Abstract
The importance of the posting of workers across EU borders has grown considerably in the past decade, causing concern regarding its impact on labour standards in Europe. This article asks why posting has taken such a flight. Building on quantitative analysis and in-depth interviews set against other sources, we shed light on employer motives for deploying posted workers. We develop a typology of posting which shows that while cost minimization is a crucial motive, especially in sectors where labour cost is an important competitive concern, a much wider set of motives are at play. Skill shortages across all levels of the skills spectrum play a crucial role in every sector. In addition, companies use sub-contracting for highly specialized temporary work as well as for routine tasks. Posting is also used for career development, especially of high potentials. Based on the wide array of employer motives for the use of posting, our typology distinguishes between ‘competition posting’, ‘specialisation posting’ and ‘expert posting’. The article discusses some implications for EU policy vis-a-vis posted work.
Introduction: why has posting taken such a flight in Europe?
One of the most sacrosanct principles of the Single Market is the freedom to provide services in other Member States. Within this context, the importance of the posting of workers across European borders increased dramatically. Because of its association with social dumping, substandard work conditions and low pay, the phenomenon has also become very contentious. Many of the problems associated with posting are in fact seen as quintessential examples of what remains a fundamental tension at the heart of the European Union (EU) project: the blatant asymmetry between its economic and (proclaimed) social dimension (Scharpf, 2010; Streeck, 2018).
There can be little doubt that the free movement of services has been ardently promoted and expanded by the European Commission and especially the European Court of Justice. The exponential development of posting, however, has generated a strong reaction on the ground with numerous stakeholders contesting its alleged social damage (Alsos and Eldring, 2008; Cremers, 2016; Hassel et al., 2016; Mussche et al., 2018). The extreme push for the freedom to provide services across the EU by the European Court of Justice and the European Commission has reinforced the perception that the pendulum had swung too much to the economic side. The most visible political consequence of this, pushed forward by French President Macron, was the Posted Worker Revision Directive of 2018 curbing its more liberal predecessor (Novitz and Andrijasevic, 2020).
But why has posting taken such a flight in Europe? This article addresses this underexamined but crucial issue. We do this from an obvious – yet understudied – perspective: employers’ motives (Riesco-Sanz et al., 2020). This article is primarily based on qualitative data obtained for Belgium from in-depth interviews with representatives of sectors of the economy where the use of posting is prevalent, as well as individual companies. Importantly, we triangulate our findings from the qualitative analysis with unique quantitative data on posted workers and secondary sources. Based on our empirical findings, we develop a typology of posting and discuss its significance for current debates about posting and associated issues.
Belgium is an excellent case for the study of posting, as it is one of the top receiving countries of posted workers, next to its neighbours Germany and France (De Wispelaere et al., 2020). Belgium has a highly open, advanced economy characterized by a strong social corporatist tradition and a high degree of labour market regulation and institutionalization. With Belgium being a top receiving country of posting, the country took steps relatively early on to counterbalance the social fall-out of posting. As early as 2002, it made about every aspect of Belgian labour law applicable to posted workers. This extensive body of labour law includes among others, chain liability for contractors and a multitude of collectively bargained agreements between unions and employers declared generally binding by the Minister of Labour. Our Belgian case study can be seen as representative for other Western European high-wage Member States. We will now discuss the existing literature before we move on to the empirical part and later the discussion of its implications.
Literature review
Posting in Europe today, a most contentious issue
It is important to start by providing a clear understanding of what posting entails. Over the years, three forms of labour mobility have emerged within the EU: migration to another Member State based on the free of movement of workers, cross-border commuting also covered by the free movement of workers and temporary mobility through posting of workers in the framework of the freedom to provide services (Bottero, 2021). Posted workers are employees who are sent by their employer to carry out a service in another EU Member State on a temporary basis. Their legal situation is ‘split’: even though the posted workers are performing work in the host country, they do not shift residence there and stay connected with their home country as the employment agreement is concluded there and remain subject to the social security system of the home country. At the same time, posted workers become mobile to work in other Member States by executing service contracts for their employer (often months at a time) and are subject to the labour legislation of the receiving country. This makes posted workers different from EU movers who migrate based on the free movement of workers, as posted workers stay only temporarily in the host Member State and do not integrate into its labour market (Fries-Tersch et al., 2020).
