If businesses think that European institutions only create red tape and interfere with their work, this news story may challenge that. It also has practical importance; if the French and German laws stand, local haulage companies will have to assess the cost to their business and also consider what administrative processes they will need in place so as to comply with the law.
On 1 July 2016 a new law is set to come into force in France obliging all road hauliers to carry documentation showing that they earn the French minimum wage: 9.67 euros per hour. At the current rate, that is £7.62 per hour, which is more than the current minimum wage in this country.
The European Commission is challenging the law because it may inhibit free trade in Europe: foreigners may be less likely to continue operations in France because of this law. That is for two reasons: the required wage is higher than in the country of origin, and the extra burden in having to prove the wage. Given that transport is a major part of international trade, the French law could have a significant impact on cross-border trade.
The Commission has already challenged a similar law in Germany. There, the minimum wage is 8.50 euros, which is currently £6.70. For most people in the UK, the minimum wage is higher than that. The new National Living Wage, which applies to workers ages 25 or over, is £7.20 per hour. It has a big effect on East European companies, however, where wages may be much lower. And the administrative affect (required documentation) may be relevant.
The UK’s Freight Transport Association supports the Commissions actions because of the barriers to free trade that these laws cause. Arguably (though I am going beyond my expertise), ironically perhaps, the French and German laws could be good for UK business – the highly negative effect on Eastern European companies may make it easier for British companies to operate.
The economic and business effects, as well as fairness, of laws such as this may be complicated. But whatever the overall effect, if any company delivers to France or Germany they may want to keep an eye on this case due the administrative and financial costs of the rule.
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The European Commission has decided to take legal action against France and Germany over the possible consequences of the application of their respective minimum wage legislation to the road transport sector, news that has been welcomed by the UK's Freight Transport Association (FTA), which took exception to France’s requirement for all foreign road hauliers to carry documents to prove they earn the French minimum wage.