Numerous French lists, from all sides, propose measures to reduce unfair economic competition between Member States, a driver of relocations. Franceinfo looked at the form that this social and fiscal dumping takes today.
They promise to “avoid it”of “to struggle against against”, or even“to end it”. THE “dumping” invites itself into the programs of the main candidate lists for the European elections, before the vote on Sunday June 9. Often “social”Sometimes “tax”, this term designates a form of unfair economic competition between the member states of the European Union. And everyone agrees on the need to avoid it, from the extreme right to the extreme left including the presidential camp. The only differences are the solutions proposed, such as top-down alignment of social rights throughout the EU or stricter supervision of posted work. But is the problem of dumping, long denounced, still a reality within the European Union? ? Franceinfo takes stock with several specialists in European law and taxation.
We remember the “Polish plumber”, erected as a symbol of foreign labor at cut prices threatening the national market. This scarecrow had been brandished by the supporters of Brexit and, before them, by the opponents of the European constitutional treaty of 2005. Five years earlier, a French parliamentary report already pointed out the problem of social dumping within the EU, defined as the practice of a State or a company aiming “to violate, circumvent or degrade, in a more or less deliberate manner, the social law in force (…) in order to obtain an economic advantage, particularly in terms of competitiveness”.
At the origins of the European Union, well before the creation of the single market, the hope was that it would encourage harmonization for the benefit of workers.notes Eloïse Beauvironnet, doctor in public law at Paris-Descartes University : “Within the founding treaties there is an alignment from above of the social models of the Member States”she explains to franceinfo.
But the enlargements of the EU have, conversely, encouraged social competition, notes Séverine Picard, lawyer and founder of the consultancy firm Progressive Policies. Particularly in 2004, during the integration of ten new countries including Poland, the Czech Republic and Hungary, then in 2007, with the entry of Bulgaria and Romania. “You place States with very disparate social models in the same economic group. Obviously, there is competition through socialconfirms Eloïse Beauvironnet. In the long term, the consequence is a downward alignment, a race to the lowest social bidder and the lowest fiscal bidder..
It describes a sort of crossover: the relocation of companies to central and eastern Europe, on the one hand; and on the other, the flight of skilled and low-skilled workers from these countries to Western Europe. According to INSEE, over the period 1995-2017, around a thousand French companies relocated each year, for an average of 25,000 jobs per year, including “nearly half destined for European countries”.
The 1996 directive on posted workers, known as the “Bolkestein directive”, reinforced social dumping, observes Séverine Picard. The objective of the text was to allow an EU company to temporarily send its employees to another Member State, by applying the “hard core” of the regulations (SMIC, working conditions, etc.) of the country in question. reception, while paying the social security contributions of the country of origin. It applies in a European Union where situations remain very disparate. Saccording to INSEE, in 2021, the hourly cost of a French worker was between 3 and 5.5 times higher than that of a Polish, Croatian, Romanian or Bulgarian worker. Social security contributions payable by the employer were between 6 and 29 times lower in these countries than their level in France.
The system of posted work has had the consequences “a fall in wages and an increasing precariousness of working conditions”says Séverine Picard. “The logic of the system was perverted because people found all the loopholes”judge for his part Philippe Pochet, advisor in social affairs of the Jacques-Delors Institute.
A 2013 Senate report found “explosion of posting fraud”, ranging from simple “failure” administrative to “human trafficking” : non-declaration, permanent secondment, remuneration well below the minimum wage, exceeding maximum working hours, unworthy accommodation, etc. “This organized fraud often involves a cascade of subcontractors and ‘mailbox’ companies within the sending country.“, the senators further detail. In another report, in 2019, the Court of Auditors also questioned the situation of nearly 44,000 French workers posted to their own country, 55% of whom were employed by temp agencies based in Luxembourg, Monaco or Switzerland.
Europe tried to rectify the situation. In 2017, a European pillar of social rights has been adopted. There The “Bolkestein directive” was revised in 2018, imposing a principle of equal pay for equal work, and the payment of travel and accommodation by the employer. In 2022, another directive, aimed at setting the minimum wages of Member States at a decent levelhas been adopted.