Along with its considerable increase in the European mobility landscape, posting has generated a fierce debate between Member States and stakeholders in the past decade. It has been the subject of litigation (Rasnača and Bernaciak, 2020), as well as of legislative reforms both at EU and national levels (Bottero, 2021). As mentioned in the introduction, the posting phenomenon generated a strong reaction from various stakeholders as posting became a glaring example of the institutional asymmetry that has been plaguing the EU from its inception, between the economic and social imperatives of policy making (Scharpf, 2010). The zealous promotion of the economic freedom of services by the European Court and European Commission resulted in extensive social damage in national labour markets. A first was the curtailment of the rights of trade unions and social partners to impose labour standards on posted workers as a result of case law of the European Court of Justice (Arnholtz and Andersen, 2018; Zimmer, 2011). Studies also found job displacement in certain sectors such as the construction and meat industry (De Wispelaere and Pacolet, 2017; Lhernould and Palli, 2017; Wagner and Hassel, 2016; Wagner and Lillie, 2014), as well as the development of a dual labour market in some Member States (Doellgast and Greer, 2007; Hassel et al., 2016). Scholars further pointed to regulatory arbitrage on the part of employers and recruitment agencies that exploit the regulatory complexity of posting and the considerable differences between national systems in order to increase their profits (Alberti and Danaj, 2017; Cremers, 2016; Novitz and Andrijasevic, 2020). Research also pointed to higher risks of exploitation and social dumping with the use of posting (Alsos and Eldring, 2008; Cremers et al., 2007; Novitz and Andrijasevic, 2020; Wagner, 2015). Posting is shown to cause pressures on local labour markets due to wage dumping, deteriorating working conditions and outright fraudulent practices such as letter-box companies, abuses with working time and deductions for transport and lodging. Literature additionally highlights the unfortunate level of complexity in fighting these practices and in implementing national and European rules on posting in transnational settings before national courts. Studies point to the lack of clarity on key legal aspects of posting, with national judges struggling to varying degrees in determining which set of regulations to apply and which elements of the employment relation and remuneration to work with in order to combat social fraud (Rasnača and Bernaciak, 2020).
At the same time, scholars have cautioned against an overwhelmingly negative depiction of posting as it neglects the possible positive aspects of the phenomenon. Posting can be seen as a mechanism strengthening upward socio-economic convergence, as it allows new Member States to exploit their competitive advantage of lower wages and lower tax and social security contribution levels (Berghman, 1996; Bjelinski and Žeravčić, 2020). The agency of workers in taking up posted work has also been highlighted. Posted workers are said to use this type of work to increase their income in view of poor employment prospects and wage levels at home, with minimum remuneration levels in high-wage Member States exceeding the average income rate in low-wage Member States (Alberti, 2014; Bottero, 2021; Caro et al., 2015). Mussche et al. (2018) further suggest that posting enables EU citizens to seize economic opportunities across the EU while saving them the challenges of permanently moving to other Member States, such as language barriers, administrative hurdles, finding suitable housing and a job and the uncertainty regarding the portability of social security rights.
Other scholars have argued that the debate concerning labour mobility within the EU exaggerates the actual impact of the posting phenomenon (Bottero, 2021; Maslauskaité, 2014). Latest available data from a report published by the European Commission indicate an overall number of 3 million postings in 2018, involving approximately 1.9 million individual posted workers (De Wispelaere et al., 2020). Although the number of postings has continued to increase over the last years, its significance for the European labour market has remained small. In fact, intra-EU postings represented only 1.2 percent of total EU employment in 2018. Yet the phenomenon does assume significant relevance in some Member States: 52 percent of postings concern intra-old Member States movements, and the flow from new Member States to old Member States represents only a third of total postings. In relative terms, Luxemburg, Belgium and Austria are confronted with the highest share of incoming posted workers, accounting for approximately 4–6 percent of total employment in these countries. Posting is also concentrated in certain sectors, with the industry sector (especially construction) being the most prevalent destination of service delivery.
What do we know about employers’ motives?
While there is a growing literature on posting, few studies have approached the posting phenomenon from a business/employer perspective. Posting is mostly studied from the perspective of the worker or from a labour market perspective. The employer perspective on posting is quasi entirely framed in terms of cost saving and rule evasion. Companies are seen to ‘consciously strategize across sovereign sites and arenas of regulation to take advantage of lower cost structures and less strict regulatory environments’ (Berntsen and Lillie, 2015: 1). Riesco-Sanz et al. (2020: 6), who interviewed European employer associations, conclude that for employers ‘posting of workers constitutes a fundamental tool for ensuring business competitiveness, the correct functioning of the single market and, in short, European prosperity’. We nevertheless observe that we cannot fully answer the question of what exactly motivates businesses to make use of posted workers.
Broadening the focus to intra-EU mobility based on the free movement of workers, we find that literature did try to analyse employers’ motives for hiring migrant labour more extensively. Several scholars came to interesting conclusions based on country case-studies, mostly the UK and Ireland (admittedly an entirely different institutional setting than Belgium). We discuss their findings here as they may serve as a basis to understand employer motivations for the use of posting. Unsurprisingly, a first major motivation observed by researchers concerns minimizing labour costs (Fellini et al., 2007; Moriarty et al., 2012). Employers’ primary objective is to maximize profits because of which employer demand for labour critically depends on the price of labour. Minimizing labour costs by hiring migrants fits with migrants’ readiness to accept inferior wages and employment conditions, given that their primary frame of reference is often the labour market in their home country (Matthews and Ruhs, 2007).
