Opinion of the European Economic and Social Committee on the Green Paper — Modernising labour law to meet the challenges of the 21st century COM(2006) 708 final
Date: 2007-05-30
Institutions: European Economic and Social Committee
Subjects: employment policy, globalisation, labour law, labour market, organisation of work, working conditions

27.7.2007

EN

Official Journal of the European Union

C 175/65

Opinion of the European Economic and Social Committee on the ‘Green Paper — Modernising
labour law to meet the challenges of the 21st century’

COM(2006) 708 final

(2007/C 175/17)

On 22 November 2006, the Commission decided to consult the European Economic and Social Committee,
under Article 262 of the Treaty establishing the European Community, on the Green Paper — Modernising
labour law to meet the challenges of the 21st century

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the
Committee's work on the subject, adopted its opinion on 2 May 2007. The rapporteur was Mr Retureau.

At its 436th plenary session, held on 30 and 31 May 2007 (meeting of 30 May 2007), the European
Economic and Social Committee adopted the following opinion by 140 votes to 82, with four abstentions.

1. Introduction

act as an obstacle to the creation of new jobs. For this reason,
these provisions should be revised.

1.1

The Green Paper on modernising labour law sets out to:

— identify the main challenges that arise out of a gulf between
the existing legal and contractual frameworks and the reali-
ties of the world of work. The emphasis is mostly on labour
law as it applies to individuals, rather than collective labour
law;

— launch a debate on how labour law could help to promote
flexibility combined with security in work, regardless of the
type of contract, and help to create jobs and reduce unem-
ployment;

— stimulate the debate on the way in which different types of
contractual relationships, and labour laws applicable to all
workers, could benefit both workers and businesses by facili-
tating transitions on the labour market, encouraging lifelong
learning, and developing the creativity of the labour force as
a whole;

— contribute to the goal of better lawmaking by encouraging
the modernisation of
forgetting to
consider the overall costs and benefits thereof, and in par-
ticular the problems that small and medium-sized enter-
prises may face.

labour law, without

1.2
In doing this, the Green Paper quite rightly proposes to
address issues as diverse as three-way employment relationships,
the case of workers with self-employed status who are in reality
economically dependent on their principal, as well as the revi-
sion of the working time directive and the serious matter of
undeclared work.

1.3 With regard to the possible ways of modernising labour
law, where the EU can undertake action complementing that of
the Member States, the Green Paper is based on the idea that
the standard contract (full-time, permanent contract) and the
protections that go with it may turn out to be unsuitable for
many employers and employees, hindering the rapid adaptation
of business and developments in the market, and may therefore

fleshing out

The Commission announces that the Green Paper, aside
1.4
from the issue of individual
labour law, paves the way for a
debate that will feed in to a communication on flexicurity, to be
this
published in June 2007 with the aim of
concept, which exists in several Member States and, according
to what we know, combines external and internal flexibility of
workers with some kind of security whose scope and funding is
not explained in any more detail at this stage. The debate in the
second half of the year will thus continue over a wider subject
area, within which it would certainly be helpful to look at the
elements of flexibility that have already been achieved through
the law or collective bargaining and at the funding of this flexi-
curity, without focusing on any particular model.

2. General comments

The Committee notes with interest

the initiative the
2.1
Commission has taken in launching a discussion on the way in
which labour law meets the objectives of the Lisbon Strategy,
which combine the quest for sustainable growth with that for
more, but also better,
jobs, aside from social cohesion and
sustainable development. However, it condemns the tight time-
scale under which this consultation is being carried out and the
fact that a whole lot of preparatory work is lacking.

The

Kok

2003)

Report

(November

2.2
suggested
‘Promot[ing] flexibility combined with security in the labour
market by focusing on improving work organisation and the
attractiveness — for employers and employees — of both stand-
ard and non-standard labour contracts to avoid the emergence
of two-tier labour markets. The concept of job security should
be modernised and broadened with a view not only to covering
employment protection but also to building on people's ability
to remain and progress in work. It is important to maximise job
creation and raise productivity by reducing obstacles to setting
up new businesses and by promoting better anticipation and
management of restructuring.’

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2.3
It is useful to recall all these various ingredients of the
Task Force's conclusions that were adopted by the Council, as
they give a more complete picture of the labour market reforms
intended to respond to the revised Lisbon Strategy than does
the Commission's Green Paper, which focuses on limited points
relating to individual labour law. The fact is, the Green Paper
only deals partly with the issues addressed by Kok, and does not
consider the issue of the ‘more secure environment’ proposed
by the Social Agenda.

