European Scrutiny Committee Contents


10 Seasonal Workers and Intra-corporate Transfers

(a)

(31801)

12208/10

COM(10) 379

+ ADDs 1-2

(b)

(31802)

12211/10

COM(10) 378

+ ADDs 1-2

Draft Directive on the conditions of entry and residence of third country nationals for the purpose of seasonal employment


Commission staff working documents: impact assessment and summary of impact assessment

Draft Directive on the conditions of entry and residence of third country nationals in the framework of an intra-corporate transfer

Commission staff working documents: impact assessment and summary of impact assessment

Legal base(Both) Article 79(2)(a) and (b) TFEU; co-decision; QMV
Document originated(Both) 13 July 2010
Deposited in Parliament(a) 13 July 2010; (b) 16 July 2010
DepartmentHome Office
Basis of considerationMinister's letter of 4 October 2010
Previous Committee ReportHC 428-ii (2010-11), chapters 10 and 11 (15 September 2010)
To be discussed in CouncilNo date set
Committee's assessmentLegally and politically important
Committee's decisionNot cleared; further information requested

Background

10.1 In 2005, the Commission published a Policy Plan on Legal Migration which stated that:

"Whilst decisions on admission numbers for economic immigrants entering the EU in order to seek work are the responsibility of Member States, it is clear that the admission of third country nationals in one Member State may affect others and their labour markets.

"An effective migration policy cannot be limited to instruments for the admission of immigrants. Other equally important legislative and operational measures are necessary, as immigration represents a complex phenomenon that needs to be addressed coherently across all its dimensions. Admission of economic immigrants is as inseparable from measures on integration on the one hand, as it is from the fight against illegal immigration and employment, including trafficking, on the other. It is in this context therefore that the EU must intensify its efforts to reduce the informal economy, a clear 'pull factor' for illegal immigration, as well as a catalyst for exploitation".[34]

10.2 The Policy Plan included a "road map" for the adoption of a range of measures, including Directives on the conditions of entry and residence of various categories of third country nationals. Last December, the European Council agreed a five-year programme on freedom, security and justice in the EU (the Stockholm Programme) for the period 2010-14 which urged the Commission and Council to continue to implement the Policy Plan.

10.3 In July, the Commission proposed two new Directives which were envisaged in the Policy Plan. Document (a) would establish common EU rules for the entry and temporary residence of third country nationals for the purpose of seasonal employment in a single Member State. Document (b) would establish a common EU framework for the admission of skilled third country nationals employed by a company based outside the EU and seeking a temporary transfer to a branch or subsidiary in one or more Member States. Both proposals would entitle third country nationals, if admitted, to certain rights concerning working conditions and equal treatment with nationals of the host Member State in a number of areas including, for example, freedom of association, access to certain social security benefits and to goods and services (but excluding public housing and employment advice services).

10.4 Both draft Directives are based on Article 79 (2)(a) and (b) of the Treaty on the Functioning of the European Union (TFEU). This Article provides for the adoption of EU measures on the conditions of entry and residence of third country nationals and the definition of the rights of those legally resident in a Member State. Measures based on Article 79(2) must be for the purposes of developing a common EU immigration policy, further defined in Article 79(1) TFEU as ensuring "the efficient management of migration flows, fair treatment of third country nationals residing legally in Member States, and the prevention of, and enhanced measures to combat, illegal immigration and trafficking in human beings".

10.5 EU measures in the field of immigration must also respect the principle of subsidiarity under which "the Union shall act only if and insofar as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional or local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level".[35] The Protocol on the Application of the Principles of Subsidiarity and Proportionality further provides that draft Directives should include a statement of the proposal's financial impact and implications for the rules to be put in place by Member States; include qualitative and, where possible, quantitative indicators; and seek to minimise any regulatory burden for public authorities, economic operators and citizens and ensure that any burden is commensurate with the objectives pursued by the proposal.[36]

10.6 Since the entry into force of the Amsterdam Treaty in May 1999, EU legislation on immigration matters does not apply to the UK unless the Government expressly opts in.

