Macron Tells Poland It's Headed for the 'Margins' of Europe
Comment of the Day

August 25 2017

Commentary by Eoin Treacy

Macron Tells Poland It's Headed for the 'Margins' of Europe

This article by Mark Deen and Marek Strzelecki for Bloomberg may be of interest to subscribers. Here is section: 

The specific issue being discussed is the use of “detached” or “posted” workers. Those employees typically are brought from low-wage eastern European countries to higher-cost ones such as France or Austria to perform tasks that would be more expensive to hire for locally.

There are an estimated 300,000 such workers in France. For employers, the advantages are obvious. The minimum wage in France is about 1,480 euros ($1,740) a month. In Poland, it’s about 450 euros.

Macron wants to reduce the length of working stays to one year in every two and increase cooperation to ensure that minimum wage and social charges are applied through cooperation between EU governments. He is seeking an agreement on the matter at an EU summit in October and said in Varna that he is confident an accord can be reached by year-end. The decision requires only a qualified majority of EU countries.

Eoin Treacy's view

It is valid to talk about whether it is entirely fair to import workers on low wages from Eastern Europe to compete directly with local workers. However, the much broader question is how Macron is going to deal with France’s militant unions. Raising the question of “posted workers” is but the opening volley in what is likely to be a terse face off. 

The gambit is just another example of the petty practice of using European politics to further domestic ambitions and Poland as an up and coming high-population member of the EU needs to be wary of such moves. 

Quite what the ECB’s monetary policy is likely to be is another big question for France. The more than doubling of the central bank’s balance sheet to €4.265 trillion has been a primary enabler in the economic recovery of the bloc and tapering could represent an obstacle to getting economic reform through.

 
One of the primary issues facing the EU is reform is required on both a domestic and bloc level for a large number of countries. Historically domestic politicians have taken the credit for EU successes and blamed the EU for domestic failures. It is an unanswered question whether the region is capable of reforming and creating a level playing field for large and small economies alike. The answer of course is federal taxation and a formal process of transfers to poorer nations beyond structural funds. That still appears to be decades away considering the current trajectory and could yet be too long if the political union is to hold together. 

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