By Gabriela Baczynska
BRUSSELS (Reuters) - The 28 European Union states failed to agree in a first round of talks on Monday on reforming the bloc's labor rules that poorer countries value but French President Emmanuel Macron dismisses as undercutting his workers.
The case pits wealthier countries against poorer peers keen to preserve current rules that allow their citizens to work elsewhere in the bloc for salaries higher than they would get at home but still lower than the local labor force.
Macron has put reforming the so-called posting of workers directive high on the EU's agenda and is backed by Germany, Belgium, Luxembourg and the Netherlands, among others.
"It's about fairness on the labor market," the EU's top jobs official, Marianne Thyssen, said on arriving for labor ministers' talks.
"I am all in favor of freedom of movement but it must be organized in a fair way.... The internal market is based on rules, it's not a jungle."
There was no agreement after the first session during which nearly all EU states spoke on the matter. Officials and diplomats said, however, the bloc's current chair Estonia will offer more compromise proposals later in the day to try get a deal.
One key point of contention is keeping international road transport covered under any new posting rules, as sought by Berlin and Paris among others.
Spain, Ireland, Portugal and several states on the EU's eastern flank want that exempted and subject to a separate law. In the latter group, Poland is the biggest exporter of cheap labor force in the EU.
While one camp says easy access for cheap workers to their markets is weighing on salaries and undermining the labor market, the other says tightening rules amounts to protectionism and weakens competition.
Poland, the Czech Republic, Romania and other easterners say they should be allowed to compete with lower wages to catch up with the wealthier west after decades of communist malaise.
Differences must yet be bridged on the length of the transition time between agreement on reform and its taking effect. Options on the table range from two to five years.
Another nut the ministers will try to crack during a further debate in the afternoon covers the maximum period for sending workers abroad under posting rules before they fall subject to the host country's labor laws.
Ministers rejected Estonia's proposal to set it at 20 months, an effort to find common ground between countries seeking at least 24 months and others opting for a 12-month cap.
Other themes still remaining open include exact remuneration rules for the posting of workers, which is profitable for companies because of existing the wage gap in the EU.
While the estimated 2 million posted workers only make up a tiny fraction of the bloc's workforce, the issue has become politically sensitive, driving a wedge between the richer states at the center and their poorer peers on the peripheries.
For Macron, the reform is seen as crucial to convince his voters of a need for difficult economic reforms at home by showing he stands up for their interests in the EU.
There will not be a formal vote on Monday but, should there not be too many objections to another proposal expected from Estonia, the ministers may give the green light to opening negotiations on the reform with the European Parliament.
(Editing by Ed Osmond)