The Letta Report on the Future of the Internal Market was published on Wednesday 17 April 2024 and presented to the European Council. The Letta Report can be found at this link.
The ETUC has put together a response to the Letta Report to assist policy makers to identify the recommendations that have support from trade unions and those that may undermine trade union and employment rights.
The report includes a number of recommendations that will be of real benefit to workers and their trade unions, in particular the support for social dialogue. The ETUC calls for the positive social elements to be emphasised and taken up (e.g. the application of social conditionalities to investments, public procurement to promote quality jobs and collective bargaining, regulation of subcontracting chains, need for investments and an industrial policy, a right to stay, importance of ensuring housing affordability…). All of these elements should be included in the upcoming discussion on the Strategic Agenda and the priorities for the next term, along with the recommendations in the La Hulpe Declaration on the Future of the European Pillar of Social Rights.
The ETUC assessment is that the title of the Letta report makes the intention of the author clear, that the single market is more than a market. In this respect we reject the deregulation narrative and proposals, as well as liberalisation pushes, and we stress that this approach cannot be interpreted as a green light to allow damage to social progress, an undermining of collective agreements, the right to strike, employment rights, or to work against measures for upward social convergence. Of particular concern is the revival of discredited ‘gold-plating’ arguments (i.e. preventing governments from providing greater protection for workers when transposing EU employment, health and safety and equality directives). The ETUC underscores that the threat of governments using the fragmentation and ‘gold-plating’ criticism to limit workers’ and trade union rights must be taken clearly off the table and not advanced by Member States or the Commission.
We call on the European institutions and Member States to take up the positive proposals in the report:
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The report is strong in recognising the importance of trade unions, social partners, and social dialogue in delivering the required social dimension of the Single Market. The fact that the conclusions highlight clearly that social dialogue is at the core of the European Social Model is welcome.
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Social conditionalities must be included in all public funding and support to businesses, as well as environmental and tax conditionalities. The report proposes in particular for the State Aid framework “common conditionalities for common public policy objectives”, including wages, workers’ rights. The report also refers to the US Inflation Reduction Act as a possible example in this area. The EU institutions should build upon these recommendations and introduce social conditionalities for EU funds and state aid, as well as environmental and tax conditionalities.
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The report highlights the potential of public procurement as a driver to realise EU strategic goals, including social progress. The report criticises the reliance on the lowest price award criterion as the default option in public procurement. Very importantly, the report states that public contracts should foster “the creation of high-quality jobs, characterised by fair wages and conditions underpinned by collective agreements”. It is necessary that the EU institutions follow-up on these proposals and revise the EU Public Procurement Directives to ensure that public money goes to organisations that respect workers’ and trade union rights, that negotiate with trade unions and whose workers are covered by collective agreements.
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The report states positively that “the EU’s industrial strategy must adopt a more European approach” and highlights the risk of deindustrialisation. The ETUC reiterates its call for an ambitious EU Industrial Policy with significant investments to deliver high-quality jobs and strong social conditionalities.
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The report positively stresses the need for investments for EU objectives. The ETUC stresses the need for a permanent investment tool at EU level to ensure the necessary resources in all sectors and in all Member States and regions for EU industrial policy and for social and green targets. We also reiterate the call for a genuine fiscal capacity for investment, an EU sovereignty fund for just socio-economic transition and common goods. The focus in the report on the need for enhance research, innovation and education, including through stronger investments, is of particular importance.
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The report suggests that a ‘freedom to stay’ should be considered part of the same coin as the freedom of movement. We welcome that the assessment of free movement is defended as a fundamental right and a choice, and not as a necessity or a quick fix to compensate for unattractive and precarious jobs. The report stresses the need to provide opportunities for citizens in all regions, in particular those being left behind, including the need for quality jobs, and the need to tackle inequalities within and between countries.
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In terms of fair mobility, the report makes recommendations to strengthen the European Labour Authority.The ETUC calls on the EU institutions to take up these recommendations and to improve the enforcement of labour mobility rules by a more effective European Labour Authority (ELA), with a stronger mandate and an enlarged scope.
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The document rightly emphasizes the necessity of implementing policies to address mental health in the workplace. ETUC believes it is high time for a Directive specifically focused on preventing psychosocial risks at work.
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The recommendation for an Action Plan for High Quality Services of General Interest is positive, and should be followed-up and connected to the EU policies for specific SGIs.
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The recognition of the need to address the multiple factors behind housing affordability to grant it everywhere in the EU is important. There is also a call for a task force on housing affordability.
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The report addresses the risks of tax fragmentation and stresses the need to “avoid harmful tax competition” and tackle aggressive tax planning, tax avoidance and evasion. We also stress the need for a more progressive taxation, including taxation on wealth and capital gains.
We call on the European institutions and Member States to guard against the negative proposals:
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The main focus of the proposals for the transport sector is on further liberalisation and on anectodical problems of the sectors. No mention of the need to tackle abuses, letterbox companies and social fraud, which are clear demands of the trade unions. The report also includes a clear attack to the right to strike for Air Traffic Management (ATM), which is unacceptable.
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The ETUC reiterates its rejection of the attacks against “gold-plating”. Having higher standards at national level than the minimum standards agreed at EU level is not only perfectly in line with EU law as directive always define minimum standards but also a legitimate goal for any Member State. This possibility must be protected at any cost, in particular in the employment and social area. The respect and compliance with Article 114(2) TFEU must be emphasised throughout any discussion on strategies for the Single Market (i.e. Article 114 TFEU shall not apply to fiscal provisions, to those relating to the free movement of persons nor to those relating to the rights and interests of employed persons). In addition, as highlighted by Enrico Letta, the Delors method should be respected (legislation on workers’ rights / working conditions is to be based on minimum harmonisation in order to avoid a race to the bottom).
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Deregulation and liberalisation pushes and “burden reduction” approaches that do not safeguard / ensure social progress must be rejected. EU competitiveness should be built on strong social and environmental standards.
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The report also criticises the use of a risk-averse regulatory approach, claiming it has resulted in overlaps, legal uncertainty and substantial compliance costs. The ETUC recalls the key importance of the precautionary principle enshrined in the Treaties, which cannot be undermined by any ‘innovative’ practices.
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The report also calls for increased cross-border service provision, and for specific types of restrictions that persist under the Services Directive framework to be addressed. It is necessary to ensure that any measures in this area guarantee equal treatment and full respect of workers’ rights, ensure stronger enforcement and tackle effectively abuses.
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The approach of the report seems to over rely on private investments mobilisation and their ability to contribute to close the investment gap for EU strategic objectives. The proposal on upgrading the Pan European Personal Pensions raises concerns. More in general, pension funds are workers’ money: adequate and safe pension income has to be fully safeguarded in any case, respecting national competences. It has also to be noted that private investments do not align to common objectives in absence of a specific legislative framework: the importance of the SDGs and of EU taxonomy should be highlighted in this regard. The lessons of the 2008 financial and economic crisis cannot be forgotten. We reiterate the need to regulate financial, energy and food commodities markets and tackle speculation.
A more detailed analysis of these and other aspects can be found in Annex.