New study “Cross Border Labour Costs” by Marek Benio, PhD

The need for data on posted workers in Europe is growing. Posted workers constitute less than 1% of total labour force in the EU. When it comes to posting from low wage member states to high wage member states their share of the EU labour market is 0,2%. According to posting of workers directive they are paid no less than minimum rates of pay of the receiving state. Yet this is the group accused for social dumping and displacement of local companies, unfair competition and pressure on social standards of the high wage member states.

The survey carried out recently at the Cracow University of Economics was aimed at determining the structure of the labour cost of posted workers. It’s goal was to show the components of the wage as well as indirect labour costs. Special attention was paid to costs of labour related only to the fact that the service is provided on the territory of another member state than that of the service provider. Those costs are called cross border costs of labour.

Based on the questionnaire, the research method, was seeking the real financial data and not projections based on legal framework. Thus the gathered data consists of aggregated real financial records of the companies on costs of posting of workers. The survey has covered the grand total of 20 623 incidents of postings from Poland (based on number of PDs-A1) over 3 years: 2013-2015. This sample constitutes 2% of all PDs-A1 issued in Poland. The receiving member states were: Germany 47%, France 34%, Belgium 19%, Sweden and Norway (insignificant). The services were provided in the following sectors: construction 34%, care for elderly 25%, production 20%, logistics 12%, metal 9%.

NET average wage = EURO 9,97 was 17% higher then the minimum rates of pay required.

Cross-border labour costs – 29%. The costs connected to the fact that the service is provided in

CONCLUSIONS

1 Posting of workers involves extra “cross-border” costs that are related only to the fact that the service is provided in the other Member State than the Member State of establishment of the service provider. These are the costs which local service providers do not have to incur. In the surveyed undertakings such costs represented 29% of the total labour cost.

2 Extra “cross-border” costs are compensated by lower employers’ margins, tax and social security contributions and posted workers’ lower-than-average, but higher-than-minimum remuneration.

3 Polish posted workers earn significantly more than the minimum rates of pay required by host countries. This suggests that their services are not chosen because of the “cheap labour”. The study shows that there is a significant difference between the level of remuneration and the total cost of labour in case of posted workers. The remuneration of posted workers is only one of many factors determining the final price of the cross-border services and competitiveness. This part of the study proves social dumping by posted workers to be false.

4 Further research in the host countries is needed to establish the reasons why Polish service providers are being chosen by the clients in other Member States. Possible reasons include skill shortage in the receiving member state, high quality and efficiency of the service.

We invite you to read the whole raport 

 

Rate this post