The weakest link – How construction workers are exploited in subcontracting chains
In construction, long and complex subcontracting chains are a major factor of exploitation. If done in an appropriate way, subcontracting should not be a problem. Trouble starts when subcontracting is simply used to reduce costs and escape legal responsibilities. These subcontractors repeatedly vanish without paying workers or leave them in the cold when an accident occurs. It is time to put an end to this. The European Commission (EC) must act. It is time to limit subcontracting.
Fernando, a posted worker in a subcontracting chain, discovered that the company was not paying him the correct salary of the country where he worked and that his social contributions and overtime were not being paid correctly. Ali has been falsely declared as a self-employed, as a cleaner or as a part-time worker. The goals are always the same: to pay him a lower salary and to disguise the nature of the relationship between worker and employer. Arman had to live with more than 20 people in one small bedroom without hot water or heating. Mohamed was promised a good salary and good working conditions. They told him that he could bring his family to Europe. All lies.
All these cases are real and unfortunately too frequent. Next time you pass by a construction site, take a closer look: it is highly probable that you will find stories like the ones from Fernando, Ali, Arman and Mohamed.
The list of workers abused is endless, the list of abuses is endless. There is one common denominator: subcontracting chains, as they are a major exploitation risk factor.
If done in a correct manner, subcontracting should not be a problem. A construction project implementation often requires different kinds of highly specialised abilities, skills, and knowledge not always available in-house. Specialised companies are subcontracted to perform specialised works.
However, this is only one side of the medal. The other side shows an increasing number of large companies which use the term ‘specialised work’ for normal, labour-intensive construction work. These companies use subcontracting chains to disguise employment relationships, use bogus self-employment, outsource key construction tasks to curb labour costs and open the doors for fraudulent companies who use cross-border subcontracting to make a profit with severe wage competition, exploitation, and social dumping.
At the end of the chain are the workers and their families, who end up being the weakest link. Subcontractors often vanish without paying the workers their wages due after months of working. These companies are often temporary work agencies, and letterbox companies, which do not pursue a real and productive business. Abusive subcontracting is an obstacle to sustainable growth and destroys the social market economy and fair competition.
Because of existing loopholes in European and national law, such practices are not necessarily always illegal, but they are certainly abusive and immoral.
Now it is time for a change! As we celebrate 30 years of the Internal Market, it is time to put social progress at the centre and make the European Internal Market socially sustainable. It is time for better rules on subcontracting. The European Commission launched a study to review the revised 2018 posting of workers directive, which aims to provide a comprehensive analysis of various aspects related to the temporary cross-border movement of workers in the European Union (EU), including subcontracting. The study is now ready, and we are waiting for its presentation and for the EC to announce the next steps.
One thing is already indisputable: the need to limit subcontracting and the long chains in subcontracting.
In many European countries, such as Belgium, Spain, Norway and Croatia, limitations have already been imposed on the number of tiers in subcontracting chains in the construction industry, others, such as Sweden, are discussing introducing similar measures.
However, it is not only about limiting the number of levels, there must also be limits to the permitted percentage of employed workers, the number of tasks, and the percentage of the turnover generated down the subcontracting chain.
In parallel, there are other solutions which must be adopted. Temporary work agencies, for instance, must be prohibited to post workers in the construction industry, as is the case in Germany.
In the context of discussions on staggering labour shortages and how to increase the attractiveness of the construction industry, direct jobs must be the norm. And when this is not possible, the European and national legislation must guarantee equal treatment in all public and private procurement, so that the subcontractor applies to his workers the same working conditions and social security rights that the main contractor applies, including the same collective bargaining agreements. It is simple: Same work, same rights, same salary, same social protection.
EU legislation must ensure unconditional and comprehensive systems of joint and several-chain liability in construction in all Member States, including in cross-border subcontracting chains. Additionally, we need a European framework for social ID cards in construction to promote transparency and assist in better enforcement.
We need effective labour inspections and complaint mechanisms. A new EU directive shall set minimum standards for labour inspections and complaint mechanisms based on ILO Convention No. 81. It shall also empower the European Labour Authority to take up its full responsibility in the area of cross-border enforcement. It should allow victims as well as third parties, including trade unions, to file complaints addressing practical barriers that make complaint mechanisms ineffective or inaccessible, in particular for mobile and migrant workers.
We believe in and fight for a sustainable internal market for construction based on fair competition, innovation, productivity, good skills and qualifications, good working conditions, strong collective bargaining, and health and safety for all workers. Profit cannot be achieved at all costs and at the expense of workers’ lives.
The state of play of subcontracting in the European construction sector will be discussed on 30 May in a joint conference with S&D – How to better regulate subcontracting – with EC representatives, MEPs, and specialists. Register here.