A simplistic approach would risk causing a loss of
2.4
confidence among the European public, which is already
increasingly sceptical towards the Social Agenda. The Commis-
sion suggests that it is appropriate to consider the revision of
the degree of
flexibility provided for in standard contracts
(permanent, full-time contracts) as regards notice periods, the
costs and procedures for individual or collective dismissals, and
the definition of unfair dismissal. These things have historically
formed the cornerstone of workers' job security.

2.5
The Committee is concerned about the implication that
labour law is currently incompatible with the revised Lisbon
Strategy in that it is an obstacle to employment, and that, as
things stand, this labour law is not capable of ensuring that
businesses and workers have a sufficient degree of adaptability.

its aims. However,

The Committee notes that the strategy set in 2000 has
2.6
not achieved all
it considers that caution
should be exercised when analysing the causes of this situation
and that an exclusive focus on labour law should be avoided.
The revised Lisbon strategy must aim to make Europe more
competitive, but also be capable of returning to full employment
in a society that is better focused on ensuring a balance between
people's work and family lives, better adapted to the career
choices they make,
investing in people and combating social
exclusion. The modernisation of labour law is only one instru-
ment among others to achieve these objectives.

2.7
Therefore, before expressing a view on what direction
any undertaking to modernise labour law in Europe should
take, the Committee proposes to try to put into perspective a
number of comments or initiatives that have come from the
Commission itself, such as the report it requested from Professor
Supiot, which receives too little mention in this context, or, for
example, the conclusions of the EPSCO Council of 30.11.2006
and 1.12.2006 on Decent work for all. The aim of the Supiot
report was to carry out a wide-ranging, constructive investiga-
tion into the future of employment and labour law in an inter-
cultural, inter-disciplinary Community framework; however, the
Green Paper does not appear to have drawn on this report suffi-
ciently.

2.8 What conclusions can be drawn from publicly-available
statistics on the performance of the protective framework of
labour law whilst keeping in mind the objective of ‘more and
better jobs’?

i.e.

relations,

The Supiot group's final report raised a number of topics
2.9
the right questions relating to developments in
that cover
labour
the globalisation of competition and
economic activities, the impact of consumers' habits and atti-
tudes, the liberalisation of markets, technological changes, the
fact that workers themselves are changing in that they are better
educated and skilled, more autonomous and more mobile, more
individualistic, not forgetting new business practices in terms of
human resource management, remuneration of workers, and
requirements for multiple skills or flexibility of working time.
The Supiot report
flexibility and
security, and also on the very important matter of transitions
the linear
between jobs, announcing the ‘abandon[ment] of
career model’.

touched on the issue of

Among the many specific democratic requirements that
2.10
social law has brought into the socio-economic field, the Supiot
group paid attention to four points that lose none of their rele-
vance in the debate opened by the Green Paper (1):

These are:

— the requirement

for equality, with the issue of gender
equality and more generally of non-discrimination, remains
relevant, as it is from this perspective that one can better
understand how to solve the problems of insecurity and of a
two-speed labour market;

— the requirement for freedom, which requires that workers be
protected from dependency, is still a solution to the issues of
disguised employment relationships, bogus self-employment
and undeclared work;

— the requirement for individual security is still an answer to
the increase in social uncertainty in its broadest sense felt by
workers and recipients of social benefits;

— collective rights that become reality through workers' input
into the meaning of work, its purpose, and economic devel-
opment.

2.11
The Committee considers that the Commission should
draw inspiration from previous requirements when framing the
debate about modernising labour law and about the protection
normally structured around an employment contract, such as
health and safety, occupational accidents, arrangements for
working time, paid leave, etc.

2.12
The Green Paper highlights the gulf that exists in most
countries between the existing legal and contractual framework
and the current realities of the world of work that have come
into being in a relatively brief period since the late 1980s/early
1990s. However, at no point is the historical protective and
emancipating role of labour law in the broad sense, including
that resulting from collective bargaining, with its specificities
connected to the cultural, social, economic and legal approaches
of the various Member States, mentioned.

(1) Beyond Employment: Changes in Work and the Future of Labour Law

in Europe, Oxford University Press, 2001.

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2.13 Maintaining a reasonable balance between the parties is
not just the job of labour law, but also of social dialogue.

2.14
Any argument that considers protective labour law as
an obstacle to growth and employment would be a simplistic
vision in which labour law would be reduced to being merely a
labour market policy tool or an economic variable.