Next to low cost of labour, Moriarty et al. (2012) further point to labour shortages and skills needs perceived by employers as a key factor in hiring migrant labour. During the Irish economic boom at the turn of the century, labour and skill shortages within the local labour force were seen as a threat to economic growth. The need for labour migrants as expressed by employers, however, was criticized as companies were seen to rely on the constant influx of trained migrant workers, rather than train their existing staff (Wickham and Bruff, 2008). The easy of availability of migrant workers slashes training costs as the necessary skills can be imported. In this way, employers contribute to the social production of the skills shortages within an industry or a country. Similarly, Matthews and Ruhs (2007: 29) argue that behind the perceived skill shortages, employers’ demand for labour is more complex and involves employers recruiting ‘good attitudes’ over specific skills, ‘primarily because they seek workers that are accepting low pay and precarious working conditions. This brings us to another major factor: the attractive ‘attitude’ of migrant workers (MacKenzie and Forde, 2009). Moriarty et al. (2012) point to employers identifying attitude as a criterion in recruitment decisions. More emphasis is put on ‘good attitude’ and an ascribed readiness for ‘hard work’ rather than formal qualifications of the EU movers.
A final motive discussed in that literature, is greater employment flexibility (McCollum and Findlay, 2015). A case study on the Irish construction sector points to the seasonal and cyclical nature of the industry, which requires a flexible labour force (Bobek et al., 2018). The ability for employers to expand and disband this additional workforce to fill daily fluctuations in demand is said to be crucial for the industry’s success and survival. Hiring EU movers is one way to attain this flexibility, as they constitute a hyper-flexible buffer of workers who are disposable in case of downturn (Meardi et al., 2012).
Empirical analysis: why do employers use posted workers?
Research questions
According to the literature on EU workers who migrate based on the free movement of workers, the following factors combine to make internationally mobile labour attractive: reduced cost, skill shortages, worker attitudes and employment flexibility. Keeping these findings in mind, we now turn to the free movement of services and ask ourselves the following research questions: What motivates employers to make use of posting? As posting literature mainly emphasizes companies’ desire to hire cheap labour, can this be confirmed in our Belgian case study, or are more motivations at play? Do the motivations of employers to hire EU migrant labour also apply to situations of posting? Are there employer motives for using posted workers that are particular to the posting situation?
To address these questions, we primarily build on qualitative data obtained from in-depth interviews with representatives of sectors of the Belgian economy where the use of posting is prevalent, as well as individual companies. We additionally corroborate our qualitative findings with a quantitative analysis based on unique Belgian posting data, as well as secondary sources on employer motives (mostly position papers by employer associations).
Posting in numbers
Before we dive into the qualitative results, we present a first impression of the potential diversity of employers’ motives for using posting from Belgian posting data. We can do this as Belgium developed a database on posting inflows in 2007 – called LIMOSA – as a tool for combatting social fraud. Every employer who wishes to post workers (and every self-employed person) to perform a temporary economic activity in Belgium must register these workers in advance. LIMOSA data confirm the growing importance of the posting phenomenon. Whereas in 2008, about 117,000 posted workers were registered, this figure gradually rose to about 239,000 posted workers in 2019. The number of unique posted workers to Belgium hence doubled over the past decade. Interestingly, the data also show that a plateau has been reached since 2015, and that posting mobility to Belgium seems to have passed into a ‘maturity stage’. The phenomenon of posting is thus clearly relevant in absolute terms. Yet we also must consider that it is a short-term form of mobility, with posted workers moving in circular patterns, commuting between their home country and the country of service delivery. Indeed, LIMOSA indicates that the 239,000 workers registered in 2019 took up approximately 879,000 posting jobs in that same year. This means that on average posted workers were sent 3.7 times by their employers to deliver services in Belgium.
A first indication that a diverse set of motives are at play for the use of posting is the diversity of origin countries of posted workers. Whereas posting is usually associated with cheap labour from New Member States, Belgian data show that 60 percent of the posted workers were sent to Belgium from EU15 Member States (mainly from the Netherlands, Portugal, Germany and France). Only about 27 percent of the posted workers came from EU10 Member States (mainly from Poland) and 9 percent were sent from EU3 Member States (mainly from Romania). This diversity of origins indicates that other factors than economic disparities, such as geographic proximity and high market integration, play a crucial role in the expansion of posting to Belgium.
