President Macron’s tour of central European
capitals last week was ostensibly about reforming the EU posted workers
directive. The directive, that came into force as long ago as 1996 and has been
tweaked a few times since, is clearly in need of reform. As a half-way house
between freedom of movement and no movement at all, the idea of posting workers
from one EU country to another for a short period of time, abiding by the host
country’s minimum wage regulations but escaping their, usually higher, social
contributions, does not in itself seem a bad idea as a way of contributing to
the gradual convergence of living standards. That being said, it has clearly
been abused by unscrupulous employers, some of whom have gone so far as to set
up shell companies in countries like Bulgaria and Romania solely to be able to
employ cheap labour in high-cost countries. Abuse of directives however would not
normally be a priority concern for a French President; once a Directive has
come into force, it is, after all, the European Commission’s job to police it. But
by publicly insisting that the Directive is “against the spirit of Europe” and engaging
with some of the governments most directly concerned, including the firing of a
well-aimed warning shot across the bows of the Polish government, Macron has given
us some clues as to his underlying motives for taking up the issue in the first
place.
Macron has said on more than one occasion
that Europe should “be more protective”, a somewhat enigmatic phrase, the meaning
of which is now starting to become clear. In doing so, it throws light both on
France’s domestic and European agendas. As I have written here before, the French
in general enjoy a high level of social protection and have not taken kindly to
“posted” workers undercutting them on building sites or driving endless streams
of lorries the length and breadth of their motorways. Opposition politicians
and trade unions have been quick to talk of unfair competition, unbridled
liberalism or uncaring capitalism. Macron knows only too well that such
feelings can generate populist reactions of the kind that gave Marine le Pen
and her Front National an
unprecedented harvest of votes in the recent elections and that were also one
the major reasons for the outcome of the Brexit referendum.
However, now that Britain is heading for
the exit, its influence on policy waning fast in the halls and corridors of
Brussels, is this not an auspicious moment for a young, newly elected and
ambitious French President to seize the initiative and, together with Germany, push France's agenda of “deeper integration”, a coded phrase for more
harmonisation along French lines, more regulation, greater protection and less
competition, in a word, less anglo-saxon liberalism, of which the UK has
always been seen by the French as the champion? This
being said, Macron is also fully aware that French levels of regulation, worker
protection and the resulting high levels of public spending are unsustainable
and one of the reasons for the higher levels of unemployment in France than in most
other EU countries. He even went so far as to point this out himself, clearly
for the benefit of French public opinion, in a joint press conference with the
Austrian Chancellor, Christian Kern, in Vienna last week. The question is
therefore, how far can Macron go in reducing these levels of regulation and protection
while ensuring that their basic principles gradually spread to the rest of the
EU but still stay strong enough in France to stop a majority of voters from
expressing populist-driven rage at the next election?
At a time when many in France see the
forthcoming reform of the French labour market as little more than a capitalist
plot to give more flexibility to employers to the detriment of workers’ rights,
it is therefore significant that Macron is seeking to curtail competition on
labour costs from the rest of the EU, and particularly its newer and poorer
members, by insisting on reining in the effects of the posted workers directive.
Of course, those members would like to
enjoy the same generous levels of heath care and pension provision as those
enjoyed by French workers and pensioners. Eventually, they probably will. The
issue for them, as for all other members of the EU is how best to achieve it
and how long it will take. Macron’s preferred solution is more widespread French
style regulation and he is starting to sketch out the series of compromises
necessary to persuade other members to adopt it. He seems prepared to offer a (slightly)
less regulated French labour market and greater fiscal discipline. What will he
expect in return? For Poland, for instance, to step back into line on democratic
freedoms and the rule of law in return for continued unrestricted access for
its workers to the rest of the EU? For Hungary and the Czech republic to take
in more refugees in return for continuing massive regional aid from Brussels? For
Germany to relax somewhat its strictures on fiscal deficits and show greater
solidarity with other members of the Eurozone as a price for its industry’s privileged
access to a market of 500 million consumers?
A lot, some might say the very future of
the EU itself, will depend on what compromises are struck and, crucially, how
they are sold to national public opinions. The forthcoming meetings on the reform of the posted
workers directive will give a first clue, as will, in the middle distance, the
political horse-trading over the future Presidents of the European Commission
and the European Central Bank. This autumn, we should have the ECJ ruling on Uber v. Barcelona, that will establish whether
Uber is considered under EU law as a mere digital platform or, on the contrary, a
fully fledged employer subject to licensing regulations and the attendant
obligations towards its workers. In any
event, Macron’s ideal spin will be: “no need to fear too much deregulation or EU
low-cost competitors because they are now, thanks to France, moving towards our
levels of worker protection”. Not only will such talk be designed to reassure
French public opinion but, more fundamentally, it will be true to the agenda of
integration and harmonisations that France has pursued ever since the start of
the EU. The original grand bargain was massive support for French agriculture in
exchange for tariff-free access for German industry to the rest of the area,
overseen by a French style administration in the shape of the European
Commission. General de Gaulle, it may be
remembered, was adamant that the UK should not be allowed to pollute the EU club
with its anglo-saxon economic liberalism and vetoed its entry in 1963. Another
Frenchman, Jacques Delors, President of the Commission from 1985 to 1995 was
the leading light behind other major advances in integration, like the Schengen
agreement (1985) the single European act (1986) and the Maastricht treaty (1992)
that established the Euro, after President François Mitterand had been instrumental in persuading Chancellor Helmut Kohl to give up the Deutschmark for the single currency, in exchange for France's support for German reunification.
Many years and many more member countries
later, but once again without the UK, the time could be ripe for the next
grand bargain. It will take some time for its contours to become visible but President
Macron and his administration are already working on it. Engaging the
governments of the poorer countries of the EU is clearly the first move in an
interrelated sequence of events that will take some years to play out.