Posting of workers: Enforcement, compliance, and reform

Abstract

This article analyses the enforcement deficit plaguing the posting of workers. The rule subjecting posted workers to the social security system of their State of origin is enforced almost exclusively, but rather poorly, by that State. Because of its limited incentive and capacity to enforce the requirements for being posted, it often issues posting certificates without adequate verification. These rubber-stamped certificates bind the social security institutions and courts of the State of destination, thus hindering its enforcement machinery. The resulting gap in administrative enforcement enables employers to unilaterally choose the applicable social security legislation, quite possibly depriving their workers of the more generous social security protection of the State of destination while gaining an unfair competitive advantage over undertakings based there. Helpful though they may be, pending reforms of Regulation 883/2004 and Regulation 987/2009 are held back by an incomplete problem definition. Building on rationalist and managerial theories, I argue that the effectiveness of administrative enforcement depends on whether each posting requirement can be monitored by a State that is both willing and capable of doing so. The existing and envisaged allocation of administrative enforcement powers suffers from a misalignment between incentives, capacities and competences to monitor, which can be addressed by heightening incentives, by enhancing capacities, and by transferring competences to the State of destination.