France struggles in EU to stem low-cost foreign workers
* France hosts over 200,000 posted workers, up 23 pct in a year
* Employers use them to avoid high French labour costs
* France seeks tougher EU rules to prevent "social dumping"
By Natalie Huet
DUNKERQUE, France, Dec 6 (Reuters) - At the northern tip of France, on the Channel coast, the country's second-biggest industrial building site buzzes with engines, cranes, and more than 1,000 workers.
But most are foreign, not French, employed at lower cost on temporary contracts under a European Union law that has stirred political outrage, embarrassed the Socialist government and given ammunition to the far-right National Front.
The issue, sensitive ahead of next year's European Parliament elections, will top the agenda next Monday when the EU's 28 labour ministers meet in Brussels, and may well be escalated to a summit of the bloc's leaders on Dec. 19-20.
The project of a new liquefied natural gas (LNG) terminal, close to where a British flotilla rescued an expeditionary force when Germany invaded France in 1940, had spurred high hopes for jobs in a rust belt town hard hit by industrial decline and the recent closure of a Total refinery.
But like many construction sites across the country, the project, owned by state-controlled utility EDF, mainly employs foreigners hired via subcontractors on terms that avoid France's high labour costs. The practice is legal under a 1996 European directive but French trade unions say it is widely abused, and local workers are feeling bitter.
"The region is desperate for jobs, but we're facing utterly unfair competition and we're being squeezed out," said David Sans, a local CGT unionist. His electrical company just lost a tender on the LNG site. Rival Italian bidders, he said, offered Portuguese labour at nearly half the cost of French workers.
The phenomenon is on the rise as companies hungry for business fight to win competitive tenders but it is causing mounting resentment in France, where unemployment is near all-time highs.
Each year, more than a million workers are posted by their employers across EU borders to provide services, mainly in construction, agriculture, hospitality and transport, according to the European Commission.
The government says the number of declared posted workers in France - mainly from Poland, Portugal and Romania - rose 23 percent this year to more than 200,000, and officials estimate that many more go unregistered.
ABUSES HARD TO NAIL
Under EU rules, workers may be posted abroad for up to two years to carry out a specific mission. Their contracts must respect the labour rules of the host country, but social security charges remain those of the home state.
In France that means they must be paid the gross minimum wage of about 1,400 euros ($1,900) a month for a 35-hour week, with five weeks annual holidays, but are not liable to French payroll deductions, which are the highest in Europe.
Social charges can be two, three or four times lower for hires from Britain, Poland or Slovakia, meaning companies can significantly lower their labour costs by using this system.
Officials say many foreign sub-contractors don't respect the pay and working time rules, but abuses are hard to nail.
"This phenomenon threatens our social system because not only does it strip French workers of a job but it also means less income for the coffers of our Social Security," a parliamentary report debated earlier this week said.
The issue is politically toxic in other high-cost countries such as Belgium and Denmark, and Eurosceptical populist parties of the far right and hard left have latched on to it ahead of European Parliament elections next May.
Fears of an influx of cheap foreign labour, symbolised by the "Polish plumber", contributed to a French "no" vote in 2005 in a referendum on an EU constitution.
FRANCE PUSHING FOR CHANGE
Paris wants to tighten the rules to make companies provide more documentation proving the contracts for posted workers are legal. It also wants to make the host contractor legally liable for ensuring the foreign sub-contractor respects host country labour rules.
At the very least, France wants those tougher requirements to apply to the construction sector. Government efforts are finding unusual support among national business federations.
"We must revise this directive, we really must adapt it, because it is destroying a lot of jobs in France, especially in small firms," employers' leader Pierre Gattaz told Reuters.
The EU legislation dates back to 1996, before the bloc admitted a dozen poorer central and east European states. It can be amended by a qualified majority vote but if the issue goes to the EU summit, decisions there require consensus.
Unsurprisingly, France faces opposition from Poland, the biggest source of posted workers, and from most other ex-communist newcomers plus Britain, the bloc's most vocal advocate of the free market.
Some French employers who use the system caution against throwing the baby out with the bath water.
"We should reform to stop abuses, but we shouldn't scrap a system that brings fresh blood and energy to morose economies," said one entrepreneur who hires about 100 posted workers a year from Romania to repair wooden pallets for French firms.
"These workers are paid five or six times what they would make in Romania, so when they come they're much more motivated and hard-working than the French, for whom this is a tough and poorly paid job," he said, asking not to be identified because of the topic's sensitivity.
LODGING IN NEARBY CAMPSITES
In Dunkerque, the National Front has seized on the fact that 59 percent of the 1,300 workers building the LNG port are foreign to call for job protection at a time when unemployment in the region is around 14 percent, compared to roughly 11 percent nationwide.
That would run counter to EU rules on the free movement of labour and services.
The head of the LNG project, Marc Girard, said in an interview it made sense to use expertise from all around Europe on such a massive project in a sector as technical and international as the oil and gas industry.
"Twenty kilometres further, the plant would have been in Belgium. We're very happy it's being built in France," he said, noting that 30 percent of workers came from the region.
Most locals interviewed by Reuters complained they weren't getting much business from the project.
"It brings zilch, nada," said Francesco Costa, 43, a barman whose bistrot faces one of the city's harbours, wrapped in fog. "Locals aren't being hired. Jobs are going to Poles, Czechs, Italians, who don't come over here for a drink but stay on campsites outside town."
Gianfranco Porcu, a 57-year-old Italian interviewed leaving the LNG site, illustrated that point, riding his pickup truck back to the seaside bungalow his company rented for his one-year posting in Dunkerque.
He said his team of 110 was dominated by Portuguese and Italians working from dawn to dusk, Monday through Saturday.
"We don't take holidays. We don't count our hours. But we make more money, so we don't complain," he said.
He declined to say how much he earned but said it was 60 euros a day more than in his native Sardinia. Otherwise, it would not be worth the trouble.
"It's long hours, a lot of travel, not seeing your family ... Also, the sea is prettier in Italy," he said.
($1 = 0.7377 euros) (Additional reporting by Emmanuel Jarry and Gilles Guillaume in Paris; Editing by Paul Taylor and Giles Elgood)