Social dumping is a practice whereby employers use cheaper labour than is usually available at their site of production or sale, for example by moving production to a low-wage country or area, or employing poorly-paid migrant workers. Employers thus save money and potentially increase their profits. Systemic criticism suggests that as a result, governments are tempted to enter a so-called social policy regime competition by reducing their labour and social standards to ease labour costs on enterprises and to retain business activity within their jurisdiction. There is a controversy around whether social dumping takes advantage of an EU directive on internal markets, the Bolkestein directive.

Gains and losses

Entities losing from social dumping:

• Employees in exporting countries
• Child labor in exporting countries
• Industry and environment in exporting country
• Government in exporting countries
• Employees in importing countries
• Shareholders of the company in importing countries

Entities gaining from social dumping:

• Companies in importing country
• Shareholders in importing country
• Customers in importing country
• Industry in importing market
• Employment in exporting country
• Government and investment in exporting country

Policy issues

A joint NGO statement on the EU Seasonal Migrant Workers' Directive also warns against social dumping. The document argues that a vague definition of seasonal work might fail to cover all types of seasonal employment taking place when the Directive exerts its otherwise-welcome protective measures on the labour market.^[1][2]

Marianne Thyssen, European Commissioner for Employment, Social Affairs, Skills and Labour Mobility, has noted that "there is no definition of the concept of "social dumping" in EC law".^[3]