Episode 41: The Invisible Border

00:00:01: Borders separate countries from one another.

00:00:05: On

00:00:05: maps,

00:00:06: they are marked as lines – in real life there is no such distinct line to be seen… sometimes perhaps a river assigned by the roadside indicating that you were crossing into other country!

00:00:19: In everyday life within the European Union however borders are meant to mean as little as possible.

00:00:25: People are allowed live and work together without visa without a work permit and normally, without being checked on their way to work either.

00:00:36: In this three-part series we ask what happens after crossing the border when a single European labour market becomes twenty seven different tax and social security systems?

00:00:50: We examine why the biggest obstacle is often not the border itself.

00:00:55: Hello!

00:00:56: And welcome to We Work Europe the podcast of The European Centre for Workers' Questions.

00:01:19: Around one point nine million people in Europe currently work in a country other than the ones they live to.

00:01:26: Nowhere is this model as significant, like Luxembourg.

00:01:30: Almost half of the country's workforce commutes across the border every day from France Belgium or Germany.

00:01:38: Axel Ludwig works at the Luxemburg Post Office One of the countries largest employers There, he is a staff representative comparable to a works council member and part of the German cross-border workers' committee of the LCGB trade union.

00:01:55: A member of ESA.

00:01:57: for decades He has been observing how the lives of commuters are changing.

00:02:03: It was relatively straightforward at the start.

00:02:05: On one hand it had to do with commuting which is taking up more time because all traffic jumps.

00:02:11: This is a huge issue for cross-border commuters.

00:02:15: It has certainly made the situation less appealing.

00:02:18: Then there's the fact that three decades ago, cross border commuters were generally viewed in positive light on both sides.

00:02:25: That has changed in the meantime.

00:02:27: In Luxembourg, many people see them as the ones who clock up their roads and in Germany they're seen as the once evading tax burden.

00:02:38: Cross-border commuters are people who benefit from two countries whilst at the same time causing disruption in both.

00:02:46: Economically speaking – The Luxemburg model is based precisely on these daily journeys.

00:02:52: Companies gain access to a workforce from a much wider catchment area.

00:02:57: Commuters often earn more than they would in their home region, and a large proportion of this money is subsequently spent back where they live.

00:03:08: Axel Ludwig explains that in the past certain matters were simply subject to less stringent controls.

00:03:15: Today it's not just an employment contract which determines what country has jurisdiction.

00:03:20: What also matters is where a person actually works and how often.

00:03:30: If you spend more than twenty-five percent of your working hours in another country, You are then also transferred to the German social security system.

00:03:39: And that hits really hard!

00:03:41: The tax systems still reasonably comparable but Social Security contributions in Luxembourg taking health insurance as just one example Are three point zero five percent

00:03:52: compared

00:03:53: with sixteen to seventeen percent In Germany and this is an area where cross border workers are no longer treated.

00:04:03: Tax and social security follow different principles in this regard.

00:04:08: For German cross-border workers in Luxembourg, a de minimis threshold of thirty four days per calendar year has applied for tax purposes since twenty twenty four.

00:04:19: Up to the limit some work may be carried out outside Luxemburg without the right to tax those working day transferring to Germany.

00:04:28: For social security purposes, a threshold of twenty-five percent working hours in the country of residence generally applies.

00:04:36: An additional European Framework Agreement may under certain conditions allow for more cross border work from home.

00:04:43: However this requires joint application between both employer and employee.

00:04:49: In even then The thirty four day tax threshold remains separate issue.

00:04:54: For businesses This means they must keep track of several sets of regulations at the same time.

00:05:01: At Post Luxembourg, working from home for German cross-border commuters has therefore been restricted.

00:05:08: Cross

00:05:09: border workers are at a disadvantage here too because their thirty four day rule comes into play again.

00:05:15: Employees based in Luxemburg can easily spend two to three days a week working.

00:05:21: As for the German cross-border worker here with us, we've limited it to one day a week at our company for various reasons.

00:05:28: That would then amount to twenty percent of working hours so as not to exceed that twenty five per cent

00:05:34: limit.".

