Politicians accuse Ryanair of social dumping in Belgium

Politicians are accusing Ryanair, the Irish low-cost airline, of social dumping, after its announcement last week that it will start flying out of Brussels Airport in February. The accusations come just as Belgium’s secretary of state against fraud, John Crombez (pictured), is preparing a clash with the EU on the issue.

Social dumping refers to the situation when contractors from other EU member states make use of the EU’s guarantee of freedom of movement to put people to work in one country – such as Belgium – but continue to pay social security contributions in the land of origin. EU rules allow this for the first two years working abroad, and the practice offers an advantage to any country where contributions are cheaper than they are in Belgium. That means most of them, but particularly countries in Central and Eastern Europe.

More importantly, some employers simply pay no contributions at all, which gives them an even greater competitive advantage over Belgian companies. That makes the difference in salary costs – already high in Belgium – even greater. The problem is difficult to detect, as home countries often do not co-operate with investigations.

Last week, Brussels Airlines (BA) chair Etienne Davignon, a former EU commissioner, accused Ryanair of unfair competition.  Explaining that the move by the Irish airline would bring the two airlines into direct competition for the first time, Davignon pointed out that the playing field was only partially level.

“Brussels Airlines pays social security in Belgium, while Ryanair pays in Ireland, even though the pilots and cabin crew have Belgian nationality,” he said, describing the problem of social dumping as “a worrying discrepancy which the government will one day be forced to tackle”.

According to the federal government, it is the EU that needs to take action; but the EU has voiced concern over measures that the government has taken. The government recently agreed to introduce stricter checks on suspected dumpers, with specialised teams of investigators using data-mining techniques to track down offenders.

From the point of view of Europe, Belgium is setting aside EU rules, and the European Commission has asked for details of the scheme and for the government to defend its actions.

“I notice from contacts with other countries that Belgium is not alone in wishing to do more to combat fraud,” said Crombez. “Family businesses are telling us that they are on the verge of bankruptcy because of this unfair competition. Either they close up shop, or they play the same game. I have nothing against active immigration to Belgium, but the rules need to be enforced.”