— the social partners, both at national and at European level,
have already, through their collective agreements, helped to
make new kinds of contract, including non-standard ones,
thus demonstrating their ability to adjust
more secure,
employment
relationships to new circumstances and to
provide for forms of flexibility backed up by appropriate
guarantees;

Given that an employee is always in a relationship of
2.15
dependence with his employer, the fundamental protective and
emancipating role of labour law must be reaffirmed. Its enforce-
ment should be better guaranteed to avoid pressure on workers
and to take into account the new challenges of globalisation and
demographic ageing. In this area, there is certainly a role for the
European Union vis-à-vis its Member States.

2.16
In 2000, the Commission launched an initiative which
aimed to launch discussions about the need to assess the key
components of the legal system and collective agreements with
a view to ensuring that they allowed for modern organisation
but also for improvements in employment relationships.

This improvement initiative was discontinued, despite
2.17
the fact that it would seem obvious that it should have been
carried through so as to achieve the aim of modernising and
improving working conditions, a theme that was taken up years
later by the current Commission, from a different angle.

2.18
The Committee must point out a number of significant
deficiencies, which significantly undermine the reasoning and
perspectives advanced by the Green Paper. It would therefore
like to highlight a number of points that it regrets have not
been looked at in greater depth or emphasised:

— the aim of strong economic growth is not incompatible
with the social dimension of European integration and its
development;

— labour law consists not only of

individual employment

contracts but also of collective labour law;

— the concept of decent work exemplified by the commitments
to EU-ILO (International Labour Organisation) cooperation
and the positive efforts made by EU Member States and
candidate countries in June 2006 when ILO Recommenda-
tion 198 on employment relationships, which puts forward
sound definitions and operational principles aimed at
removing the uncertainties regarding the existence of an
employment relationship and thus ensuring fair competition
and proper protection for workers in an employment rela-
tionship, was adopted, should not remain empty words (2);

(2) The employers' group did not support the adoption of the ILO Recom-

mendation 198 on the employment relationship.

— social dialogue is a means of co-regulation, which should
therefore be strengthened and made more effective so that it
provides a better framework for flexibility in employment
contracts;

— job security is a prerequisite for improving productivity, as
insecurity does not create new jobs. Mobility and flexibility
can provide productivity gains and greater security, but any
changes in labour law must not be made in such a way as to
give rise to an increase in the working poor;

— the answer is not to be found in an argument that sets
worker against worker and leaves them with the responsi-
bility for finding a solution to unemployment and the skills
gap;

— the new standard type of contract proposed in order to
respond to the alleged conflict between ‘insider’ and
‘outsider’ workers must not leave workers to sort out how
to put an end to the two-speed labour market; moreover,
this contract, were it to come into existence, would not
remove the real obstacles to job creation.

2.19
undertake a comprehensive, rigorous analysis, based primarily:

The Committee believes that the time has come to

— on an assessment of the legal systems in the Member States
as regards protection, their aims, the access to judicial and
non-judicial conflict resolution bodies and procedures;

— on the contribution of social dialogue to modernising and
improving labour law, decent work, and combating unde-
clared work and to the issue of the operation of the labour
market and the organisation of work in businesses at appro-
priate levels (European, national, regional, businesses and
groups, and also across borders, as is appropriate to each
case);

— on consideration of public services and of the active role
that efficient, high-quality public services play in employ-
ment and growth;

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— on consideration of corporate governance, worker participa-
tion, and the mechanisms for monitoring and for alerting
worker representative bodies (in particular on works coun-
cils) in adapting to change and faced with restructuring;

— on the recognised role of genuinely self-employed workers,
whose role is key to promoting entrepreneurship and the
creation of SMEs, not least in the social economy, and the
establishment of appropriate protection for economically
dependent workers, taking into account the specific situation
of certain self-employed workers (e.g. direct sales workers);

— on promoting ILO Recommendation 198 (2006) on the

employment relationship;

— on the impact of undeclared work, using the instruments for
combating this practice via better coordination at European
level of the competent authorities: a social Europol?

— on the impact of migratory flows, which need to be better

coordinated;

— on win-win situations, i.e. making good use of flexibility in
relation to the needs of businesses and to the needs and
wants of workers, who can thus take back control of their
lives;

— on the debate and the initiatives relating to basic and
lifelong education and training,
for example of workers,
whether they are working, threatened by restructuring, re-
entering the labour market after career breaks taken for
personal reasons, and on secure careers, instead of banking
on certain proposals for a hypothetical ‘single contract’.

types of

the various

liability, for example,

are subjected; it gives the latter very valuable legal certainty in
that
standard contracts are clearly
established and their key clauses are fixed or given a framework,
in
including for cases of termination by one side; moreover,
terms of civil
labour law also provides
workers and employers with guarantees and legal certainty in
terms of compensation for and recognition of any incapacity
suffered by the employee and of limitation of the employer's
non-fault civil liability if safety standards were observed; collec-
tive bargaining and consultative institutions contribute to good
industrial relations and, if necessary, to the search for appro-
priate ways of resolving differences.