Sectoral developments can reveal interesting trends too. 1 Posting is generally associated with a few sectors and LIMOSA data confirm construction as the most affected sector, with 31 percent of the total number of posted workers in 2019. Yet data make clear that posting involves a wide variety of economic activities, including metal and pipe fitting (10 percent), transport and distribution (10 percent), maintenance of electrical machinery (5 percent), petrochemistry (3 percent), meat (2 percent) and ICT (1 percent), of which a sizeable share involves medium to high skilled workers who are temporarily supplying knowledge-intensive services. We indeed see a higher concentration of posted workers from low-wage Member States in labour-intensive sectors, such as transport, meat and construction. In turn, medium and high skilled sectors more often rely on service delivery from old Member States. However, in neither of the labour-intensive sectors (except transport), workers from new Member States account for more than 50 percent. In the construction sector, the number one sending country is Portugal, followed by Poland and the Netherlands. And in financial and insurance services, workers from new Member States cover approximately a third of the posted workforce. This means that posted workers from low-wage Member States are more proportionally distributed across sectors than often assumed.
In sum, these data show a high degree of concentration of posted workers employed for the provision of labour-intensive services on the one hand and for highly specialized jobs on the other. Importantly, those coming from new Member States are not the only ones involved. On the contrary, the majority of posting flows concern workers from the old Member States. Posting is hence a multifaceted phenomenon which has many benefits and reasons for its use, for different sets of actors and sectors. These observations help us understand the different motives of employers to use posting. In the next section, we elaborate more extensively on these motives from an employer/client perspective, building on qualitative research.
Qualitative analysis of employer motives
We begin our analysis with a brief discussion of the research method. Our qualitative analysis draws on data obtained from 27 in-depth interviews with Belgian sector federations, companies and other stakeholders. The interviews were carried out between April 2018 and October 2019. The research sought to cover a broad range of sectors in which the use of posted workers is prevalent. As can be viewed from Table 1, our interviews not only included the labour-intensive sectors, but also sectors like petrochemistry and tech. In total, 10 interviewees from sector federations and 11 interviewees from individual companies took part in the research. Sector federation representatives included (managing) directors and staff from departments responsible for posting issues: Human Resources, Social Affairs and Legal Services. Company representatives included (assistant) general managers, international mobility managers, human resource managers and legal advisors. The companies ranged from small and medium-sized enterprises to large multinational organizations. Although our interviewees had distinct roles and responsibilities within their respective federations/companies, most of them were directly or indirectly responsible for posting of workers. In addition to the 21 interviews across different sectors, 6 interviews were undertaken to explore a more overall perspective on employer motives; with an umbrella organization of approximately 50 employer federations, two entrepreneurial network organizations, a labour union, a law firm specialized in migration and a social security administrator. The semi-structured interviews, which were designed keeping the existing literature on employer motives in mind, concentrated on the motives for companies in the sector to use posted workers, if these motives evolved over time, and how the interviewees see posting as part of their business and sectoral development. Most of the interviews took place at the interviewee’s place of work and lasted for over an hour.
Research participants by economic sector.
Temporary employment agencies work across different economic sectors.
Before we present our most important findings, we highlight some limitations that need to be kept in mind when interpreting the results. Primarily, the research participants of our study were purposively selected rather than randomly chosen. We explicitly aimed to interview representatives of sectors/companies that make use of posting while at the same time safeguarding sectoral diversity. We approached our research participants through employer organizations, agencies and informal contacts. A second set of limitations relates to the challenges associated with research into employers’ motivations. Businesses may be fearful of opening up to outside researchers and may not be enthusiastic to disclose all there is to know on the subject. Employers might be inclined to ‘overlook or try to hide less savoury aspects of workplace and workforce change’ (Scott, 2013: 705). Hence, the data captured in the interviews are essentially the employer’s perspective, but may differ considerably from other perspectives, such as that of the posted worker. We also must keep in mind that most of our interviewees are ‘professional elites’ who often have a chain of command to answer to, and therefore might have more to lose from being completely candid and open.
Similar sets of motives are prevalent in certain sectors having similar sector characteristics (such as low or high value-added) and similar posted worker profiles (low to medium or medium to high skilled). Grouping these motives and associated sectors, we discern essentially three clusters: Competition Posting, Specialization Posting and Expert Posting. We discuss these in turn.
Competition posting
The first cluster, coined Competition Posting, collects four different motives: low cost, increased flexibility, motivated workers, and skill and manpower shortages. The associated economic sectors are mostly low value-added, with low- to medium-skilled labour being a large part of the operational cost: construction, transport, meat, food and cleaning. Based on LIMOSA data, we estimate the Competition Posting cluster to represent the largest share of posted workers in the Belgian posting landscape. The below analysis of the motives indicates that Competition Posting is where the institutional asymmetry between the economic and the social is most obvious and makes up the type of posting that has been addressed by the Revision directive.
