Presentations at the EZA/HIVA conference in April 2017 on intra-EU posting made it clear that, because of the highly mobile nature of work in the road transport, the implementation of the Posting of Workers Directive raised particular legal questions and difficulties in this sector. It was concluded that a follow-up seminar with a focus on exclusively the transport sector would be very useful in order to discuss the available figures as well as the legal complexity of the sector more in detail. A month after this conference, the European Commission presented the so-called ‘Mobility Package’. This package consists of several legislative proposals. One of them is the proposal to amend Regulations 1071/2009 and 1072/2009 in order to fight effectively letterbox companies and illegal cabotage. Also, the proposal to revise EU social legislation in road transport should have an impact on drivers’ working conditions. Concerning the posting of workers in the road transport sector, the proposal to amend Directive 2006/22/EC establishes specific rules, which prevail over relevant provisions of the Posting of Workers Directive and its enforcement Directive. The announcement of this proposal reinforced the need to organise a conference on the road freight transport sector.
On 26 March 2018 HIVA organised, for and in collaboration with the European Centre for Workers’ Questions (EZA) and with the financial support of the European Union and in collaboration with ACV – CSC Transcom, the conference “On the road. Economic and legal aspects of the road transport sector in Europe”. Some 170 persons registered for the conference, which took place in the Auditorium Dom Helder Camara in the Brussels ACV-CSC building, of which more than 100 members of the transport union ACV-CSC Transcom. Below we provide an overview of the conference highlights. For more detailed information, we refer to the presentations published at the website of HIVA:
Brief overview of the content of the presentations
The social dimension of the current legislative framework as well as of the recent proposal of the European Commission was discussed in this conference by confronting research with the opinion and ambition of stakeholders and policy makers. An ex-post evaluation of the social legislation concluded that the lack of clarity of certain legal provisions or the difficulty to implement and enforce them led to a non-homogeneous implementation across the EU and to a potential risk of fragmentation of the internal market. Moreover, the safeguarding of working conditions and of fair competition seemed sometimes at risk. This is partly because of the existence of letterbox companies and false self-employment within the transport sector. Other shortcomings of the rules concern the fact that the cabotage provisions are not specific on certain points and led to differences in Member States practices. Finally, there are different levels of control by Member States, in particular on the stable establishment and illegal cabotage operations.
Mr. Jean-Michel Crandal (former Deputy Director Work and Social Affairs and former High-level Expert to the French Ministry of Transport) presented an exhaustive overview of the legal framework. In addition, an overview of the available statistics on the road freight transport sector, with a focus on Belgium, was given by Professor Jozef Pacolet and Frederic De Wispelaere (HIVA – KU Leuven).[1] The problems with which the workers in the sector are confronted with, were highlighted by Roberto Parrillo (CSC-Transcom).
Several studies provided input for the impact assessment prepared by the European Commission on the current legal framework (baseline scenario) and possible future policy options. This impact assessment resulted in the announcement of the ‘Mobility Package’. The content and objectives of the package were presented by Frederik Rasmussen (DG MOVE) during the morning session. In addition, lessons from the evaluation of the European legislation on road transport were presented Achilleas Tsamis (Ricardo) in the afternoon session.
The opening speech of Kris Peeters (Belgian deputy prime minister and minister of Employment, Economy and Consumer Affairs, in charge of Foreign Trade) strongly focused on the revision of the Posting of Workers Directive and the ‘lex specialis’ in road transport. Both Professor Barbara Palli (University of Lorraine) and Professor Mijke Houwerzijl (Tilburg University) discussed more in detail the legal complexity of posting in the transport sector. Furthermore, Hilaire Willems (Belgian Federal Public Service for Work, Employment and Social Dialogue) presented some problems when applying a ‘lex specialis’ in road transport.
The topic of cross-border social fraud and social dumping in the Belgian road transport sector was discussed by both Hilaire Willems and Bart Stalpaert (National Social Security Office). Statistics on the extent in which letterbox companies and cross-border social fraud are a real threat were collected and presented by Professor Jozef Pacolet and Frederic De Wispelaere.[2] Finally, efforts to fight cross-border social fraud and social dumping were presented in the closing speech of Philippe De Backer (Belgian State Secretary for the Fight against Social Fraud). Claude Rolin, member of the European parliament and former secretary-general of the trade union ACV-CSC concluded the conference, highlighting the efforts of the European Parliament to improve the regulations on posting and now also on the road transport sector, confronted as the policy makers are with real situations of exploitation.
