How to apply social conditionality in the Common Agricultural Policy

 

“We do not manufacture food, we grow it”

 

(Antonio Onorati, ARI)

March 2021

 

Ensuring the respect of the social and labour rights of rural workers has been part of ECVC’s struggle since the organisation’s very beginnings.[1] In this context, applying social conditionality to public subsidies in the framework of the Common Agricultural Policy (CAP) has therefore been one of ECVC’s main demands over recent decades. In the post-2020 CAP reform discussions, ECVC repeatedly reiterated and defended this request in various policy spaces. At the time of writing, the European Parliament have just included a provision on social conditionality in its amendment proposal on the CAP reform.

 

This article will outline the concept of social conditionality itself, demonstrate the importance of it in the particular context of the agricultural sector using the example of Italy, and present the current proposal by the European Parliament in the trialogue discussion on the CAP reform.

 

It is high time to stop giving public assistance, and in particular subsidies within the CAP, to an agricultural model that doesn’t recognise the rights nor the dignity of workers. All public support measures must include a social conditionality clause to ensure the respect of the fundamental labour and social rights of rural wage-workers!

 

A. What is social conditionality

Social conditionality is a concept used in relation to public subsidies. The idea is that the receipt of all public subsidies or public aid should be conditional on the respect of certain fundamental principles (worker rights, social and economic rights etc.).

 

Social conditionality means that in order to be eligible to receive public subsidies, the potential subsidy beneficiary should comply with all provisions in national and international law and, in this context, specifically with the ILO declaration of fundamental principles and rights at work[2], which states four main principles to be respected by all member states:

(a)    freedom of association and the effective recognition of the right to collective bargaining;

(b)    the elimination of all forms of forced or compulsory labour;

(c)     the effective abolition of child labour; and

(d)    the elimination of discrimination in respect to employment and occupation.

 

 

How does this relate to the CAP? The CAP is one of the most important public financial support instruments at the EU level for private entities: over the next 7 years between 53.78 and 59.3 billion EUR will be paid through the two CAP pillars.[3]

However, in the Common Agricultural Policy (CAP) there is no mention of social conditionality, despite many civil society organisations, including ECVC, requesting the inclusion of a social conditionality clause [4]. To date, in the EU, the recognised conditionality (cross-compliance system) refers to basic standards relating to the environment, climate change, agricultural and environmental condition of land, public health, animal health, plant health and animal welfare[5] but no conditionality is mentioned regarding the respect of workers’ rights.

 

 

B. Why is social conditionality important in agriculture?

1.      Employment in the agricultural sector
The agricultural sector in the EU is one of the sectors that provides employment to tens of millions of people.

 

Figure 1. Use in agriculture in the EU as a percentage of total employment, Reporting Year 2016

 

 

Taking Italian agriculture as an example, certain characteristics in agricultural sector employment can be observed.

 

In the EU, Italy remains the third biggest in terms of agricultural production.  The country “also holds the record with regard to work in agriculture and the number of people employed in the primary sector, with 1.25 million workers, followed by Spain and France; and the use of labour remains almost stable, with a variation of -0.1 percent.” Again “[…] the employment component rose slightly (+0.5%) while the self-employment component has stagnated since 2018 […]” (2019, ISTAT).

From 2013 to 2016, employment in the agricultural sector continuously increased in Italy.

 

The employment structure in the agricultural sector is extremely diverse: from independent farmers – with or without their family – to permanent workers with regular permanent or temporary contracts, but who are also often falsely declared as self-employed workers. There are multiple types of fixed-term employment conditions, which include day workers but also workers who do not have a contract but are recruited “by the day”[6].  In addition to these models, you find those related to illegal work and “slave” labour. While the forms of exploitation of wage labour in agriculture have remained roughly the same over the past half century, the characteristics of the workforce have changed frequently, i.e. the country of origin, sex and race of the workers.

Violations of fundamental rights are structural within agriculture – both in the case of family farming (self-exploitation) and in the violations that are deeply integrated in the value chain – and are “necessary” to support the competitiveness of farms, the low prices paid at the farm gate and the rising cost of productive inputs. In particular, large-scale industrial agriculture makes its profit through a steady reduction in labour costs.

 

On top of this fragile and often precarious employment structure it should be noted that an increasing part of agricultural workers in Italy are foreigners, with more than 10% of them coming from outside of the EU.

Foreign workers are more often subject to violation of rights, illegal employment situations and particularly violent forms of exploitation.

 

 

 

Employment is particularly concentrated in larger agricultural infrastructure (20 hectares or larger). In Italian agriculture, this represents only a small part of agricultural activity (9%) despite the fact that these larger infrastructures hold almost two thirds of the agricultural land. In Italy only 39% of agricultural farms (“imprese agricole”) (161.000) have employees and just 1,4% (5.782[7]) of the agro-industrial farms have more than 10 employees, accounting for 16% of the employees in the agricultural sector.

