Handouts to German workers ‘export dole queues to Denmark’

Date: 19/06/03

By Peter Chapman

MARIO Monti, the competition commissioner, has pledged to investigate reports that Danish builders face the dole queue after losing out to cheap German workers granted lavish state handouts at home for going abroad to find work.

Danish daily paper Jyske Vestkysten revealed that a smart German entrepreneur is exploiting the country's subsidies system to offer Danish firms teams of German workers at wages well below Danish rates.

The paper said the Kiel businessman had sent 3,000 emails and faxes to Danish firms offering workers at €16 per hour compared to the local rate of €23.50-25.50.

A German subsidy worth €8 per hour and a daily tax allowance for each worker of around €107 lets him easily undercut local Danish labour rates.

Monti told MEPs the scheme could fall foul of EU state aid rules, even though the Union has a special regime for efforts to boost job creation.

That is because aid granted by member states "may have a major impact on competition in the common market" even if the promotion of employment is a central aim of the EU and member states.

The competition chief said the German scheme might form part of a broader plan to reform the country's labour markets, already being scrutinised in Brussels. But he insisted his department would "request the German authorities to provide information on the specific measures and will assess them if appropriate under the state aid rules".

Danish MEP Mogens Camre said the German aid scheme, run by the Bundesanstalt für Arbeit, the German national job agency, showed a lack of "solidarity" by "trying to export the high level of unemployment in Germany" to its northern neighbour.

"The businessman has done nothing illegal - he is profiting only from German legislation. Nevertheless, this regime harms considerably the Danish job market because it increases the pressure on a sector where unemployment is growing."

The availability of cheap German workers marks an ironic turnaround for the EU's biggest economy, saddled with one of Europe's most expensive workforce and least flexible labour market. For years Germany has faced waves of migrant workers from Poland, Russia or even the UK, where wage rates are still far lower.

Hit UK television series Auf Wiedersehen Pet covered the exploits of a team of builders who left their native north-east England in the mid-1980s to work on a Düsseldorf construction site.