Slovenia’s model of temporary posting of workers to other EU countries has been subject to sharp criticism about exportation of cheap labour. The country has seen an exponential growth in such postings over the past ten years and is reportedly third in the EU by the number of posted workers.
The Health Insurance Institute (ZZZS), which issues forms to employers posting workers abroad, issued 17,668 such forms in 2008, 103,370 in 2014 and as many as 159,136 in 2017, but the figure fell to 127,059 last year. A worker may be posted abroad several times a year, which means several forms.
The social contributions paid by Slovenian employers for the workers sent abroad do not correspond to the actual pay they earn but to what they would if they did the same work in Slovenia. Posted workers as a rule also get extras such as allowances for separation and higher living costs, so their earnings are higher than if they performed their job in Slovenia.
The strong growth in the number of postings and deductions on social contributions paid by employers has provoked criticism from European interest associations.
The European Federation of Building and Woodworkers (EFBWW) has calculated that Slovenia posts at least 100,000 construction workers to the EU even though it has only 55,000 domestic workers in the industry. Most of them come via Slovenia from the Western Balkans.
This is why the federation submitted a request to the EU Commission at the end of May to investigate the practice and its regulation in Slovenia.
“Slovenia has built a money-spinning business model based on social fraud and worker exploitation. This is totally unacceptable and should be stopped at once,” said the EFBWW president Dietmar Schäfers.
The commission has also received complaints from interest groups in Austria, while the country itself has said it will try to engage in dialogue with Slovenia before taking any such step.
Slovenian posting companies have been accused of exporting workforce to the EU at dumping prices as Slovenian labour costs are lower, which makes workers from Slovenia cheaper.
Meanwhile, the Slovenian government has acknowledged that the situation provided food for thought regarding necessary measures.
Slovenia’s regulation entails that posting companies need to obtain an A1 document which allows posting temporary workers to other member states and is issued in accordance with the EU legislation by a relevant district unit of the ZZZS.
According to the Labour Ministry, a special task force is examining relevant regulations from 1970, including those governing the social contribution deductions for employers, and drawing up measures to reform them.
Responding to the criticism of the increase in the number of posted workers and worker exploitation, the Labour Ministry told the STA that the transnational provision of services act, which tightened regulations for issuing A1 documents, had been adopted last year.
The law aims to prevent cross-border posting of workers by mailbox companies or employers, particularly in construction and industry, who have already violated regulations, thus tackling worker exploitation, which has been a critical issue.
According to the Labour Inspectorate, there have been 20 violations of the act in 2018.
On the other hand, the ZZZS, which is in charge of revoking issued A1 documents, recorded more than 17,450 irregularities, including over 6,400 tax-related and over 6,300 pertaining to employment contracts.
Foreign authorities have been submitting requests about checking conditions compliance of posting companies or revoking their posting permits to the institute, which has received around 10 such requests by June this year.
According to the ZZZS, the issue is complex and hard to tackle, while Goran Lukič of the Workers’ Counselling Office told the STA that the new act somewhat improved the situation even if he is still sceptical about its enforcement.
Meanwhile, Slovenian employers’ associations deny the accusations of Slovenia being a kind of gateway for social dumping in Europe.
The Slovenian Employers’ Association (ZDS) told the STA that given the amount of labour costs in Slovenia one could not speak about dumping, while the Chamber of Commerce and Industry (GZS) said that it was key that foreign workers who got work permits in Slovenia and ended up working in other EU countries were paying their social contributions and income tax in Slovenia.