Combining this data with the fact that 1% of agricultural structures belong to corporations, yet this 1% employs 9.5% of agricultural employees, it is clear that there is a concentration of labour force in large agricultural industries. [8]

Hence, agricultural employment is a structural component of a particular type of agricultural enterprise, in which capitalisation is the basis for profit production, and the growing and harvesting operations involve export, retailers and/or industrial processing. This is where employment is most concentrated, and this is where respecting social conditionality should be primarily controlled and implemented.

 

 

2.       Public aid in the agricultural sector

How does all this relate to social conditionality in CAP subsidies?

 

First of all – as stated above –the CAP is one of the largest public aid systems in Europe.

 

Public aid for the financial instruments under the CAP in the EU makes more than one third of the total EU budget for the budgetary period 2021-27.

 

Today the majority of CAP subsidies (more than 60%) are paid directly and automatically to companies through Income Support payments and further funds are channelled through the rural development programs.

 

 

 

 

Italy is among the four main countries in Europe (with France, Spain and Germany) that receives the most CAP payments from the EU in the Income Support and the Rural development Fund; in 2019 alone, Italy received more than 4.2 billion EUR under the first pilar. [10]

 

 

These direct payments to farmers in the context of the European agricultural guarantee fund (EAGF) are made based on hectares: the larger the amount of agricultural land, the more the company receives as support (while also concentrating the biggest part of dependent employment).

 

Combining this with the fact that land is concentrated under the control of a few agricultural structures (see above), and the fact that around just 15,000 agro-industrial farms have more than 100ha land, it is clear that public subsidies are equally concentrated in the hands of a few: the biggest agricultural farms with more than 100,000 EUR direct payment from the CAP received more than 12%  of total CAP direct payments whereas they account for only 0,32%  (2,534 farms) of the beneficiaries in Italy.[11]

 

 

 

C. The proposal of the European Parliament to introduce social conditionality in CAP

 

It is in this context that we should read Article 11a – Principle and scope on the social conditionality[12]  of the position of the CAP Reform post-2020, recently approved by the European Parliament and now being negotiated in the trialogue.

“1. Member States shall include in their CAP Strategic Plans a system of conditionality, under which beneficiaries receiving direct payments under Chapter II and Chapter III of this Title or the annual premia under Articles 65, 66 and 67 shall be subject to an administrative penalty if they do not comply with the applicable working and employment conditions and/or employer obligations resulting from all relevant collective agreements and social and labour law at national, Union and international levels.

2. The rules on an effective and proportionate system of administrative penalties to be included in the CAP Strategic Plan shall respect the requirements set out in Chapter IV of Title IV of Regulation (EU) [HzR].”

 

Beyond setting out the conditionality rules the text adopted by the EP provides instruments and mechanisms to control and implement the respect of this conditionality and even provides a sanction mechanism for beneficiaries not respecting.

 

The amendment 211cp2 to the art.84[13] shows ways to ensure compliance with the existing law: “In order to ensure compliance with the applicable working and employment conditions resulting from relevant collective labour agreements and social and labour law at national, Union and international levels, Member States shall ensure cooperation between competent national authorities responsible for labour inspections and the control system referred to in the first subparagraph. In cross-border situations, coordination and cooperation shall also be ensured with the European Labour Authority (ELA) the functioning of which is regulated by Regulation (EU) 2019/1149 of the European Parliament and of the Council.

 

Those who break the rules of conditionality might receive less money from the CAP, in fact the amendment 151[14] to art.55 states that “Member States shall deduct any sums unduly paid as a result of an outstanding irregularity by a beneficiary, under the terms set out in this Article, from any future payments to the beneficiary by the paying agency.“. Furthermore in the amendments 212 cp1 and 212cp2 to article 85[15] it is specified that “Under that system, the administrative penalties referred to in the first subparagraph shall only apply where the non-compliance is the result of an act or omission directly attributable to the beneficiary concerned; and where one, two or all of the following conditions are met: (…) (ba) the non-compliance affects the working and employment conditions of the workers employed by the beneficiary.”

 

Finally in national strategic plans, one of the novelties of the new CAP, is that the MS should “incorporate compliance with national law on social and legal rights of agricultural workers in the conditionality to be met in order to receive CAP direct payments” as proposed by ECVC and its members and now also required by the EU Committee of the Regions. This would force Europe to put pressure on states that do not have satisfactory laws on the matter so that there is a positive harmonisation of peasants and workers’ rights.

 

D.      Implementing social conditionality on the ground

 

Is it feasible to control and check if CAP beneficiaries comply with the social and economic rights of agricultural workers? The text proposed by the EP provides the legal basis and tools to do so, as well as for applying sanctions in case of non-respect. But do MS have the means to implement those at national level?

 

Several member states published a note[16] stating that the introduction of social conditionality could lead to a distortion in competition as social and labour conditions are not equal in all MS and furthermore that this additional burden of controlling the respect of social and economic rights of agricultural workers is too burdensome for the national states.

 

As regards the distortion in competition, MS could refer to the above-mentioned principles of the ILO as a basis for social conditionality, in order to have a harmonized approach as all EU MS signed the declaration.