3.1.2
In terms of changes that are desirable as a matter of
priority, it would be appropriate that, with due respect to the
laws and practices specific to each Member State, labour law
regulates the new flexible forms of contracts that are developing
so as to continue, under new conditions, its role of protection
and of balancing the working relationship, as well as of ensuring
legal certainty for the parties in the event of justified dismissal
or of occupational accident or illness; moreover, modern labour
law should enable employees to establish rights regarding their
career throughout their working lives so that they can alternate
lifelong learning, various types of contracts which may at
various times meet individual needs regarding work-life balance,
promotion or retraining, etc. and enabling employers to achieve
long term benefits from the work of satisfied employees.

2.20
The German presidency's agenda, the reappearance of
the quality of work at the informal meeting of employment and
social affairs ministers in January 2007, and the recent letter
from nine employment ministers entitled ‘Enhancing Social
Europe’, the annex to which contained, in particular, proposals
for employment and flexicurity policies, have opened the way
for the in-depth analysis the Committee wants and for the
relaunch of the social component of European integration.

3.1.3
Labour law reforms must support positive actions in
the interest of those most excluded from the labour market.
Without creating precarious employment, such reforms must
therefore also be instrumental
in finding pathways into the
labour market, including supporting access to lifelong learning
and social economy initiatives providing employment integra-
tion.

3. Specific comments: responses to or comments on the

questions asked by the European Commission

3.1 What would you consider to be the priorities for a meaningful

labour law reform agenda?

3.1.1
Labour law has lost none of its validity as a law that
protects both employees and employers; it gives the former an
equitable basis for establishing a legally worded employment
contract, balancing rights and obligations, taking account of the
employers' powers of management and command to which they

3.1.4
It would also be appropriate to provide for better regu-
lation of three-way employment relationships in order to specify
the rights and obligations of all parties, inter alia in terms of
civil or criminal liability; the case of workers who are economic-
ally dependent on one principal employer, to whom they are de
facto subordinated in terms of how they work, should also
enjoy suitable protection,
in particular regarding occupational
accidents, occupational diseases and social welfare. Any changes
to the rules governing this area need, however, to be made with
great care, taking into account the specific situation of various
economically dependent groups of self-employed workers (e.g.
those working in direct sales),
they are not
deprived of their source of income or the opportunity to carry
on activities meeting their expectations.

to ensure that

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3.1.5
In addition, the fight against undeclared work and the
legal formalisation of employment relationships are essential; it
would be desirable to step up employment inspections, both
with this in mind and more generally so as to ensure the effec-
tiveness of the applicable legal or contractual provisions.

3.3 Do existing regulations, whether in the form of law and/or collec-
tive agreements, hinder or stimulate enterprises and employees
seeking to avail of opportunities to increase productivity and
adjust to the introduction of new technologies and changes linked
to international competition? How can improvements be made in
the quality of regulations affecting SMEs, while preserving their
objectives?

ILO Recommendation 198 on the employment rela-
3.1.6
tionship, adopted by the International Labour Conference in
June 2006, provides a solid underpinning for the Member States
in adapting labour law to the technological, economic and
social developments that have been making profound changes
to production, services and world trade for over two decades (3).

3.2 Can the adaptation of

law and collective agreements
contribute to improved flexibility and employment security and a
reduction in labour market segmentation? yes/no

labour

3.2.1
Experience shows that without relevant regulation, an
increase in flexible contracts increases the segmentation of the
market and increases insecurity, for example in terms of lower
incomes in the most common (part-time) contracts, which do
not make it possible to meet basic needs satisfactorily, and in
terms of less social welfare (thresholds of access to unemploy-
ment benefits, to a supplementary pension, to lifelong learning).
the working day should also be taken into
The length of
account, because if part- or full-time work is spread out over
the day, workers cannot in practice use the time when they are
not working for the pursuit of their personal interests.

