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ECJ overturns Austrian regulations against wage and social dumping

Black Tuesday for Social Europe: On 13th November the European Court of Justice (ECJ) overturned parts of the Austrian law to combat wage and social dumping. Specifically, it concerned a Slovenian posting company from the construction industry that had violated Austrian regulations against wage dumping. The Austrian client had to deposit money for possible penalties. There is a good reason for this: in practice, penalties against foreign dumping companies are virtually impossible to collect across borders.

Fraud firms can continue cheerfully

The decision of the Court is as follows: These rules are incompatible with the principle of ‘freedom to provide services’. This means that the ECJ has once again shown itself to be a brake on the fight against wage and social dumping. It is true that the judges have to admit: The Austrian regulation certainly serves the protection of employees and the fight against social fraud and would therefore be justified. But the European Court of Justice assumes that the regulation is not “proportionate”, completely alien to the world and practice. The consequence: wage and social dumping is facilitated, the fraudsters can continue cheerfully.

Wage dumping is becoming more and more the rule

The latest figures from the construction industry are alarming: in the first half of 2018, almost 50 per cent of foreign posting companies engaged in wage and social dumping, while the figure for local companies was only around 1 per cent.

Employment authority and social progress protocol now!

The rapid enforcement of the European Employment Authority is more urgent than ever. The next Council of EU Social Ministers in December must finally clear the way, while the Austrian Presidency has to abandon its filibustering tactics. Such a labor authority would be a first step towards a better cross-border fight against wage dumping.

[translation from the text ‘Lohndumping wird leichter’ on the OEGB website]