A new study commissioned by The Left in the European Parliament sets out how subcontracting has become the business model for exploiting workers in the EU. Numerous scandals – from systemic exploitation during the World Cup in Qatar to human trafficking at Borealis chemicals operation in Belgium, reveal how complex webs of tangled contracts allow big companies to conceal their role and evade liability when accusations of exploitation and abuse surface. 

“Subcontracting: Exploitation by design. Tackling the business model for social dumping” by Silvia Borelli of the University of Ferrara, sets out the various ways that subcontracting undermines labour laws in the EU and normalises worker exploitation and social dumping so that companies can increase their profits. In this environment, rogue employers are able to separate power and profits from risk and responsibility – leading to a race to the bottom in terms of workers’ rights. Using examples from Belgium, Cyprus and Spain the study explores the ways in which subcontracting negatively affects labour movements, entrenching inequality among workers and fragmenting and hampering worker organisation. 

The study concludes that not only illegal but also legal subcontracting promotes this vicious cycle and calls for EU action to fight exploitation in the contracting chain. 

Concretely, the author calls for a new European Regulation on decent work in the subcontracting chain to hold the lead company jointly and severally liable for the conditions of the employment contracts throughout the chain to allow workers to seek redress if the subcontractor fails to fulfill certain obligations. The author also calls for amendments to the European Commission’s proposal for a Directive on corporate sustainability due diligence to increase transparency, establish liability and involve unions and worker representatives throughout the process. 

Left MEP Marc Botenga (PTB/PVDA Belgium) fully supports the conclusions of the study and said: “European rules aimed at promoting subcontracting are at the expense of workers, who often are forced to live with precarious contracts and poor wages. We must put an end to the long subcontracting chains. Subcontracting should be the exception not the rule.”

The full study is available here.

Details of the study launch are available here.