European Labour Authority to strengthen the fairness of the Internal Market
Source: Ministry of Economic Affairs and Employment 16.11.2018
The European Commission presented a Proposal for a Regulation of the European Parliament and of the Council establishing a European Labour Authority (ELA) on 13 March 2018. The proposal plays a role in strengthening fairness and social rights as a whole. The ELA contributes to the roll out of the European Pillar of Social Rights. Establishing the ELA will also enable the Commission to enforce EU legislation more effectively.
Both parties to the legislative process, the European Parliament and the European Council, are currently processing the Proposal.
The ELA should be up and running in 2019 in Brussels and reach its full operational capacity by 2023.
Role of the new labour authority
The ELA will promote fair labour mobility in the Internal Market. Three special tasks:
- Facilitate access for individuals and employers to information on their rights and obligations, as well as to relevant services
- Support cooperation between EU countries in the cross-border enforcement of relevant Union law, including facilitating joint inspections
- Mediate and facilitate a solution in cases of cross-border disputes between national authorities or labour market disruptions, and quickly and efficiently resolve any cross-border disputes.
The ELA will help to secure workers' and citizens' rights to equal treatment. Access to employment opportunities and social protection will be guaranteed in cross-border situations. The ELA will provide transparency for businesses on local labour standards throughout the Internal Market. It will also support cooperation between national authorities to ensure that workers' and citizens' social rights are respected, and to prevent fraud and abuse.
The functions of the ELA
The ELA will provide operational and technical support for Member States in the enforcement of EU legislation concerning cross-border labour mobility and the coordination of social security. In practice, the ELA would be tasked with the following:
- providing information and services to individuals and employers, and
- supporting Member States in cooperation, information exchange, simultaneous or joint inspections, risk assessment, the development of capabilities, mediation, and cooperation relating to cross-border labour market disruptions.
What is Finland's opinion on the ELA?
Finland has supported cross-border cooperation to facilitate mobility. Finland's priorities also include the prevention of undeclared work and abuse. In general, Finland agrees with the role and tasks assigned to the European Labour Authority.
However, the assistance provided by the ELA must bring added value and may not reduce the powers of national authorities or the role of labour market organisations in the supervision of compliance with collective agreements or the enforcement of social security legislation.
The ELA shall support the operations of national authorities and fit into the existing governance structure on labour mobility and social security coordination. Finland presents this opinion with reservations and will modify it as needed as the processing of the Proposal for a Regulation progresses.
Further information: Lippe Koivuneva, Senior Government Adviser, Ministry of Economic Affairs and Employment email@example.com
EU platform provides new tools and good practices for the prevention of undeclared work
Source: The Ministry of Economic Affairs and Employment
The Commission supports the prevention of undeclared work with the help of a EU-level platform. In March 2016, the Commission set up a European platform against undeclared work, given how challenging it is for the authorities of Member States to address undeclared work in cross-border situations. The platform’s work focuses on:
- the promotion of cross-border cooperation of authorities,
- increasing knowledge bases and competence, and
- learning from the best practices of other countries
The prevention of undeclared work is the task of several authorities. Key operators include tax, industrial safety and social security authorities as well as the Police, border guards and employers’ organisations and trade unions.
The measures to prevent undeclared work aim to improve the working conditions and equal treatment of employees, engagement in working life and the equal competitive conditions of companies. These can only be ensured by complying with a common set of ground rules. Undeclared work also has a negative impact on the entire society in the form of a lower amount of collected taxes.
What does undeclared work mean and how is it apparent?
On the level of the EU, undeclared work is defined as legal, paid activity undeclared to the authorities. It allows employers, companies and employees to avoid obligations related to social security, taxes or the employment relationship. The proportion of undeclared work between Member States varies and industry-specific differences are considerable. Reliable statistics are not available. According to latest estimates, undeclared work’s share of the GDP is approximately 1.5–7.5 per cent in Finland, 15.7 per cent in Estonia, 10.8 per cent in France, 12.2 per cent in Germany, 8 per cent in Austria and 13 per cent in Latvia. In some Member States, undeclared work is more common due to cultural reasons alone. The manifestations of undeclared work and the operating methods of the authorities of the EU’s Member States aiming to prevent and investigate undeclared work vary. European Platform tackling undeclared work Member State Factsheets and Synthesis Report (PDF 1,75 Mt)
Key manifestations of undeclared work include
- working without a formally binding employment contract,
- “envelope wages”, i.e. under-reporting work to the authorities,
- a failure to report company income to tax authorities, and
- missing trader/entrepreneurship
The underlying reasons for undeclared work include high unemployment rates and taxes, cultural factors and the general attitude. The traditionally problematic sectors include the construction, restaurant, accommodation and transportation sectors as well as agriculture.
How does the platform support Member States in the prevention of undeclared work?