3.2.2
Experience also shows that the most common flexible
contracts (fixed-term and part-time contracts) are often offered
to people who would prefer a full-time job. While these
contracts can be a good starting point for the further working
life of young people and an excellent opportunity for recon-
ciling work and family life, or work and study, they are not
always voluntarily chosen. Older workers have difficulty finding
jobs, even temporary ones. The fragmentation of the market is
not
from choices made by
employers who ultimately decide unilaterally what kind of
contract they want to offer. Labour law must seek to stop discri-
mination against young people, women and older workers in
terms of access to the labour market and of pay.

the workers'

results

fault;

it

3.2.3
If flexibility is to be a choice rather than a means of
discrimination, providing greater security, giving workers the
opportunity to organise their lives independently (young people
on short-term contracts forced to live with their parents because
housing is too expensive, one-parent families where the parent,
not by choice, has a part-time contract, often leading him or
her to join the ranks of the working poor), then sweeping
reforms of labour law are needed in the direction set out in the
answer to the first question, preferably by means of social,
tripartite or bipartite dialogue depending on the country and at
the appropriate level.

The Committee cannot answer on behalf of

the
3.3.1
it does have some specific
27 Member States. However,
comments to make; the best way to compete is to keep inno-
vating or to play the quality card.

3.3.2
The real factors in productivity are the workers' skills
and thus their training and experience, and the introduction of
new technologies, which depends on investment in education
and training and in research and development, both public and
private (it is primarily the latter that is lacking in Europe).

3.3.3
Regulation (whether legal or contractual, as a frame-
work for action on training by the social partners) must there-
fore be aimed at continuing education and training and
adjusting to the introduction of new technologies at work or
during people's careers, and be applied fairly to all categories of
employees; businesses that seek to build and maintain skills will
have to make joint efforts with the public authorities or relevant
institutions. Business will get a competitive advantage in return
and employees will benefit from increased employability; legisla-
tion can encourage the improvement of skills and qualifications
by organising or facilitating funding,
training structures, by
specifying rights to and incentives for training (training leave,
(through successive
time accounts)
contracts and employers), according to the laws and practices in
force or to be put in place, and collective bargaining (4).

throughout

the career

Pooling of education and training efforts can be
3.3.4
encouraged by legislation and local
for
example, in order to share the costs over a geographical area,
given that very small businesses and the self-employed cannot
themselves organise and finance training of any duration, apart
from the acquisition of on-the-job experience.

financing for SMEs,

3.3.5
Labour law in the broad sense can, however, deal only
with a limited part (lifelong learning, involvement of workers) of
the factors needed to deal with new technologies and to adapt
to industrial and social changes; higher education, research,
venture capital, start-up incubators and innovation poles also
have their role to play as part of a competitive and coordinated
industrial policy at regional, national and European level.

(3) The employers' group did not support the adoption of the ILO Recom-

mendation 198 on the employment relationship.

(4) See OECD, PISA 2003 and PISA 2006 on the effectiveness of education
systems; the Nordic European countries do very well, with Finland in
first place.

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3.4 How might recruitment under permanent and temporary contracts
be facilitated, whether by law or collective agreement, so as to
allow for more flexibility within the framework of these contracts
while ensuring adequate standards of employment security and
social protection at the same time?

3.4.1
It is difficult to accept such an approach if flexibility
means more, less secure job types. According to the definition,
flexicurity provides the opportunity to combine different forms
of labour market flexibility with security, in order to provide a
balanced approach to enhancing workers' and firms' ability to
adapt, while protecting them from risk. Consequently, flexicurity
is more than just a balance between external flexibility and
social security systems. The more flexible the contract is, the
less job security one has, and the stronger the protection needs
to be (social protection, secure careers or security of employ-
ment throughout the career) (5).

3.4.2
The question implies that flexibility creates jobs; there
is no demonstration nor evidence to back up this assertion.
Security has more to do with social
legislation, which is not
covered by the Green Paper.

3.5 Would it be useful to consider a combination of more flexible
employment protection legislation and well-designed assistance to
the unemployed, both in the form of income compensation (i.e.
passive labour market policies) and active labour market policies?

Truly well-designed support for the unemployed must,
3.5.1
in any event and whatever the level of employment ‘protection’,
include worthwhile training or credible retraining. Moreover, it
means tailored support
for enterprises which are ready to
employ people at the margins of the labour market (long-term
unemployed, etc). An ‘active labour market policy’ does not
mean compulsory acceptance of any job that is offered, even a
less skilled or less well-paid one, on pain of complete loss of
benefits.

3.5.2
Solutions vary from country to country depending on
history, the role of collective bargaining, and the social situation.
Subsidiarity has an important role to play in the area of labour
law,
including in the implementation of European directives,
whether they are the result of a European framework agreement
or an EU initiative. To be sure, the Community level must also
take its responsibilities, encourage negotiation, submit concrete
proposals within its areas of competence, and must not confuse
‘better legislation’ with ‘deregulation’.