Finally, during a panel discussion, Philippe Degraef (Febetra), Lode Verkinderen (Transport en Logistiek Vlaanderen), Cristina Tilling (European Transport Workers’ Federation), Slawomir Adamczyk (Solidarność -Poland) and Ricardas Garuolis (Lithuanian Trade Union of Truck Drivers ‘Solidarumas’) presented their opinion from a workers’ or employers’ perspective. The panel debate illustrated that in the new Member States also trade unions are confronted with the growing challenge of social dumping from non-EU countries, the competition of letterbox companies from the old Member States, difficulties and even the lack of willingness to fight letterbox companies and social fraud and finally the risk of real exploitation of the workers.
The conference illustrated that the different threats of misuse are well-known but that an important set of (European) regulations has been installed to avoid them. In addition, there is a ‘overwhelming ambition’ of the European Commission to improve the legal framework further (not less than eight regulations are under discussion in the ‘Mobility package’). The main problem remains nonetheless compliance. Between the dream of fair competition and working conditions in the sector, and the reality of social dumping[3], or even fraud and exploitation, there are not even laws, since the main problem seems to be the enforcement of present laws.
Some statistics on the road freight transport in the EU
Germany, Spain and Poland dominated the European road transport in 2016, measured in total tonne-km. By making a distinction between national and international road freight transport strong differences among Member States are uncovered. National transport mainly explains the high share of Germany in total European road transport. While, in terms of tonne-km, Poland is by far the largest international transport country in the EU. In the last decade we witnessed a remarkable eastward shift of international transport activities, mainly the result of the EU enlargement and the liberalisation process of the road freight transport market. The share of the EU-15 in total international transport shrank considerably during the last decade from 57% of total tonne-km in 2008 to only 39% of total tonne-km in 2016.
Current political debate strongly fixates on the use and misuse of cabotage. Cabotage means freight transport carried out in country A by hauliers registered in country B. So, from the point of view of the haulier, cabotage is considered as international transport. Nonetheless, from the point of view of the movements of goods, it could be considered as national transport. Cabotage accounted for ‘only’ 2.1% of total tonne-km performed by hauliers in 2016. The relative low share of cabotage cannot be a surprise as there is still a general ‘protective’ regulation in force limiting cabotage operations within the EU area. Notably, Article 8 of Regulation (EC) No 1072/2009 provides that every haulier is entitled to perform up to three cabotage operations within a seven days period starting the day after the unloading of the international transport.
Poland, Romania and Bulgaria were the largest supplier of cabotage in terms of tonne-km in 2016. A third of all cabotage activity was carried out by Polish operators. Germany is by far the main country where cabotage takes place (43% of total cabotage operations), followed by France (25% of total cabotage operations). More than two thirds of the EU cabotage takes place in these two countries. It is however more useful to calculate the cabotage penetration rate. This is the market share of foreign hauliers in total national transport activities. While there is significantly more cabotage activity now than in the past, the share of foreign hauliers in all national transport operations is still only some 4%. The share of foreign road freight transport companies in total national transport activities are the highest in Belgium (12%), Luxembourg (9.3%), France (8.1%), Austria (8.0%) and Germany (6.5%). These calculations show that cabotage is strongly concentrated in a few Western European countries.
‘Flagging out’ and the threat of letterbox companies
Western-European transport companies might have taken advantage of the EU enlargement to establish a subsidiary in a new Member State. Especially differences in labour costs and taxes/social security costs might be an important driver. By making use of the Orbis database from Bureau van Dijk it was possible to search and compare company information across borders. The database helped us to learn more about the ownership structures of transport companies by offering a comprehensive overview of (foreign) subsidiaries and shareholders.
We found that only 0.2% of the European road freight transport companies had one or more subsidiaries in another EU Member State in 2016. However, in terms of turnover and employees the share of road freight transport companies with a foreign subsidiary in total is much higher. Furthermore, some 2.7% of the road freight transport companies have a shareholder from another EU-28 Member State and 2.5% have a foreign majority.