The Commission has held some 30 events within the framework of the platform aiming to increase awareness and learning to prevent undeclared work. The Commission has had research, tools and learning materials (missing trader/entrepreneurship, construction industry, data mining) done for authorities and collected 40 examples of good practices from various Member States. These measures and reports provided through the platform support the learning of the authorities of Member States and their work against undeclared work. Learning from the best practices of other countries requires action on a national level and the willingness of each authority to assess the practices of other countries and the practices’ applicability to the authority’s own prevention measures.
National cooperation network supports the work of the EU platform
In August 2016, the Ministry of Economic Affairs and Employment established a national cooperation network comprising authorities to support the efforts of the EU platform. The network strengthens the government’s internal coordination and collaboration, and supports national strategies and programmes. One of the key tasks of the network is to distribute information on the cooperation against undeclared work, monitoring methods, new phenomena and best practices to various operators. Finland is committed to the prevention of undeclared work. The matter has been included in the programme for the prevention of the grey economy and economic crime for 2016–2020. In Finland, the work for the prevention of the grey economy and undeclared work is supported by a political commitment to the cause as well as the good cooperation and exchange of information between the authorities.
Further information on the work of the EU platform:
Päivi Kantanen, the Ministry of Economic Affairs and Employment: firstname.lastname@example.org
Kirsi Kyrkkö, the Ministry of Social Affairs and Health: email@example.com
European Platform tackling undeclared work
Source: The Ministry of Economic Affairs and Employment 16.11.2018
The European Commission supports tackling undeclared work through the European Plat-form Tackling Undeclared Work, which was set up in spring 2016. In cross-border situa-tions, the authorities of the Member States find it challenging to intervene in cases of un-declared work. Tackling undeclared work requires political commitment, listening to new ideas with an open mind, and readiness to learn from other countries’ good practices. Tackling undeclared work is one of the Commission’s priorities, and its aim is to promote:
- the realisation of employees’ rights
- fair competition between businesses
- better application and enforcement of EU regulations
The Platform’s Work Programme for 2019-2020
The European Platform Tackling Undeclared Work adopted its Work Programme for 2019–2020 on 19 October 2018. The Work Programme emphasises the importance of using a cross-sectoral and comprehensive approach to tackle undeclared work, which means forming a common government policy for tackling undeclared work at both strategy level and in practical implementation. The aim is to boost cross-border cooperation between Member States. Cooperation and information exchange between the authorities are im-portant means of intervening in cases of undeclared work and preventing abuse. The new Work Programme focuses on cross-border inspections, penalties and developing risk as-sessments by the authorities in support of the more efficient control and enforcement of EU regulations.
The Platform’s work will continue to be centred on increasing the knowledge base and competence of the authorities and stakeholders, and learning from the best practices of other countries. Another aim of the Work Programme is to foster cooperation between the occupational safety authorities and other authorities – social security and tax authorities in particular – and stakeholders. The new Work Programme also supports the Commission Initiative to establish a European labour authority.
- hotel-restaurant-catering sector (HORECA)
Included in the new Work Programme is the EU level communication campaign to pro-mote tackling undeclared work. Everyone’s contribution is needed to ensure the fairness of the labour market. Different Member States have different forms of undeclared work, so different actions and perspectives are needed to tackle it.
The goals set by Finland are realised well in the new Work Programme. The effective ac-tions include:
- the horizontal approach of the Work Programme
- increasing cross-border cooperation between the authorities
- peer learning from other Member States
- the anticipation of future phenomena
The Platform’s work in 2017–2018
The European Platform Tackling Undeclared Work has supported tackling undeclared work and promoting the competence of the authorities by commissioning reports and stud-ies, organising several seminars, producing training and guidance materials, and dissemi-nating the good practices of Member States.
Special themes in 2017:
- data mining
- actions in the construction industry
- cooperation agreements between national authorities and the authorities of the Member States
- “letterbox” companies
Priority areas in 2018:
- the Member States’ actions to tackle abuse in the transport sector
- the risk assessments of the authorities
- new forms of work
- issues related to the digital platform economy
Visits by the authorities and supporting peer learning have been a practical and cost-effec-tive way of learning from the authorities of other Member States. In total, 19 government officials’ exchanges have been organised, with 40 civil servants participating in them. The occupational safety authorities of Romania, Latvia, Lithuania and Slovakia have utilised peer learning by participating in Mutual Assistance Projects (MAP). The good practices identified by the Member State authorities that participated in the MAPs are also supported by the new Work Programme.
Finland and the other Nordic countries have also actively participated in the work of the European Platform Tackling Undeclared Work, through various programmes and projects. The Ministry of Economic Affairs and Employment has set up a cooperation network to support the work of the European Platform Tackling Undeclared Work. The network’s members have disseminated Finland’s good practices for tackling undeclared work to the other Member States, as well as evaluating examples from other Member States and their applicability in Finland.