Imagine trying to live in Belgium while being paid the minimum wage in Bulgaria. The sums just wouldn’t add up. It’s hard enough for workers trying to survive in Bulgaria on €620 a month when the average cost of rent in Sofia is €954 a month, let alone the €1,476 cost in Brussels.
Yet this scenario could actually become a reality under the European Commission’s loophole-ridden proposal a parallel EU corporate structure known as ‘EU Inc’ after the venture capital campaign group which lobbied for it.
Under the Commission’s proposal, a company based in Belgium, carrying out work in Belgium, with workers based in Belgium, could decide to register itself - within just 48 hours through one online form - in any other EU member state.
And the draft regulation states that 'matters that are not covered by this Regulation or by the articles of association shall be governed by national law… in which the "EU Inc." has its registered office.' That includes workers’ rights.
There is a mention of the principle that place of work determines the law applicable to workers, contained in the Rome I regulation - but only in the non-legally binding ‘recitals’ of the text.
Unless this is fixed, EU Inc puts at risk every victory by working people over the last 100 years.
That is no exaggeration. Companies of any size would have a legal way to circumvent national labour laws or collective agreements on pay and conditions. Bad bosses will begin undercutting the majority of good employers. The logical consequence is a race to the bottom across Europe.
As it stands, companies could even exploit the lack of safeguards and the introduction of employee stock option plans to pay workers in shares rather than money. This highlights the problem with making EU Inc accessible to companies of any size, rather than just for start-ups as this policy was originally sold.
What might work for a couple of friends trying to build a tech start-up clearly should not be applied to millions of working people with families to support and bills to pay.
And it’s not only pay that would be affected. Companies in Germany or Austria could also exploit EU Inc to avoid their current obligations to worker representation on company boards and co-determination.
Companies across Europe would be enabled to divide their entities up into small enough units to avoid the threshold for compliance with workers’ rights to information and consultation on board decisions.
The fast-track liquidations offered could also leave workers with huge sums in unpaid wages.
EU Inc is a pandora’s box and the fact that it is a regulation, rather than a directive, means there will be nothing member states can do to protect national law if it’s adopted in its current state.
If EU Inc is not intended to damage workers’ rights, as the Commission insists is the case, then clear safeguards can and should be introduced by the Council and Parliament.
Without them, the European project is at risk of being turned on its head.
In signing the Treaty of Rome, the heads of state of 'the Six' affirmed the 'constant improvements of the living and working conditions of their peoples' as the 'essential objective of their efforts.'
That is the only version of Europe which commands the support of working people. And it is this Europe which attracted countries like Bulgaria to join since 1958.
The people of these countries placed their hopes in Europe because it represented progress towards a better life.
Europe has been delivering on this promise. As a result of the directive on adequate minimum wages passed during Ursula von der Leyen’s first term, the lowest paid workers in Europe have already seen substantial increases in their wages.
More important still, the directive requires all member states to raise collective bargaining coverage – which is what delivers genuinely fair pay - to at least 80 per cent of the workforce.
The loopholes in EU Inc would put this progress at risk. This is why thousand of workers will demonstrate in Brussels on Thursday. As economy ministers meet to discuss EU Inc, our message is simple: fix it or sink it.