 

Concerning the “administrative burden” for MS, we must look at the number of beneficiaries that receive a significant amount of public subsidies (more than 100,000EUR) in the frame of the CAP, and compare that to the number of beneficiaries employing more than 10 employees in the agricultural business. In doing so, it seems that if at least a small number of beneficiaries were audited to assess the extent to which they respect social conditionality, this would cover a fairly large proportion of subsidies and dependent employment.

 

With the example of Italy above we have examples of the numbers of these agricultural farms: 2534 agricultural farms receive more than 100,000EUR CAP direct payments and furthermore 5.872 agricultural farms employ more than 16% of the employees in the sector.

 

Due to the current circumstances, for ECVC all CAP beneficiaries that receive more than 60,000 euros subsidies, (including direct aid and any other kind of CAP subsidies such as 2nd pillar subsidies), should be subject to compulsory State checks to ensure the respect of social conditionality. Such social conditionality enforcement measures for beneficiaries getting more than 60,000 euros of subsidies should not be applied to the beneficiaries of the small farmers scheme (SFS), similarly to what happens with environmental conditionality. In addition, it is important to underline that, for ECVC, a capping mechanism should be established to limit direct subsidies to a maximum of 60.000 euros per beneficiary, despite the fact that the EU institutions are currently discussing a higher capping threshold (100,000 euros)

 

 

With compulsory checks on the beneficiaries that receive over 60,000 euros subsidies, ECVC believes that the administrative burden is proportionate to guaranteeing that public aid is bound to the respect of fundamental social and economic rights.

 

 

Another idea could be to request the submission of an official confirmation from national authorities that all social security obligations are complied with when introducing the request for CAP subsidies.

 

 

We must also not underestimate the fact that the UN approved the Declaration of the Rights of Peasants and other people working in rural areas in December 2018 and EU Member States should implement it in good faith. The Declaration clearly extends all rights to agricultural workers in article 1 and several articles (9, 13, 14 and 16) make references to social, economic and labour rights. So, the integration of social conditionality of the CAP represents a basic requirement in the application of this declaration, which aims to protect all those vulnerable groups of the agricultural sector.

 

 

“Not one euro of the next CAP payments will be beyond social conditionality[17]!”

 

 

Learn more:

–          Read ECVC web page dedicated to agricultural workers:https://www.eurovia.org/main-issue/agricultural-workers-migrants/

–          Read ECVC document on migrant and seasonal workers:https://www.eurovia.org/wp-content/uploads/2016/03/ECVC-Document-on-Migration-and-Rural-Labour-2017.pdf

–          Read ECVC complaint report on the mechanisms of brokering employment in the European agricultural sector:https://www.eurovia.org/ecvcs-publication-sowing-injustice-harvesting-despair-abuse-and-exploitation-of-foreign-agricultural-workers/

–          Read ECVC questions for agricultural workers during COVID-19 pandemic: https://www.eurovia.org/open-letter-on-urgent-and-necessary-measures-for-rural-workers-in- the-context-of-covid-19 /

[1] https://www.eurovia.org/wp-content/uploads/2016/06/Common-base.pdf
[2] https://www.ilo.org/declaration/thedeclaration/textdeclaration/lang–en/index.htm consulted on 17 March 2021
[3] https://ec.europa.eu/info/food-farming-fisheries/key-policies/common-agricultural-policy/financing-cap/cap-funds_en consulted on 17 March 2021
[4] https://www.eurovia.org/open-letter-the-new-cap-needs-social-conditionality/
[5] REGULATION (EU) No 1306/2013 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 17 December 2013
[6]”Work without a contract, undeclared work, hidden work, work without social security contributions and insurance coverage, in other words illegal work” (ISTAT).
[7] See ISTAT various sources
[8] https://www.istat.it/it/files/2019/12/Struttura-unit%C3%A0-economiche-settore-agricolo.pdf consulted on 9 April 2021
[9] https://ec.europa.eu/info/food-farming-fisheries/key-policies/common-agricultural-policy/financing-cap/cap-funds_en#overview consulted on 19 March 2021
[10] https://www.europarl.europa.eu/factsheets/en/sheet/104/the-common-agricultural-policy-in-figures consulted on 9 April 2021
[11] https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/direct-aid-indicative-figures-2019_en.pdf consulted on 09 April 2021
[12] https://www.europarl.europa.eu/doceo/document/TA-9-2020-0287_EN.pdf consulted on 30 March 2021
[13]https://www.europarl.europa.eu/RegData/seance_pleniere/textes_adoptes/definitif/2020/10-23/0288/P9_TA(2020)0288_EN.pdf consulted on 7 April 2021
[14] https://www.europarl.europa.eu/RegData/seance_pleniere/textes_adoptes/definitif/2020/10-23/0288/P9_TA(2020)0288_EN.pdf consulted on 7 April 2021
[15] https://www.europarl.europa.eu/RegData/seance_pleniere/textes_adoptes/definitif/2020/10-23/0288/P9_TA(2020)0288_EN.pdf consulted on 7 April 2021
[16] https://data.consilium.europa.eu/doc/document/ST-6434-2021-INIT/en/pdf consulted on 9 April 2021
[17]https://www.assorurale.it/2020/11/09/prova-1/