Previous scrutiny of the draft Directives

10.7 We considered both draft Directives at our meeting on 15 September 2010 and decided to keep them under scrutiny while seeking further information from the Government.

Document (a) — the Seasonal Workers' Directive

10.8 We concluded that the legal base proposed was appropriate but expressed doubt that the draft Directive respected the principle of subsidiarity and invited the Minister to comment further. We also requested information on the outcome of the Government's consultations on the proposal, and on the principal factors informing the Government's decision on whether or not to opt into the draft Directive. We said that we would seek further information on the cost implications, particularly as regards eligibility for social security benefits, in the event that the Government decided to opt in.

Document (b) — the Directive on Intra-corporate Transfers

10.9 We thought that the principal purpose of the proposed Directive appeared to be to make the EU more commercially attractive for multinational companies and asked the Minister whether he considered this purpose to be consistent with the objectives of the EU's common immigration policy as defined in Article 79(1) TFEU. We noted the Minister's concern that Article 16 of the draft Directive, which provides for mobility between EU Member States once an intra-corporate transferee permit has been issued in one Member State, might undermine the Government's freedom to determine who to admit to the UK, and asked whether he considered that the removal of this provision would diminish the justification for the proposal on grounds of subsidiarity. We requested further information on the outcome of the Government's consultations on whether to include third country nationals moving to the UK on the basis of an intra-corporate transfer within the proposed cap on economic migration from outside the EU. We also said that we would request an assessment of the cost implications, particularly as regards social security payments and contributions, in the event that the Government decided to opt in.

The Minister's letter of 4 October 2010

10.10 The Minister for Immigration (Damian Green) says that the Government has not yet reached a decision on whether to opt into either of the draft Directives.[37] He adds that the Government is unable to provide realistic estimates of the likely additional costs of participating in the Directives because of uncertainty as to the number of third country nationals that would enter the UK. Additional costs would most likely arise "as a consequence of such workers having access to 'in work' benefits, such as child benefit and child tax credit, rather than 'out of work' benefits".

Document (a) — the Seasonal Workers' Directive

10.11 As regards the subsidiarity implications of the draft Directive, the Minister says that the Commission has argued that the draft Directive would reduce illegal immigration. He continues:

"The argument here is that those who enter the EU as seasonal workers may have less incentive than other categories of migrant worker to return overseas at the end of their stay and that, in the context of the Schengen area at least, this is an issue with a collective dimension. The proposal therefore includes provisions aimed at encouraging seasonal workers to return at the end of their stay. This would appear consistent with the principle of subsidiarity."

10.12 The Minister explains that the Government has consulted the National Farmers Union (NFU), given its interest in measures regulating the supply of labour to the agricultural sector. The NFU considers that rules on the admission of non-EU seasonal workers should be determined at a national level and has therefore recommended that the Government should not opt into the draft Directive. The Minister adds that the Government has no plans to introduce a scheme for the admission of seasonal workers from outside the EU.

Document (b) — the Directive on Intra-corporate Transfers

10.13 The Minister says he is satisfied that Article 79(2)(a) and (b) provide the right legal base for the draft Directive. Although the proposal does seek to make the EU more attractive for inward investment by multinationals, "this is nevertheless achieved through the regulation of the conditions of entry and residence of this category of worker". He says that the draft Directive could still be justified on grounds of subsidiarity, notwithstanding the removal of the principle of intra-EU mobility in Article 16, on the basis that the absence of common EU standards might result in unfair competition. He adds that the Government is still considering responses to its consultation on introducing an annual limit on economic migration from outside the EU, and the inclusion within that cap of intra-company transfers, and that the Government will announce its policy later this year.

Conclusion

10.14 We thank the Minister for his letter but regret that the Government is still unable to inform us whether or not it intends to opt into either Directive even though the deadline for so doing — by 14 October — is imminent. We ask the Minister to inform us of the Government's decision, and the reasons for it, as soon as possible. In the meantime, we shall keep both proposals under scrutiny.

