Trésor-Economics No. 171 - Social competition from posted workers in France: misconceptions and realities

A posted worker is an employee assigned temporarily by his or her employer to the territory of a Member State of the European Union other than the State in which he normally works and in which the employer is established. Unlike migrant workers-to whom the Community principle of free movement of persons applies-the posting of workers rests on the principle of free provision of services.

France is the second host country in Europe after Germany, with 229,000 posted workers in 2014, or less than 1% of the French labour force. France is also one of the three countries that post the largest number of workers after Poland and Germany. The typical profile of a posted worker in France is a Polish, Portuguese, Spanish or Romanian manual worker in the construction industry.

Postings raise the issue of potential tax and social competition between Member States. The cost of posted workers may prove lower than the cost of non-posted workers depending on whether or not the host country applies minimum wages (as posted workers may accept lower pay if wage levels in their home countries are lower), differentials in employers' social contribution rates, and the contribution assessment base.

In France, the existence of minimum wages limits competition from posted workers vis-à-vis non-posted workers and acts as a protection mechanism. The official minimum wage, known as Salaire Minimum Interprofessionnel de Croissance (SMIC), applies to all employees including posted workers, as do most collective agreements, which apply to all employees of a specific sector owing to the near-systematic extension of industry agreements.

At SMIC level, the labour cost for a worker posted in France by a Spanish, Polish, Portuguese or Romanian firm is broadly equivalent to that of a local worker for a French firm. Differentials might be observed at higher wage levels.
However, some firms seeking to minimise labour costs take advantage of grey areas in EU legislation that may encourage optimisation strategies and abuse.

France and the European Commission have put forward proposals to combat these trends. The Commission has submitted to the Member States a proposed revision of the Directive on posting of workers, which is currently under discussion.