ban on below cost selling, Kings Inns monopoly of legal-qualifications. Barriers to entry are unfair to consumers and give unions the power to dictate terms.

Anyway, the Commission cannot pass this directive on its own. It will be blocked in the European Parliament and Council of Ministers. Most likely it will be watered down. I propose that the country of origin principle be removed while facilitating competition in the legal-sector, electricity and gas, and mortgage markets and transport sector and airports sectors (other than rail sector).

Meh

What this means is that in the case, for example, of a Polish company operating in Ireland, the pay and conditions of its employees need only be in line with legal minimums applicable in Poland.
...
It is conceivable that Irish companies could slash wages and abolish employment rights for Irish workers simply by relocating their headquarters outside Ireland.

I've read the proposed directive and as far as I can see this is incorrect.

(p45)
4) "Member State of origin" means the Member State in whose territory the provider of the service concerned is established;
(5) "establishment" means the actual pursuit of an economic activity, as referred to in Article 43 of the Treaty, through a fixed establishment of the provider for an indefinite period;

So if a Polish company set up a branch in Ireland, this would be a "fixed establishment" and their country of origin would be Ireland as far as the services directive was concerned. And if an Irish company moved their headquarters to Poland but left their factory in Ireland, the country of origin would still be Ireland as far as the Irish workers were concerned. As I read it, you could only pay Polish wages to workers in Ireland if you didn't have a fixed branch in Ireland at all and you ran the whole operation out of Poland. This would be pretty much impossible on anything above a small scale.

(p61)
Where a provider posts a worker to another Member State in order to provide a service, the Member State of posting shall carry out in its territory the checks, inspections and investigations necessary to ensure compliance with the employment and working conditions applicable under Directive 96/71/EC and shall take, in accordance with Community law, measures in respect of a service provider who fails

Directive 96/71/EC protects the rights of workers posted to a different EU member state. So Polish workers posted to Ireland under the services directive would enjoy the same rights as Irish workers, including the minimum wage.

bonkey

Roisin Dubh wrote:

I fear it would lead to the kind of cheap labour immigration competition I constantly warn about.
...
We are supposed to be a single market in the EU after all.

Constantly, eh? One would swear you've been saying it to us for a long time...but that couldn't be so, what with you being relatively new here 'n all.

Anyway...cheap shots aside....I hate to break it to you, but ever since we moved from being the EC to being the EU, we are supposed to be a lot more than a single market.

One of the basic principles is also freedom of movement - which would be entirely contradictory to your "immigration competition" notion.

I believe that the principle behind this proposal is entirely consistent with the ultimate aims of the EU regarding integration. However, I also believe that it would be premature to take such action at this point in time, and I am furthermore unconvinced that it would not be prudent to abolish such significant barriers all at once.

Barriers to entry into markets were identified by the Competition Authority as a reason for prices being kep artificially high

But you want to keep barriers in place. You did say that we need to protect ourselves from cheap labour competition. How else can we do that if not by erecting barriers to ensure that our comparatively high costs can be artificially supported?

I propose that the country of origin principle be removed while facilitating competition in the legal-sector, electricity and gas, and mortgage markets and transport sector and airports sectors (other than rail sector).

One can safely assume that you neither work in nor intend to work in any of those industries then, eh? Bring in the competition for the stuff you'd like to see made cheaper, whilst ensuring that the plum jobs and (interestingly) the lower-wage positions remain firmly in Irish hands.

Whats that you said about a single market again?

jc

Roisin Dubh

As part of the "Lisbon Agenda" on economic development, the services directive indicates the most aggressive shift into the pro-business camp which the EU has so far displayed. That any serious debate on this should have passed Ireland by is a poor reflection on a Government which will shortly be expecting us to march, sheep-like, into the polls to pass another piece of EU legislation - its new constitution.

Actually the Lisbon agenda does not include this directive. This directive is based on one interpretation of how to implement it in practice.

In answer to Bonkey, I am keener on a single market in goods and services than in people. But if people are to come here then they should not be allowed to pay workers less than the minimum wage.