As expected then, our interviews reveal low cost to be a major motive in these labour-intensive sectors. In fact, cheap labour was said to have become one of the only ways to remain competitive. A representative of the federation of cleaning businesses was straightforward: ‘There is only one motive [for the use of posting]: that is the difference in labour cost [. . .]. The cleaning sector is very competitive; there is fierce competition at the sectoral level as customers ever want more for less’. The representative even advocated a total ban on posting in the cleaning sector, as the competition it generates is said to destroy the sector. Cheap labour is a crucial motive in the transport and construction sector as well. Especially large construction companies extensively make use of posted workers to remain competitive. A representative of a federation of construction businesses explained that after wages and social security are paid for in the home country, a posted worker from Central and Eastern Europe remains at least €4–€6 per hour cheaper than a local worker. As a result, smaller construction companies have also started working with posted workers. Secondary sources reflecting employer motives in the Belgian construction sector similarly recorded that construction companies are almost obliged to use posted workers if they want to remain competitive, as ‘the foreign wage costs are more and more seen as the reference price by the customers’ (Confederatie Bouw, 2017). An employer from the temporary employment sector hence argued that the low-cost motive has become so predominant in the labour-intensive sectors that ‘one cannot talk of a temporary delivery of services in the framework of the free movement of services anymore [. . .]. Rather, posting has become a structure to permanently work with cheap labour all year round’.
Other companies in the construction sector defined their relationship to low-cost posting as a form of ‘cost optimization’. Workers from ‘cheaper’ Member States are posted to these companies as intra-company transferees, but in fact the worker is treated as a regular worker for the duration of the project and the employer authority lies with the Belgian branch. Hence some fictive reality is created within the framework of posting. Deploying workers in this way results in cost saving for the Belgian branch as the final cost of the posted worker will be cheaper than hiring a local, among others, because social security is paid for in the sending country. A construction company representative described this as ‘legal but not according to the spirit of the Posted Workers Directive’. All paperwork is in order, and would probably withstand a social inspection, but it nevertheless shows the use of posting to enable cheaper employee-employer relations, and not for temporary service delivery. This finding is clearly in line with the argument of Berntsen and Lillie (2015: 57), that companies play with the ‘grey zone of legal uncertainty that exists around posting’ to set up cheaper worker relations.
A second important motive is that working with posted workers offers greater flexibility. While hiring permanent personnel is quite a process, contracting posted workers is often much easier, quicker and less burdensome administratively. For the meat sector, for example, working with posted workers is attractive: We had an urgent order for the government [. . .]. So, I called that man [of the sub-contracting company]. And that’s how simple it is: We need people who can handle animals. It is for Saturday. And I need eight men. Can you provide them? It is almost absurd. But within half an hour, I have a yes. (Representative federation of meat businesses)
The importance of this motive is confirmed in secondary sources reflecting employer motives for the use of posting in the Belgian construction sector. Next to the sheer ease of taking up and shedding manpower when needed, businesses observed that the insecurity about their future personnel needs makes working with posted workers a flexible alternative, as it avoids the burden of personnel costs in uncertain circumstances (Federation of General Construction Contractors (FABA), 2018). This flexible uptake of quickly needed manpower is especially attractive for sectors where qualified personnel is hard to find. This quote from a representative of the federation of meat businesses supports that In this way, posting is convenient. Qualified people come and tell you: we will come and debone and cut for you, that is indeed easy. When one worker falls sick, then they guarantee that another comes in his place. While otherwise this burden falls on the company [. . .]. Tomorrow, I have 1000 carcasses more, can you provide 15 men to help them debone? – answer: yes, I’ll call around, I’ll call you back. You should try doing this with a temp agency (Implying difficulty).
The third motive which we cluster under Competition Posting also played a crucial role in the hiring of EU movers (MacKenzie and Forde, 2009): the willingness to work hard and long hours. Companies in the construction, transport, meat and food sector similarly reported to prefer posted workers over local ones due to their elevated levels of commitment, availability and motivation. This quote from a food company representative is illustrative: Whereas before these same workers worked 6 days on 7 and used Sunday to go the Polish mass in Brussels and have social contacts with other Polish workers, they one day realised that they can as well record a mass on TV and watch it in the night. They prefer working 7 days on 7. (Representative food company)
Similarly, companies in the construction and meat sector reported to their sector representative that ‘they found the good will in these posted workers, that their own people had thirty years ago’.