But, despite a strengthening of this arsenal, the abuses continue: France “has moved to another stage in social dumping”with companies established in member countries carrying out “recruits Outside the European Union”, notes Séverine Picard. This is the case of Latin American seasonal workers employed on farms, or even of Ukrainian truck drivers who compete with Polish drivers. For Philippe Pochet, the 2018 revision was “goodcorrected most of the problems that were encountered, but did not prevent mafia-like practices.”
“The problem is the lack of control. If there are laws but no control, it is of no use.”
Philippe Pochetsocial affairs advisor at the Jacques-Delors Institute
Séverine Picard recommends a reform of company law in order to apply the principle of “real seat”: “A company should only establish itself where it can demonstrate that it truly has economic activities”, limiting its ability to choose the national legislation that is most favorable to it. The lawyer sees it as an instrument to fight against social dumping, but also fiscal dumping, another scourge pointed out by many parties.
Some countries, including in the EU, in fact offer lower taxes than their neighbors to encourage businesses to set up on their territory. “Societies go, in the same way [qu’elles le font en matière de droit du travail]artificially locate oneself in tax havens to benefit from much more favorable taxation”notes Eloïse Beauvironnet.
Corporate tax in France reached 25.8% in 2023 according to the OECD, compared to 31.5% in Portugal, but 16% in Romania, 12.5% in Ireland, 10% in Bulgaria and 9% in Hungary . These disparities create competition between Member States. The average rate in the EU has been divided “in pairs for 40 years”explains Vincent Vicard, deputy director of the Center for Prospective Studies of International Information. In 2020, the NGO Oxfam even accused the Netherlands, Ireland, Cyprus, Luxembourg and Malta of being five tax havens within the Union.
MEPs tried to stem this trend during the previous mandate. In a 2021 resolution, the European Parliament asserted that while tax competition between countries is not a problem in itself, common principles should govern how countries use their tax policies to attract business and profits. Quoted in the activity report of the subcommittee responsible for tax issues, in April, the French elected official Aurore Lalucq (Socialist Party-Place publique) pleads for the establishment of a new code “restrictive” For “fight effectively against harmful tax practices and aggressive tax competition”.
In 2022, Parliament passed a directive “aimed at ensuring a minimum level of taxation” on the profits of large companies operating in the EU. This minimum rate imposed on the Twenty-Seven was set at 15%, and the text came into force on January 1. Valérie Hayer, head of the presidential majority list for the European elections, is pleased in her program to have “returns” tax dumping thanks to this directive.
If it represents “a very big step”it is far from perfect, nuance Séverine Picard. “Tax havens will actually increase their tax rate from almost 0% to 15%”. But they will still be able to encourage multinationals to set up on their territory by paying them part of the revenue. “in the form of subsidies and tax credits”, underlines the lawyer. A legal process which is not taken into account by the new directive, which Eloïse Beauvironnet describes as a “cheese with lots of holes”.
Even in France, domicile your head office in “La Défense or in certain towns of Seine-Saint-Denis” provides “significant tax advantages”, underlines Eloïse Beauvironnet. The research tax credit is another widely used French system, points out Vincent Vicard. “If a company invests in research and development, this tax credit allows it to obtain a tax reduction or zero taxation”, he illustrates. In 2023, a report from the finance committee of the National Assembly noted that the real tax rate for large companies in France was 17%, compared to 23.7% for small and medium-sized companies, highlighting the ability of large groups to reduce the bill. For the two experts, the minimum tax rate of 15% for multinationals will therefore have few consequences in practice.
However, it is difficult to attribute responsibility for this social or fiscal dumping to the European Union alone, according to the specialists interviewed by franceinfo. Firstly for reasons of decision-making power. “The European Union has no competence in all decisions regarding direct taxation”, recalls Eloise Beauvironnet. To align taxation in the EU, each Member State would therefore have to vote, at national level, on identical reforms. “VS“is science fiction”she explains. “The European Union is ultimately only the sum of the heads of government of the Member States that make it up.”