3.6 What

role might

law and/or collective agreements negotiated
between the social partners play in promoting access to training
and transitions between different contractual
forms for upward
mobility over the course of a fully active working life?

3.6.1
It is essential to have solid and sustainable standards to
provide for lifelong learning and transitions between jobs; the
relative importance of legislation and collective agreements will
vary according to the models that exist in countries where legis-
lative and social conditions, the strength of representative orga-
nisations, and traditions and customs differ, depending on the
social history and the means of ensuring that compromises
accepted by the social partners are kept to for the very long
term. This brings us back to the creation of genuine statutory
protection of employees.

3.6.2
The system that needs to be set up involves employ-
ment contracts and needs to be implemented in institutions that
provide support for transitions, financial support (the forms of
financing to be negotiated or discussed) and public, collective or
cooperative training establishments, or on-the-job training
(learning company) with recognition of the qualifications thus
acquired.

3.6.3
It is in this area that labour law could make an effective
contribution to the Lisbon objectives, both in the area of the
knowledge society and in that of security that enables people to
organise their lives and plan for the future, which in turn makes
a direct contribution to productivity and the quality of work.

3.7 Is greater clarity needed in Member States'

legal definitions of
employment and self-employment to facilitate bona fide transi-
tions from employment to self-employment and vice versa?

3.7.1
To be sure, a debate could be held on this matter, on
the basis of sufficiently in-depth comparative studies, but this
question seems largely theoretical, to the extent that the harmo-
nisation of labour law or of social protection are not on the
agenda; the national definitions and the corresponding case law
are working, and it would seem more appropriate to leave them
in place, as there is a clear distinction between labour law and
civil (commercial) law.

3.8 Is there a need for a ‘floor of rights’ dealing with the working
conditions of all workers regardless of the form of their work
contract? What,
in your view, would be the impact of such
minimum requirements on job creation as well as on the protec-
tion of workers?

(5) In this context, it is important to recall that 78 % of work contracts in
Europe are full time and permanent, and that 18.4 % of workers are
part-time, also with permanent contracts. Fixed-term contracts account
for around 14.5 % of the workforce in the EU and temporary work for
2 % of employment across the EU27. Nonetheless, over 60 % of new
work contracts are flexible.

3.8.1
This all depends on what is included in this ‘floor of
rights dealing with […] working conditions’. If we are talking
about such things as working time, flexible working, and pay,
these are determined by the type of contract and the legally
applicable general conditions.

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3.8.2
If we are talking about rights of participation, funda-
mental freedoms, the principle of equality and non-discrimina-
tion, the right to protection against the unforeseen — accidents,
sickness, unemployment, etc. — these are obviously indepen-
dent of the employment contract; they are fundamental rights.
It would be completely unacceptable to propose that they be
described as
to envisage their
‘flexibility’.

‘minimum requirements’ or

3.9 Do you think the responsibilities of the various parties within
multiple employment relationships should be clarified to determine
who is accountable for
rights?
Would subsidiary liability be an effective and feasible way to
establish that responsibility in the case of sub-contractors? If not,
do you see other ways to ensure adequate protection of workers in
‘three-way relationships’?

compliance with employment

3.9.1
Labour law is based on public social policy, which is
binding on all parties. Principals must have some power to
monitor or supervise their sub-contractors and must take the
precaution of enshrining certain principles (compliance with
applicable social and technical standards) in contracts, if they do
not want to be unwilling accomplices to violations of labour
law or other national standards applicable to building sites or
workplaces.

Joint responsibility, with provision for principals to
3.9.2
take action against defaulting sub-contractors, seems to be the
solution that would best protect the rights of workers, who may
find it very difficult to defend themselves if the headquarters of
the sub-contractor is in another country, possibly outside the
EU, while they are working on a building site managed by the
principal. This rule establishing joint responsibility for working
conditions and for guaranteeing the payment of salaries should
apply whether the principal is a private or public entity or a
mixture of the two.