By far the highest number of road freight transport companies with a foreign shareholder are located in the UK. Some 60% of the road freight transport companies with a foreign shareholder are based in the UK. These companies account for 13.5% of total road freight transport companies located in the UK. Also, roughly one out three road freight transport companies located in Luxembourg have a foreign shareholder. Flagging out to new Member States such as Romania and Slovakia has become a popular practice. In relative terms, approximately one out of ten road freight transport companies located in Slovakia have a foreign shareholder. Nonetheless, the share of road freight transport companies with a foreign shareholder in total hauliers is much lower in the ‘new’ Member State (1.8%) compared to the ‘old’ Member States (3.4%). In absolute terms more hauliers with a foreign shareholder are established in an ‘old’ Member State. These findings are completely the opposite what is generally believed, notably that companies mainly flag out to the new Member States.
In this paragraph, we will discuss the prevalence of letterbox companies by analysing the Orbis database more in detail on the basis of indicators that may indicate misuses. Firstly, in some cases there is a remarkably strong concentration of road freight transport companies located in the same city and even at the same address, particularly in Rugby (UK) and Bratislava (Slovakia). Secondly, a high percentage of hauliers located in Slovakia and Romania with a foreign shareholder show a very low amount of disposable capital.
The threat of (illegal) cabotage
The perception is that most of the cabotage activity in Belgium is performed by EU-13 Member States. This is refuted by the available Eurostat statistics on cabotage. (Reported) cabotage activities in Belgium are mainly performed by hauliers from the Netherlands (31% of total) and Luxembourg (30%), which are two neighbouring countries. The share of hauliers from Bulgaria (9.9%), Poland (8.5%), Romania (5.5%) and Slovakia (5.4%), ‘the usual suspects’, is much lower. The Benelux countries (Belgium, the Netherlands and Luxembourg) fully liberalised cabotage in 1991 and have repeatedly prolonged this agreement. This explains the high share of both the Netherlands and Luxembourg in cabotage activities in Belgium.
Achilleas Tsamis showed in his presentation that official data on level of non-compliance probably underestimate the level of the cabotage, particularly in some of the EU-15 countries where overall level of cabotage is higher. Moreover, an increase in the number of cabotage checks has an important effect in reducing illegal cabotage – over 60% reduction of illegal cabotage. Finally, changes to the definition of cabotage is expected to have different impacts depending on the number of days – cabotage period of 4 days without maximum number of operations could lead to up to 35% reduction of cabotage activity.
Posting of workers
In the proposal to revise the Posting of Workers Directive, the European Commission concluded that it would be better that challenges of the road freight transport sector are addressed through sector-specific legislation. On 31 May 2017 the Commission launched a proposal to adopt a lex specialis for posting in road transport (see COM(2017) 278). Problems of applying the concept of ‘posting’ in the road freight transport sector were discussed by Professor Barbara Palli and Professor Mijke Houwerzijl. Furthermore, Hilaire Willems, presented some possible problems when applying a ‘lex specialis’ in road transport.
Enforcement
Philippe De Backer concluded is his closing speech that “The new mobility package and the European Labour Authority prove that we have to work together at EU‐level if we want to combat social fraud. We can’t get rid of social dumping, misconduct and letterbox companies on our own. We have to cooperate. And we have to do this actively and not just wait on European initiatives.”
In recent years, several initiatives were taken at Belgian level to fight social fraud in road freight transport sector. In 2015, an action plan on fair competition in the sector was concluded between the Belgian State secretary for the Fight against Social Fraud, the competent institutions, workers and employers organisations. In addition, several bilateral agreements on the fight against cross-border social fraud are concluded between Belgian and other Member States. Most recent bilateral agreements (October 2017) were concluded with Slovakia and Portugal. In 2015, a Recommendation of the committee of the ministers was signed which aims to enhance collaboration to fight social fraud and social dumping in the Benelux. Under this, Belgium, the Netherlands and Luxembourg will work together against social dumping, undeclared work and other types of social fraud. A recent agreement between the competent authorities in these three Member States to exchange data in order to fight, among others, illegal postings (April 2018).
At European level, the recent judgement in the case Altun (C‐359‐ 16 ECJ), notably that any A1 form which has been provided on the basis of false declarations can be put in doubt (even rejected) by the local judge under certain conditions, is of course an important step in the fight against social fraud.