BRUSSELS (Reuters) - French President Emmanuel Macron and four eastern European Union leaders sought to smooth relations on Friday after publicly trading barbs over jobs and democratic values.

German Chancellor Angela Merkel and French President Emmanuel Macron addresses a joint news conference at the EU summit in Brussels, Belgium, June 23, 2017. REUTERS/Gonzalo Fuentes

Macron, in power for little more than a month, has vowed to protect French workers from what he sees as “social dumping”, in which companies employ cheaper labor, and unfair competition from the poorer eastern European states.

Poland, Hungary, Slovakia and the Czech Republic say they should be allowed to compete on lower prices - just as more developed western EU nations compete on quality products and know-how - to catch up after decades of communist stagnation.

Along with looming negotiations on the EU’s next multi-year joint budget that runs from 2021, this dispute is shaping up as one of the most contentious issues facing the bloc, exacerbating an east-west rift as it seeks unity to tackle Brexit.

But meeting on the sidelines of an EU summit, Macron and the leaders of the east European states - known together as the Visegrad four - agreed to set up an expert-level group to try to narrow differences over rules for so-called “posted workers”.

“At the Visegrad meeting this morning we established which issues we disagree on and where we will continue to talk to better understand each other’s constraints,” Macron told a joint news conference with German Chancellor Angela Merkel on Friday.

“There are issues where I’d like to advance together, the posted workers directive being one... I believe we need a profound reform of the balance. I will do it with respect for our partners.”

EU states are divided on rules under which, say, a Bulgarian truck driver or a Lithuanian bricklayer can work in France for a limited time for the eastern European wage, usually below the minimum level guaranteed in the west.

“I pointed out to Emmanuel Macron today how low wages are in the Czech Republic compared to France, and that French firms can also do more to raise (their) wages,” Czech Prime Minister Bohuslav Sobotka said.

“We will start with the directive on posted workers.”

A diplomatic source said the five leaders had agreed to meet again in September.

EAST-WEST

The Visegrad four have also clashed with France on the treatment of refugees and migrants from outside the EU, and were infuriated by Macron’s open criticism of the track record of Warsaw and Budapest on democracy and rule of law.

But Macron received strong support from Merkel, Europe’s most powerful leader, who said on Friday she believed they were obliged to speak out when common EU values were being damaged.

Macron has previously said he would seek sanctions on Poland, whose nationalist-minded government has angered the EU with moves to impose stricter state control over judges and public media and with its refusal to take in any refugees.

Earlier this week Macron told the Visegrad four not to treat the EU as a “supermarket” and said they would face consequences if they failed to respect EU rules and values.

He drew scorn from Hungary’s Prime Minister Viktor Orban, who put Macron’s comments down to his relative youth. The French leader is 39.

On Friday Orban struck a more conciliatory note.

“As far as I can see, we identified the issues where pragmatic cooperation and agreement can be achieved on the basis of mutual respect,” he told reporters.