European Commission President Jean-Claude Juncker wants to set up a new EU institution to monitor how labour law is applied in member states. The Commission will outline its plans for the supervisory authority by the end of 2018.

“We should make sure that all EU rules on labour mobility are enforced in a fair, simple and effective way by a new European inspection and enforcement body,” Juncker said Wednesday (13 September) during his annual state of the union address in Strasbourg.

It was part of a handful of new proposals that Juncker announced during the speech.

“It seems absurd to have a banking authority to police banking standards, but no common labour authority for ensuring fairness in our single market,” he added.

EU officials said there has not been a decision yet about whether the labour authority will be an EU agency or a different kind of institution. The Commission argues that an EU body to oversee labour law will help manage the growing number of people who work outside their home member state. Sixteen million Europeans work in other parts of the bloc, which is twice the amount from ten years ago.

According to EU executive, 1.7 million Europeans travel to other member states every day for work.

“It’s a logical final building block,” one official said. There is currently no permanent EU-level authority overseeing labour law. It makes sense to create one as an additional measure to protect against worker exploitation–on top of the growing amount of EU legislation relating to employment, the official added.

Juncker has frequently been outspoken on social issues. The Commission chief has pushed for member states to introduce national minimum wages and is a driving force behind the controversial posting of workers rules to regulate conditions for temporary work outside a person’s home member state.

The Commission’s push for more social legislation has caused friction with a handful of mostly eastern EU countries including Poland and Hungary that don’t want the EU to regulate rules on employment and wages.

Marianne Thyssen, the EU employment Commissioner, backed Juncker’s proposal. She tweeted after his speech, “For a single European labour market we also need a European labour market authority.”

Thyssen first suggested the idea for a labour authority to Juncker two weeks ago during a retreat with the full college of EU commissioners, one Commission official said.

Macron's proposals wreak havoc on posted worker negotiations

Tough French proposals have derailed talks on controversial EU labour mobility rules and dashed Malta’s hopes of brokering a compromise deal by the of this month.

The Commission wants the labour authority to carry out cross-border inspections to fight abuse of workers and potentially settle disputes between national labour watchdogs.

One source said the new EU body could also analyse skills forecasts and produce recommendations on what fields and areas might have job shortages in the years ahead.

There’s a longer history behind the proposal to set up an EU authority to oversee labour rules.

Last year, French Socialist MEP Guillaume Balas (S&D) suggested a similar agency to monitor whether employers treat truck drivers fairly, in a European Parliament report on social rights.

Balas told EURACTIV.com that a new labour authority should do more than only oversee how EU law is enforced.

“We need two things from the labour authority: the possibility to take decisions when rules aren’t enforced by national authorities or companies and the possibility to sanction national authorities,” Balas said.

“It should have a cross-border staff to follow companies and to really follow all the social problems of workers in one country when there is any link with another EU country,” he added.

That means the EU authority should potentially be able to intervene if Bulgarian workers are mistreated while they are in Germany, Balas said.

Sources close to the discussions on the labour authority said that although the proposal has echoes of French demands for more labour market oversight across the EU, the French government did not ask for the body to be set up.

In July, France rattled the fragile discussions on the posting of workers bill by proposing a list of controversial new amendments. One of the French demands was a new “coordination function attached to the Commission” that would crack down on fraudulent companies and oversee how the posting law is applied in EU countries.

During his first month as president this spring, French President Emmanuel Macron visited Brussels and praised Juncker’s push for the contentious labour legislation.

One diplomatic source close to the posting of workers negotiations said Juncker’s plan for an EU authority doesn’t draw on France’s amendment proposal. France wants to amp up an existing EU-level meeting group that was set up one year ago to discuss undeclared work. Under France’s proposal, the group would start to focus more on monitoring how companies pay workers that they post temporarily to other EU countries.

Juncker’s proposal for an EU labour authority would be a separate body that could monitor posted workers but would also oversee a broader range of labour rules, an EU source said.