10.15 We make the following further observations at this stage.

Document (a) — the Seasonal Workers' Directive

10.16 We note the Minister's view that the draft Directive would appear to be consistent with the principle of subsidiarity and so have looked again at the reasons advanced by the Commission to justify EU action.

  • There is a continuing need for seasonal workers in most Member States but differences in the treatment of those admitted to a Member State can affect other Member States and distort migratory flows.

10.17 We understand the Commission to mean that the conferral of more generous rights and entitlements in one Member State may operate as a 'pull factor' and draw seasonal workers to the Member State offering the most favourable employment conditions rather than to the Member State/s where their labour is most needed. However, the Commission's impact assessment (ADD 1) merely refers to "anecdotal evidence of competition among Member States for the most attractive conditions in terms of salary, travel arrangements, accommodation or working conditions".[38] We doubt whether anecdotal evidence constitutes the qualitative indicator required under the Subsidiarity Protocol. We also question what practical difference the draft Directive would make as the employment and equal treatment rights it confers are based on those provided for by law in the Member State to which seasonal workers are admitted and are thus largely determined at a national level. Moreover, competition between Member States to improve the conditions of employment for temporary seasonal workers strikes us as a sign of a healthy labour market, not one that requires further regulatory intervention.

  • Common rules are needed within the Schengen free movement area to reduce the risk of overstaying or illegal entry which may result from differing rules on the admission of seasonal workers or lax enforcement.

10.18 We understand that there is a correlation between the sectors most likely to employ seasonal workers, for example, agriculture and tourism, and the incidence of illegal employment. Opportunities for overstaying or for taking up illegal employment, possibly in a different Member State from the one that first admitted a seasonal worker, are likely to be greater within the Schengen area than, for example, in the UK where border controls remain. The Minister suggests that Schengen introduces a collective dimension sufficient to justify EU action to regulate the conditions of entry of seasonal workers. He notes that the draft Directive includes a provision — Article 11 — which expressly requires seasonal workers to leave the EU after a maximum of six months' residence and another — Article 12 — which encourages circular migration by facilitating the re-entry of seasonal workers who have a good record of compliance. We perceive two difficulties with this justification. The first is that each Member State remains at liberty to determine the number of third country nationals (if any) it will admit for the purposes of seeking or taking up employment.[39] This will inevitably affect migratory flows within the EU to a far greater extent than divergent national rules in those Member States that do admit seasonal workers. The second difficulty, as noted in the Commission's impact assessment and in our previous report, is that the legal framework for entry and employment in a particular Member State is only one of a number of 'pull' factors influencing the decision to migrate. The Commission says that the relative importance of these factors is difficult to measure and that they are "outside the remit and impact of EU legislation".[40] While we acknowledge the difficulty, we also question how the Commission can assert that common rules on entry and residence will have a beneficial impact on reducing illegal immigration without attempting to weigh the importance of other contributory factors.

  • Only EU legislation can ensure that third country seasonal workers employed within the EU are accorded a minimum core of employment and social rights to prevent exploitation.

10.19 We do not contest the Commission's assertion that there is significant evidence of poor working conditions and exploitation of migrant seasonal workers in some Member States, although it is somewhat at odds with the first justification advanced by the Commission that Member States are competing with each other to offer more attractive conditions. However, as the Commission acknowledges in its impact assessment, poor working conditions are largely a result of deficiencies in national legislation and lax enforcement and so it is not clear why the appropriate remedy can be better achieved at EU level than at national level.[41]

  • EU legislation on seasonal workers is crucial to ensure effective co-operation with third countries to tackle illegal immigration, not least by removing obstacles to the legal migration of unskilled workers.

10.20 We understand the argument that opening up opportunities for legal migration, particularly of low skilled workers, may make it easier to secure co-operation on illegal immigration from source countries. However, the Treaty on the Functioning of the European Union does not empower the EU to determine how many labour migrants to admit. Decisions on the volumes of admissions remain in the hands of Member States. EU legislation on seasonal workers cannot alter that fact and so we do not accept the Commission's assertion that the draft Directive is crucial for securing effective co-operation with third countries.