This brings us to the motive of skill and manpower shortages, which is discussed in literature on hiring EU migrant labour and is also confirmed by employer position papers (Business Europe, 2016; Moriarty et al., 2012). Importantly, this motive was reported to be one of the main motives for making use of posted workers. One of the consequences of these skill and manpower shortages is a strong dependence on posted workers. In the meat and construction sector, shortages of the needed manpower with specific skills combined with a continuous use of posted workers as the main strategy to address these shortages has gradually led to this situation. An example from the meat sector: The meat sector has little sex appeal, the factories are cold and deboning carcasses is a specific skill. There are ever less candidates in the butcher vocational training. So, the meat sector is constantly in search of people. [. . .]. We have come so far that in certain companies, posted workers make up sixty per cent of the total team.
In the construction industry, it was similarly observed that companies make use of posting to combat work overload, one of the consequences of their reported problems in finding personnel. As the sector faces growth, manpower is in high demand. Especially large construction companies are now in a situation of dependence on manpower from abroad. Without them, they would not be able to do their work at all. According to a representative of the federation of construction businesses, posted workers represent about 50,000 full-time equivalents in the Belgian construction sector.
A related aspect of the use of posting due to manpower shortages is the fact that posted work is a ‘solution’ for unattractive work. This is the case for shortage occupations that arise due to perceived bad working conditions. In the transport sector, it was indeed expressed that finding local employees was difficult: To Belgian youth you cannot say anymore: start driving Sunday night or keep driving Friday night, because they have football training or a date with their girlfriend [. . .]. For Romanians and Bulgarians, it is different, they want to work 7/7 [. . .]. Note that being a truck driver is not an easy occupation and is very hard to combine with a family. Being a truck driver in Bulgaria or Romania is an attractive profession. Those men make more than doctors and notaries there. They drive for four to five years non-stop, save money diligently and then buy a beautiful house there. (Representative federation of transport businesses)
The meat and construction sectors admitted that due to the enthusiastic use of posting, the incentive to invest in training and education is reduced, with negative consequences for the future. A representative of a federation of construction businesses admitted: ‘The construction sector lost five to ten years of investment in education and training of its own youth, because there are relatively cheap, flexible workers available’. Moreover, due to the dependence on posted workers, a real fear exists that a time will come that too many posted workers will decide not to come and work in their home country, as there too work becomes easily available and the factors family and a better social life weigh heavily. A representative of a construction company reported to see the wages of posted workers gradually rising due to their high demand.
As is clear from this overview, ‘low cost’, ‘flexibility’, ‘motivated workers’ and ‘skill and manpower shortages’ form a cluster of motives for the use of posting which we can also associate with a particular cluster of sectors. Competition Posting is the type of posting that takes place in ‘risk-sectors’ associated with social dumping practices. It is this cluster then that the asymmetry between the economic and social imperatives of EU integration has manifested. We come back to this in the discussion part.
Specialization posting
The second cluster, which we coin Specialization Posting, combines a set of motives occurring in different sectors of the economy than the Competition cluster ones. The sectors are high value-added with mostly (but not only) high skilled posted workers being deployed for a shorter time. The sectors are metal, electric installations, petrochemistry, finance, chemistry and life sciences, and tech. Although the Specialization Posting cluster may quantitatively not be as important as the Competition Posting cluster, we do estimate it has quite some importance in the Belgian posting landscape.
Importantly, this cluster differs from the first one in that the cost element does not play. In fact, companies and sectors in the second cluster indicated that sub-contracting specialized and highly skilled or technical work (such as welding) is not always a cheaper option. Or as put by a representative from a petrochemical company, ‘Posting as cost cutting strategy is often far from the truth, as the main motives are skill shortages and specialization’.
Like competition posting, this cluster also indicated skill shortages to be a major motive to make use of posted workers. Although Belgium has a large labour reserve, companies seem to have a tough time finding skilled personnel. This is not new but is one of the main motives for the high value-added sectors to rely on posting. Several representatives pointed out that the outflow of universities, colleges and vocational training in Belgium is much too low to meet the needs of companies. According to a representative from an umbrella organization of employer federations ‘many technical profiles are subcontracted temporarily. For example, in the tech sector they take up highly specialized assignments. Not all expertise is present in Belgium’.
A second recurring motive to make use of posting is to outsource temporary specialized services. Services by firms with a specific ability are used by companies in chemistry and life sciences, tech and finance. Non-core recurring tasks, such as maintenance of facilities, repair works and expansion of a company’s facilities, are contracted out to companies that offer specialized services. These services are needed for the smooth functioning of the site, but are temporary in nature: The normal operational running of chemical plants is done by the company’s own personnel, but almost constantly services are delivered by sub-contractors for installations. These are companies highly specialized in certain applications or certain installations, or certain utilities of steam or gas or other things. (Representative federation of chemistry and life science businesses)
Another motive relates to the present-day business practice of sub-contracting a set of routine, non-core tasks in a company. Literature discussed this drive towards sub-contracting and outsourcing as the emergence of new organizational forms that allow businesses to focus on their core activities (Purcell and Purcell, 1998). Specialized sub-contractors are hired to take care of operations such as catering, security and cleaning. For example, a representative from a tech company indicated that they cannot fulfil these tasks anymore as cost-efficiently as they used to: ‘these are facilities, for which we don’t have people on our own payroll. That is not our core activity, we sub-contract that’. Another representative from a chemical company observed that, while these activities were fully part of companies’ activities in the past, it has become virtually impossible to invest in these nowadays as the costs of sub-contracting them are (much) less.