3.9.3
The protection of employees working abroad must be
improved. Non-national sub-contractors should make contribu-
tions to funds or institutions that guarantee the payment of
money owed to employees if the employer becomes insolvent;
legal provision should also be made in the Member States for
compensation for possible repatriation to be included among
the principal's obligations in the event of
its sub-contractor
becoming insolvent.

of

the

relationships

increased risk,

of
in the

problems
lies

three-or-more-way
3.9.4
One
employment
for
employees/workers, of failure of one of the links in the chain
and of dilution of responsibilities. In the case of non-national
sub-contractors' employees, only joint responsibility between
the principal on the one hand and any and all of its sub-
contractors on the other, supported by the legal rules, provides
protection that is sufficiently complete to ensure that rights are
respected and wages and social security contributions are paid.
Appropriate national guarantee systems, based on the directive
on the protection of employees in the event of the insolvency of
sufficiently effective and even
their
extended to companies in other countries if their national guar-
antee system is insufficient or non-existent, in which case the
responsibility of principals would be proportionately
joint

should be

employer,

reduced. In addition, national legal systems must provide for a
mechanism to allow the use of a proportion of payments from
principals
to a
mechanism guaranteeing the latter's outstanding financial obli-
gations towards their employees in the event of their employer
becoming insolvent (6).

to foreign sub-contractors

to contribute

3.10 Is there a need to clarify the employment status of temporary

agency workers?

The absence of a Community legal

3.10.1
framework is
creating the risk of abuses such as evading legislation on
temporary secondment. It would be useful to look actively for a
consensus in the Council, which would enable regulation of the
activities of temporary worker agencies at European level.

3.11 How could minimum requirements concerning the organization
of working time be modified in order to provide greater flexibility
for both employers and employees, while ensuring a high stand-
ard of protection of workers' health and safety? What aspects of
the organization of working time should be tackled as a matter
of priority by the Community?

3.11.1
The 1993 directive that is currently in force, subject
to the inclusion of case law established by the Court, offers a
protective framework that can be improved, complemented or
developed at national
inter alia through
collective bargaining at various levels.

level as necessary,

3.11.2
The question implicitly recognises the link between
the duration/length of working time and the risks of accidents
or detriment to health; there is indeed such a link, and reducing
improve
actual working time could, over a longer period,
workers' health, mainly by reducing stress and permanent
fatigue, and at the same time also facilitate the creation of new
jobs.

3.12 How can the employment rights of workers operating in a trans-
national context,
including in particular frontier workers, be
assured throughout the Community? Do you see a need for more
convergent definitions of
in the
‘worker’
interests of ensuring that these workers can exercise their employ-
ment rights, regardless of the Member State where they work?
Or do you believe that Member States should retain their discre-
tion in this matter?

in EU Directives

3.12.1
See answer to question 1 and ILO recommendation
198; due to current variations, the definition should remain
within the competence of the Member States, as it affects not
only employment contracts, but the application of social legisla-
tion (definition of beneficiaries, conditions for accessing bene-
fits).

(6) See Council Directive 80/987/EEC of 20 October 1980 on the protec-
tion of employees in the event of the insolvency of their employer (OJ
L 283, 28.10.1980, p. 23).

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Official Journal of the European Union

27.7.2007

3.12.2
There does not seem to be any real problem caused
by European directives, which define the persons concerned
according to the nature of the legislation; an in-depth study of
this matter would certainly be necessary before any changes, if
necessary, were considered.

3.13 Do you think it is necessary to reinforce administrative co-opera-
tion between the relevant authorities to boost their effectiveness
in enforcing Community labour law? Do you see a role for social
partners in such cooperation?

3.13.1
The role of the social partners is indispensable, in the
context of social dialogue and in the spirit of the treaties and
the Charter, in looking at the implementation of and compliance
with Community labour law.

3.14 Do you consider that further initiatives are needed at an EU
level to support action by the Member States to combat unde-
clared work?

some studies indicate, then action by Member States themselves
should be strongly supported and encouraged.

little

since

Nonetheless,

is known about

these
3.14.2
phenomena,
it would be useful to clarify the links between
these types of work and counterfeiting, the significance of crim-
inal networks in undeclared work and links with illegal immi-
gration, which could justify greater judicial cooperation within
the Union, and an increased role for the EU, insofar as these
forms or work also have an impact on the internal market and
competition.

3.14.3
The social partners have an important role to play in
combating undeclared work and in reducing the informal
economy. Action should be taken at EU level to encourage the
social partners in Member States to launch national and sectoral
projects among themselves and in cooperation with the authori-
ties to resolve these problems. The social partners could work
together at EU level to analyse and publicise good practices in
Member States.

3.14.1
The role of Eurostat should be developed so that the
phenomena operating in the various countries can be properly
understood; it appears that the role of informal or undeclared
work in forming national GDP is underestimated; if the causes
of this are more attributable to specific national situations, as

3.14.4
The fight against undeclared work calls for effective
cross-border cooperation and surveillance by Member State
authorities and dissemination of information on the sanctions
arising from performing undeclared work or making use of
undeclared work.

