The European Parliament is preparing an own-initiative report on abusive subcontracting practices in the EU, gathering harrowing stories from people caught up in this system across the union. The report will call for the Commission to propose changes to EU rules governing labour intermediaries.
At a European Parliament event in April, a representative of the Commission’s labour vice president, Roxana Mînzatu, signalled that the topic will be included in the upcoming Quality Jobs Roadmap and Labour Mobility Package.
Euractiv asked Johan Danielsson, a centre-left Swedish member of the European Parliament working on the file, and Tom Deleu, secretary general of the European Federation of Building and Woodworkers, why EU legislation is needed and what changes they think need to be made.
The way that subcontracting is used in the European construction sector has undergone a significant evolution over the past decades. What was the intention when subcontracting was first introduced within the EU single market, and how has the use of this practice changed over time?
Danielsson: Subcontracting has always and will always be a part of the construction sector. What worries me is that over the past decades, the misuse of subcontracting for purposes other than filling specialist needs seems to have increased.
When I visit construction sites, workers talk to me about a sector where fewer people know who their employer is, where working conditions are under pressure, and exploitation is on the rise. The business owners, in turn, describe how it is becoming increasingly hard to find good, trustworthy contractors to hire, and how this affects the quality of the work and their ability to deliver to the client.
Deleu: Originally, subcontracting in construction aimed to allow main contractors to bring in specialised expertise for specific tasks. However, it has now become an exploitative business model where the subcontracting of workers is simply used to reduce costs and to escape legal responsibilities. And this happens more and more.
Often, companies use subcontracting chains to disguise employment relationships, circumvent tax and social security payments, avoid liability and hide from controls by labour inspection bodies.
The increased use of temporary work agencies and other labour intermediaries demonstrates that the casualisation of working relationships is an entrenched part of the business model of the construction industry. This shift in subcontracting practices has gone hand-in-hand with a growing reliance on posting and cross-border arrangements, which makes enforcement more difficult and often excludes workers from national protections.
What are your main concerns about the use of subcontracting today?
Danielsson: My main concern is that subcontracting in the sector is increasingly becoming an indicator of bad working conditions, occupational health and safety issues and in some cases, outright labour exploitation. When speaking to authorities in different European countries today, the picture is clear: when they control worksites, it is rarely with the main contractor or even in the first link in the chain that they find issues, but from link two and down.
Deleu: Our concern is that the subcontracting of workers has become a structural business model. In this business model, subcontracting leads to the replacement of direct, quality employment by a layer of ultra-flexible, vulnerable workers who are often subjected to precarious working conditions, lower salaries, in unhealthy and unsafe situations.
Subcontractors repeatedly vanish without paying the workers their wages due after months of working, or without paying their social security contributions. Subcontracting chains are often so complex and opaque that authorities cannot determine who is responsible.
This is why we are calling for EU-level rules to limit subcontracting chains, ensure full liability and protect all workers equally, regardless of their employment or posting status.
The European Parliament has started an own-initiative report on abusive subcontracting and labour intermediaries. What will be the impact of this report, and what are you expecting from the Commission in terms of willingness to review the legislation?
Danielsson: My hope is that we can produce a strong report with clear demands for the Commission to put forward a legislative proposal on this issue.
Deleu: Urgent action is needed from the European institutions, and the expectations are high. The European Parliament’s initiative is a clear political signal that there is broad support for action. It helps build momentum and lays the groundwork for concrete legislative proposals.
We expect the Commission to respond with a legislative proposal, not just soft law or guidelines, which would only act as a sticking plaster and let workers down. The time for studies and consultations is over.
What do you think is most important to see from a new labour mobility package?
Deleu: A new labour mobility package must close enforcement gaps and stop the abuse of free movement to exploit workers and undercut rights.
A fair mobility package would promote direct jobs and good working conditions. These are the basic conditions to combat labour shortages. Workers only come to work in construction if the sector is attractive, and this means good and fair working conditions.
Our main demands are to limit subcontracting of labour, ban intermediaries in construction – that includes digital tools to prevent fraud and protect workers; that promotes direct jobs.
Moreover, we want a fair mobility package which is not contradicted and even threatened by other Commission initiatives.
The Commission, which is preparing to launch the Fair Labour Mobility Package and Quality Jobs Roadmap, is the same Commission which is planning the Single Market Strategy.
If approved, this strategy will have dramatic consequences for workers’ rights and will water down many of the rights conquered by workers. We are ready to fight this proposal.
Is there a risk that introducing legislative changes on this at a time of economic uncertainty could result in protections being weakened during the legislative process? If that were to happen, would you be prepared to ask the Commission to withdraw it?
Deleu: Of course, there is always a political risk when discussing new legislation, especially when there is pressure to ‘simplify’ by cutting protections. If a proposal fundamentally weakens protections, we would call on the Commission to withdraw it. We will not support legislation that legitimises exploitation.
If the EU wants simplicity, then promote direct jobs. If the EU wants simplicity, then limit subcontracting. This already reduces red tape and barriers significantly and simplifies the management of construction sites. This is what contributes to a strong, simple and seamless European market. And to a Fair Single Market.
Danielsson: To me, the issue is fairly straightforward – if the Commission puts forward proposals to address abuse and exploitation in the sector, they will have my support. If they do the opposite, they can expect strong opposition.
In the meantime, there are many harrowing personal stories of people caught up in abusive subcontracting situations. What is the most common type of story that you hear in this regard?
Danielsson: I am very marked by what happened in my hometown, Stockholm, at the end of 2023, where five workers died, stuck in a broken construction lift that fell from the eighth floor.
Four days after the accident, their employer still could not say if the workers who died were his employees or not. Because no one seemed to have a clue about who was actually present at the workplace.
That is probably the most common factor in all the stories I hear – the notion that no one knows who is at the worksite, who employs whom and who will take responsibility if something goes wrong.
Deleu: We hear all kinds of stories concerning different topics. And they are indeed horrific stories. The most frequent story we hear is of a worker caught in a subcontracting chain who is underpaid, not properly registered for social security, or left without protection after a work accident, often without knowing who their employer is.
When accidents happen, and the workers need support, not only do they discover that they have to pay for health care from their own pocket, but if the employer intervention is needed, they often do not even know who their boss is. The situation is even worse when deadly incidents happen.
I recall the collapse of a school building under construction in Antwerp in 2021. It took several days before the victims – the workers – could be identified. It was not possible to know who was working at the construction site at the time of the accident.
The families, with the support of trade unions, had to pay for the transportation of the victims to their country of origin, as they were posted workers.
Four years later, the investigation into who is legally responsible is still ongoing, and the victims’ families are still waiting for financial compensation.
[Edited By Brian Maguire | Euractiv’s Advocacy Lab]