Understanding social dumping in the European Union

Briefing 21-03-2017

Although a recurring term in discussions related to working mobility, wages and the social security of workers, social dumping has neither a generally accepted definition, nor easily definable limits. It is rather a set of practices on an international, national or inter-corporate level, aimed at gaining an advantage over competitors, which could have important negative consequences on economic processes and workers’ social security. Examples include actions taken by actors from 'low wage' Member States to gain market advantage over actors from Member States with higher pay and social standards; multinational companies from 'high wage' countries searching for ways to avoid legal constraints by employing subcontractors from low-wage countries; and companies engaging cheaper and more vulnerable temporary and agency workers, or relocating production to lower wage and less regulated locations. Social dumping takes different forms in different sectors. Suppressing social dumping is a component of different regulations on working mobility, undeclared work, and the status of transport workers. However, as the legislative competence of the European Union is limited in the labour law domain, soft law and social dialogue are also used to tackle the phenomenon. Several cases before the Court of Justice of the EU (such as the Viking and the Laval cases) show that the applicable EU rules can only be effective if adequate implementation and enforcement by the Member States is guaranteed. In September 2016, the European Parliament adopted an own-initiative resolution on social dumping, calling for a number of actions to reinforce controls, close regulatory gaps, revise working conditions and promote social convergence.