As was the case in the competition posting cluster, this cluster also mentioned employment flexibility as an important motive for using posted workers, yet from a different angle. In highly qualified sectors, flexibility is a motive when the nature of production is unique and requires specialization. It allows companies to take up and deliver orders more quickly and hence address the needs of clients more efficiently. A representative from a tech company clarified the following: Unique pieces are being produced for which we need specialists. It is not profitable to hire permanent personnel for this. So, we make personnel in other European/third country branches mobile: there is an exchange of specialists who support the production of unique pieces.
So, the Specialization Posting cluster combines ‘skill shortages’ and ‘flexibility’ in an entirely different setting than Competition posting. Flexibility in this cluster is not uniquely focused on easy take-up and shedding of manpower, but rather in deploying temporary specialized skills. Specialization Posting is associated with ‘outsourcing of temporary specialized services’ as well as with ‘sub-contracting routine, non-core tasks’ in a company; the focus is not on cost-cutting, but rather on specialization.
Expert posting
The third and final motive cluster, coined Expert Posting, covers the sectors petrochemistry, chemistry and life sciences and tech. These sectors are also associated with the specialization posting cluster but reported motives that were not mentioned by other high value-added sectors. The motives we cluster here focus on attracting highly skilled managerial and knowledge workers, who often stay for a longer duration.
The (mostly intra-company) posting undertaken here is what we could call ‘expensive posting’. A representative of a tech company explained that hiring a posted worker ‘is typically twice as expensive as hiring a local, and if the family joins them, it is three times as expensive’. Many multinational companies choose to keep the posted workers linked to their home country system, so that there is no interruption in the employees’ pension and social security rights. On top of preserving social security rights, companies also offer compensations for the temporary loss of certain benefits, such as family allowances, cost of living adjustment, mobility premiums, allocation allowances for miscellaneous expenses, housing, documentation, and schooling and support for the family.
The first motive in this cluster concerns the career planning of high potentials. In the tech and life sciences sector, representatives pointed out that large multinationals use posting to groom high potentials as part of their career planning, for the ‘development of the individual’. They are sent to several branches to further their experience. A second strongly related motive, which was reported in the same sectors, is knowledge development. Many highly skilled researchers and technical profiles are posted between the Research and Development branches of the company group for several months/years: We attract a lot of people to Belgium but we also send a lot of people from Belgium so they can pass their experience to other sites [. . .]. There is a strong person in one team, for example in Kiev, we send him to Bulgaria, where there is not enough experience, so that person can transfer experience and can develop our people there. (Representative tech company)
These intra-company postings are said to be a fixed part of Human Resource management and, according to a representative from an umbrella organization of employer federations: ‘part of the DNA of their business management’. As mentioned, these highly skilled segments of the labour market struggle with skill shortages and finding STEM personnel is a challenge. Highly skilled posting adds to the availability of skilled labour.
Discussion and policy implications: how should the EU deal with posted work?
Summarizing, we can discern three clusters of motives: Competition Posting, Specialization Posting and Expert Posting. These clusters of motives, captured in Table 2, are of course not as neatly delineated as the typology suggests; some motives are present in more than one or in all clusters, such as skill shortages and flexibility, and some types of posting are present in more than one sector. Still, we discern sets of posting motives that correlate with skill levels, posting durations, posting origins and clearly affect certain sectors more than others.
Towards a typology of posting.
An important finding, then, is that posting motives are broader than the low-cost motive featuring so prominently in much of the literature and in policy debates. In Competition Posting – associated with construction, transport, meat, food and cleaning – there indeed can be no doubt that cost minimization and optimization are crucial motives. Labour cost is an important competitive concern in these sectors characterized by a continuous high demand for low- to medium-skilled labour. As social security contributions are due in the sending country, posted workers tend to be significantly cheaper than local workers. The low-cost motive is complemented in the Competition Posting cluster by other important motives such as employment flexibility, the ‘good worker’ attitude associated with posted workers, and especially skill and manpower shortages. Together, these motives correspond closely to the conclusions of the existing literature studying the demand for EU labour migrants in the UK and Ireland (MacKenzie and Forde, 2009; Matthews and Ruhs, 2007; Moriarty et al., 2012). Based on our findings, we would argue that some of these motives play even stronger in the posting field than in recruiting EU migrant labour. Cost reduction and employment flexibility can be more important as the posted workers do not have to be hired/fired and social security contributions are paid for elsewhere (often cheaper Member States). Even more so if we consider the institutional background of our case study. In a strictly regulated labour market, many of the employer motives in Competition Posting (cost-cutting, flexibility, good worker attitude) can be seen as a way out of a heavily regulated rigid labour market. This brings us to the crux of the problem with Competition posting.