10.21 The Lisbon Treaty provides a new power for any national parliament (or a chamber thereof) to issue a "reasoned opinion" if it considers that draft EU legislation breaches the principle of subsidiarity. The Austrian National Council and Czech Senate have both issued reasoned opinions stating that the draft Directive is in breach of the principle of subsidiarity and other national parliaments may do so before the expiry of the eight-week deadline in Article 6 of the Subsidiarity Protocol. As the preceding paragraph indicates, we do question whether the draft Directive complies with the principle of subsidiarity, but we are also aware of the Commission's predicament, not least because it has been asked by the European Council to implement measures contained in its 2005 Policy Plan on Legal Migration for which the justification, at least in terms of subsidiarity, is in doubt. We think, moreover, that the difficulties identified above in relation to this draft Directive are indicative of a deeper tension within Article 79 TFEU, which provides, on the one hand, for the development of a common EU immigration policy while, on the other, preserving Member States' autonomy to determine how many third country economic migrants to admit.

10.22 The parliamentary timetable does not permit the House to issue a reasoned opinion within the eight-week deadline in this case, even if we were minded to recommend it to do so. In our Inquiry on Subsidiarity, National Parliaments and the Lisbon Treaty the former Commissioner for Institutional Relations and Communications Strategy (Mrs Margot Wallström) said that the Commission would listen to the views of national parliaments even if there was an insufficient number of reasoned opinions to require the Commission formally to review its draft legislation.[42] It is in this spirit of a consensus-seeking approach by the EU institutions that we intend to transmit our views on the subsidiarity implications of the draft Directive to the Presidents of the European Parliament, Council and Commission.

Document (b) — the Directive on Intra-corporate Transfers

10.23 We note the Minister's view that the content of the draft Directive is consistent with the powers conferred on the Union under Article 79(2(a) and (b) TFEU. Any EU measures based on this Article must be within the scope and serve the objectives of the Union's common immigration policy as defined in Article 79(1) TFEU. We accept that the draft Directive may contribute to two of the objectives cited in Article 79(1) TFEU — the efficient management of migration flows and the fair treatment of legally resident third country nationals. However, the principal purpose of the draft Directive would seem to be to make the EU more commercially attractive to multinational companies. While we acknowledge that there are numerous policy pronouncements establishing a linkage between economic migration, competitiveness and labour market productivity, we continue to question whether this objective falls within the scope of Article 79(1) TFEU.

10.24 The Minister says that, even without a provision on intra-EU mobility, the draft Directive would be justified on grounds of subsidiarity because a common legal framework for the admission of intra-corporate transferees and for the conferral of certain social and economic rights would reduce the risk of unfair competition. We understand unfair competition in this context to refer to the risk of 'social dumping' and the possibility that multinational companies based outside the EU might seek to import poor working conditions or salaries when transferring an employee to a European branch or subsidiary, thereby undercutting the workforce in the host Member State. We can see some merit in this argument, and in the need for common EU rules, if the draft Directive includes provision for mobility between Member States. We are not sure why the Minister considers that EU rather than national regulation would be preferable if the scope of the draft Directive were to be limited to the conditions of entry and residence within a single Member State.





34   See section 1.1 of the Policy Plan at http://eur-lex.europa.eu/LexUriServ/site/en/com/2005/com2005_0669en01.pdf and HC 34-xviii (2005-06), chapter 20 (8 February 2006). Back

35   Article 5 of the Treaty on the European Union. Back

36   Article 5 of the Protocol on the Application of the Principles of Subsidiarity and Proportionality, annexed to the Treaty on the Functioning of the European Union (TFEU) and the Treaty on European Union (TEU). Back

37   The deadline for notification of a decision to opt in is 14 October. Back

38   See paragraph 2.2.1 of the Commission's impact assessment (ADD 1). Back

39   See Article 79(5) TFEU. Back

40   See paragraph 2.2.1 of the Commission's impact assessment (ADD 1). Back

41   See paragraph 2.2.2 of the Commission's impact assessment (ADD 1). Back

42   See HC 563 (2007-08), paragraph 24, p.8. Back


 
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