A case of construction fraud involving 755 fake notifications from 30 bogus companies has resulted in damages of 55 million euros. More facts: 40 per cent of foreign firms working on Austrian construction sites are suspected of undercutting workers' pay and the number of postings is rising. In addition, foreign firms enjoy a legal competitive edge. This has incited BWI affiliate, the Construction-Timber Union, GBH, to file a complaint with the European Commission.
Among the demands in its complaint, GBH demands a stricter Posted Workers Directive. For GBH Federal Chairman and National Council member Josef Muchitsch, “Enough’s enough! What we have here is a modern slave trade and it has to stop!" His words are substantiated by inspections carried out by the Construction Workers Leave and Severance Fund (BUAK). In the first half of 2017, 3,075 on-site inspections of 3,365 domestic companies and 12,371 workers revealed suspected cases of underpayment involving 40 domestic companies and 115 workers (or 1.2% of companies and 0.9% of employees). During the same period, inspections of 816 sending companies and 3,706 employees thereof led to suspicion of underpayment involving 360 companies and 1,518 employees (or 44.1% of companies and 41.0% of employees). And the posting period is steadily increasing: during a six-month period, there were 437,448 posted days paid in 2015, 513,125 in 2016 and 522,690 in 2017.
In addition, posted workers remain in the social security system of their home country for two years, which gives the sending companies a competitive edge – they pay lower contributions or non-wage labour costs – but signifies lower entitlements for the posted workers.
Muchitsch stresses: “We demand that social security contributions be deducted in the country of posting, in this case Austria. In addition, each posting must be preceded by a proven period of at least three months of prior employment in the home country. Otherwise you end up with these dubious postings. Many companies have been founded to ‘import’ cheap labour from Eastern European countries that then slinks its way from one construction site to another. Moreover, the European authorities have to network so that social security data can be searched and penalties imposed on foreign firms in Austria can be executed in their country of origin as well. Only then will there be fair competition in Europe.
See Official complaint here.