Competition posting is seen as an emanation of Europe’s underdeveloped social dimension (Scharpf, 2010; Vandenbroucke et al., 2021). Despite the social corrections implemented by the Revision Directive, Competition Posting continues to help sustain dualities in local labour markets, providing cheaper labour in expensive, heavily regulated labour markets. Many European labour markets are marked by strong insider–outsider divisions. Competition posting is effectively perpetuating this. While insiders keep their well-protected quality jobs-cum-social-benefits, a large labour reserve of migrants, elder workers and unskilled workers remain long-term unemployed and are cut off from the labour market. Recruiting posted workers who are skilled, readily available for cheaper rates and in a much more flexible setting, becomes a very attractive option for employers, but this perpetuates and solidifies the insider–outsider divisions. Hence the above-mentioned dependence of certain sectors on the continuous supply of posted labour. Operations of many businesses cannot function anymore without large numbers of posted workers. In addition, the extensive use of posting in labour-intensive sectors disincentivizes those sectors to properly address real shortages in the labour supply of some professions. For years, certain occupations like welders, meat processors and truck drivers have been on the list of shortage occupations. These shortages have been partially compensated by the supply of posted workers. This potentially reduces the incentive for sectors and policy makers to increase their efforts in training and education for these profiles. Quite some companies are acutely aware of this ‘social production of skills shortages’ (Anderson and Ruhs, 2012) through the widespread use of posted workers. Hence, shortages that were already structural, have not been addressed enough, which deepens the dependence on posted workers, and perpetuates employers’ preference to work with flexible, cheap posted labour.
Yet although Competition Posting is important and problematic, it does not nearly cover all postings. Two other types – Specialization Posting and Expert Posting – are also part of the posting landscape but are often completely overlooked. Specialization Posting is found in high value-added sectors such as metal, electric installations, petrochemistry, finance, chemistry and life sciences, and tech. Posted workers undertake temporary specialized services (such as repair and maintenance) or outsourced low-skilled routine tasks (such as cleaning and security). In this cluster, cost is not a driving factor and instead skill shortages and flexibility play a key role. Skill shortages are also a driver of Expert Posting, associated with high value-added sectors of the knowledge economy. Here, long-term posting of highly skilled workers is used by multinationals to groom high potentials for international careers and to deploy researchers across their research facilities. Importantly, posting in this cluster is much more expensive than hiring local workers.
So how does the EU deal with this diversity? It arguably does not. The (perceived) prevalence of Competition posting brought an acute political awareness that corrective action needed to be taken for ‘Social Europe’ to have some credibility. However, the problems with Competition posting were so severe that Competition posting also received all the political and legislative attention. Hence, the 2018 Revision Directive mainly aimed to introduce the ‘same pay for the same work at the same place’ principle, as well as a time limitation for postings up to 12 months. In the same socially corrective push, the European Labour Authority was established a year later as part of the roll out of the European Pillar or Social Rights, to enforce EU mobility rules.
The Revision directive, however, makes no distinction between different types of posting. The new rules are written for Competition posting, over which social dumping loomed large. A clear example of the misfit between the Revision Directive and Expert posting is the limitation in the duration of posting to 12 months. Our interviews made clear that these postings are usually for a longer duration, typically 3 years, making posting more complicated for companies using Expert posting. The social corrections that were introduced to counterbalance the negative consequences of Competition posting were driven by legitimate concerns. But we think that it would be useful to distinguish between the risk sectors associated with Competition posting and the non-risk sectors associated with Specialization posting and Expert posting and to diversify regulations accordingly, for example, by reserving limitations on posting to the risk sectors.
Finally, if anything, this article demonstrates the need to think about posting in a more varied and nuanced way. The empirical reality of posting is far removed from the reductive stereotypes in some current debates. Of course, the limitation of this article remains that it looks at employer motives in one country, be it a country where posting is comparatively sizeable. It also builds to a large extent on what employers themselves put forward as motives for using posting. Clearly, there remains scope for delving deeper into the more fundamental drivers of this phenomenon, as well as into its consequences.
Footnotes
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship, and/ or publication of this article: This research was financially supported by funding from Federal Science Policy (Grant BR/165/A4/IMMILAB) as part of the BRAIN Research Program.