00:05:36: An employee living in Luxembourg can therefore stay at home for several days – his colleague who holds this same job and works simply because his home is a few kilometres further away on the other side of the border.

00:05:54: The border has not, therefore disappeared – it's merely changed form!

00:05:59: It no longer stands as barrier to the road but embedded in calendar, percentage calculation and question which authority ultimately collects contributions.

00:06:12: Axel Ludwig has now observed that the number of German cross-border commuters is stagnating.

00:06:18: Parts of the labour pool in the immediate border region have been exhausted, at the same time wages in Germany have risen.

00:06:26: The financial incentive to put up with longer journeys and more complicated rules every morning are diminishing.

00:06:35: The latest figures show that there is no longer any growth in the number of German cross-border commuters, partly because the border region has been somewhat tapped out.

00:06:45: There aren't many people left who could potentially come over to work.

00:06:50: Wages have risen accordingly so it's becoming less attractive for such a small difference and pay.

00:07:00: But how large this group actually And how dependent is Luxembourg on it?

00:07:08: At the moment, according to the latest figures... ...the situation is as follows.

00:07:13: We have a total of four hundred and ninety-four thousand workers in Luxemburg….

00:07:18: …and there were two hundred thirty-two thousand cross border commuters!

00:07:22: You can see that the ratio is high.

00:07:25: Without cross-border workers, The Luxembourg economy simply wouldn't function as it should.

00:07:31: Through

00:07:31: their daily work Cross border workers help to sustain the economy and ensure That Luxemburg enjoys economic growth.

00:07:41: This is Mandy Nürsen.

00:07:43: She's a trade union secretary at the LCGB.

00:07:47: she Is responsible for the unions European And international relations

00:07:51: and

00:07:51: for cooperation within the greater regions surrounding Luxembourg.

00:07:55: This also includes the LCGB's cross-border advice centres.

00:08:00: Cross border workers are not just a small mobile minority in Luxemburg, they're part of the economic norm – this is also evident within the trade union.

00:08:13: We do indeed have forty five percent of cross border workers.

00:08:18: We have forty-eight thousand members and forty five percent of them are cross border workers.

00:08:24: This

00:08:24: also changes the way a trade union operates!

00:08:28: It cannot wait for workers to come to Luxembourg when they have a problem, it must cross the border itself.

00:08:35: The LCGB therefore runs advice centres in German & French Border Towns In Mierzig, in the Saarland, in Tionville ,in France And in Wasserbeelig in Luxemburg right on the German border.

00:08:48: This office is due to reopen in September.

00:08:54: And

00:08:54: we're constantly looking to see if we might be able offer offices somewhere else, If there's demand

00:09:01: A

00:09:01: trade union office on the border.

00:09:04: At first glance that sounds like a very local response To a European problem But perhaps That it precisely where The crucial question lies... ...If single labour market works so well Why do its workers need special advice centres just to understand it?

00:09:22: Above all, Axel Ludwig wants a level playing field.

00:09:27: But he also points out that is not only Luxembourg benefits from commuters.

00:09:32: the bulk of their income flows back home in Germany France and Belgium.

00:09:40: Cross-border

00:09:40: workers who work here and help the economy to grow should be subject to the same conditions, face no disadvantages either later when they retire or in terms of taxation compared with the residents at Luxembourg.

00:09:53: We must not forget that cross border workers spent a majority income from their country's residence.

00:10:00: this has also generated certain level prosperity for the border regions.

00:10:08: Crossing the border itself often involves only short journeys.

00:10:12: Switching between the two systems, however is something that accompanies a worker throughout their entire working life when working from home—when it comes to tax health insurance and eventually their pension!

00:10:26: As long as day-to-daylife runs smoothly much of this remains out of sight.

00:10:31: but what happens if someone falls ill?

00:10:34: If a deadline passes or if two authorities reach different conclusions.

00:10:41: Next up on We Work Europe If you like We Work European, do give us a five-star rating and don't forget to subscribe!

00:10:51: Also – if you have any interesting topics or feedback for us just contact isa at isa.org.

00:10:59: WeWorkEurope Is the podcast from ESA The European Centre For Workers' Questions which receives financial support from the European Union.