Brussels, 30 May 2007.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

APPENDIX

to the Opinion of the European Economic and Social Committee

The following amendments were rejected, although they did receive at least a quarter of the votes cast:

Replace the entire opinion by the following:

‘Today Europe is facing important challenges like a changing economy from an industrial economy to a service oriented and
knowledge based economy, globalisation, rapid technological progress, ageing of European population, decreasing birth rates and
changes in society and its needs.

Responding to these challenges as well as maintaining our European social model requires — inter alia — a modernisation of
labour law.

Therefore, the European Economic and Social Committee (EESC) welcomes the Commission's Green Paper that launches a public
debate about the modernisation of labour law. Input to this Green Paper shall enrich the planned Commission's communication
on flexicurity. The balance between employment flexibility and security should mutually satisfy the needs of workers as well as
enterprises.

The modernisation of labour law should support the Lisbon strategy objectives of growth, competitiveness, more and better jobs as
well as social inclusion. To achieve these objectives the EESC suggests the following:

1. The existing variety of contractual forms of employment should be kept provided that a stable legal framework is in place,
which takes the needs of workers as well as the needs of enterprises, especially SMEs, into account. 78 % of employment
contracts are on a permanent and full time basis, however, the number of new flexible contract arrangements is rising across
Europe. Flexible work contracts such as part-time and fixed-term contracts can help develop work skills that are not learnt in

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Official Journal of the European Union

C 175/73

a classroom environment, increasing the likelihood of finding a full-time permanent contract. Flexible work contracts can be a
good starting point for the further working life of young people as well as an excellent opportunity for reconciling work and
family life and can therefore contribute to the creation of an inclusive labour market. The protection against discrimination is
important for these workers as established in European directives regarding part-time work and fixed term work which are
based on European social partner agreements.

2. The modernisation of labour law needs to take place mainly at the level of the Member States. As labour law is just one part
of the flexicurity-principle the right balance between flexibility and security needs to be defined within the respective national
framework. National reforms should be complemented by European action targeted at raising awareness through identifying
and facilitating exchange of best practices.

3. The important role of social partners at national, sectoral and enterprise level for modernising labour law as well as for
finding the balance between flexibility and security has to be supported. The collective bargaining has to be based on the prin-
ciple of the autonomy of the social partners and will vary according to the history and culture of industrial relations in the
different Member States.

4. A more flexible employment protection within indefinite labour contracts should be combined with active labour market poli-
cies providing tailored support for employees upgrading their qualifications according to the labour market needs. The focus
should be on employment security rather than on the protection of particular jobs. Positive actions by social economy and
enterprises should be supported to integrate the most excluded in the labour market. A close tripartite partnership
between employers, workers and the public sector helps to identify training needs and to share the financial burden. Employ-
ment-friendly social protection schemes for workers as well as for the self-employed should contribute to facilitate transitions
between different forms of work.

5. Self-employment highly contributes to entrepreneurial spirit, an area where Europe is lagging behind compared to its main
competitors in the world and is the best sign of the dynamism of a modern economy. Economically dependent self-employment,
however, has to be clearly distinguished from bogus self-employment: bogus self-employed should have the same level of protec-
tion as employees as regards e.g. social security, safety and health and job protection.

6. Undeclared work distorts competition and destroys the financial basis of the national social security schemes and the tax
systems. Undeclared work is a complex phenomenon and its causes are multiple. Therefore combating undeclared work requires
a good policy mix, with an adaptation of labour law, a simplification of administrative obligations, consistent wage policies,
fiscal
improvement of public infrastructure and public services but also controls and dissuasive sanctions. The
European Commission should therefore take the lead in order to gather good practices and facilitate its dissemination among
the Member States in order to stimulate action against undeclared work.’

incentives,

Reason

To be given orally.

Voting

For: 89

Against: 126

Abstentions: 7

New point 3.9.2

Add new point:

‘In general terms principals do not have any influence on how contractors comply with their obligations to employees on a daily
basis, and in addition they are neither aware of nor able to influence contractors' financial situation; they are not therefore in a
position to gauge whether contractors are able to meet their obligations to employees. They are not therefore able to assume the
accompanying financial risk.’

Reason

The Commission's question in the Green Paper is general and does not only apply to transnational relations. Therefore I
propose to insert an additional point of general nature between 3.9.1 and 3.9.2. In this case, point 3.9.2, which describes
in detail the exemption from this general statement (transnational relations) would be OK.

Voting

For: 75

Against: 122

Abstentions: 12