The Nordic labour market models and European mobility: Opportunities and challenges Line Eldring, Fafo EURES Mobility Conference in Reykjavik, 22nd June 2007

Nordic working group follows the EU enlargement Appointed by the Nordic Council of Ministers, Fafo is coordinating the group The group is following the development in the Nordic labour markets after the EU enlargement Last report was published September 2006: pdf pdf Next report will be published autumn 2007

The Nordic countries: More labour migrants are needed : Concerns for waves of migrants, social dumping, social tourism 2007: Concerns for ageing population, lack of manpower and increased competition on European labour Some sectors are now dependent on EU-10 labour ”The Norwegian Minister of Finance states that the government relies on labour migration to be able to fulfill their goals.” ( Foto: HÅKON LARSEN / SCANPIX ) Aftenposten

Poland: Shortage of labour.. Crisis in Polish construction : –Employment reduced by persons –EU enlargement created new opportunities for Polish construction workers; at least have emigrated : Boom in Polish construction –19 % growth in 2006 – more employed –increase in wages –major concerns for lack of labour in construction –educational crisis Mikołaj Chylak, Dzwigi i ludzie (Cranes & People)

Mobility of services No transitonal rules, free flow from 1 May 2004 Free access for posted workers and service providers Mobility of persons Transitional rules Division of the labour market? Different regimes for mobility of labour and services from EU-8 (10): Grey zones illegal work

: Towards free movement Free mobility of services ………………………………………………………………………………D/Au?………….> Free mobility 2007: of persons UK, Irl, Sw, ……………………Bulg/Romania? ………………………………………………> Fl, Icl, Gr, Sp, P, It, Nl… ……………………………………….> DK, N, Fr, B, mfl….....………………….> De/Austria…….> Opening of labour the markets – increased competition on labour

Nordic transitional regimes after 1 May 2006 During the first 2 years after enlargement, concerns shifted from fear of social tourism to concerns about lack of labour Iceland and Finland repealed their transitional arrangements, but introduced special regulations on information and registration Denmark and Norway continued their regimes (some amendments in Denmark) Sweden – opened for free movement from 1 May 2004 No possibility for transitional regulations on the free movement of services

Wage regulation mechanisms in the Nordic countries Collective agreement coverage in private sector Extension of collective agreements Other mechanisms Type of regime Denmark77%No Accession agreements with local negotiations, or entry into employers’ org., making collective agreement mandatory Auto- nomous collective agreement model Sweden90%No Accession agreements Lex Britannia Norway53% Yes, some (construction) Mixed model Finland90% Yes, widespread Tariff wages required by the Posting of Workers Act Regulation by law (and strong unions) Iceland90%Yes Tariff wages required by the Posting of Workers Act

Rise in registered individual migration from EU-8 to the Nordic countries Surprising Nordic differences in individual migration Norway issued most permits Strongest growth in Iceland and Norway; high demand for labour The transitional regimes have had very different effects, and only cover a small part of the whole picture Photo: Geir Bølstad, Dagbladet

Issued work permits to individual labour migrants from EU-8 to Nordic countries 1 May 2004 – 30 April 2006

Issued work permits to individual labour migrants from EU-8 to Nordic countries January-April 2007

The monitoring challenge ”We do not know the number of labour migrants to Norway”. (Norwegian authorities) Poor statistics on volume, especially on mobility of services (in all European countries) ”I think there can be as many as Poles in Norway”. (Szostak, Embassy of Poland) (Aftenposten 3. September 2006) Photo: Carl Martin Nordby, Aftenposten,

Labour supply: Employers’ new strategic choices (1) Hiring individual job-seekers looking for employment in a Nordic firm; (2) Hiring temporary service providers or contractors with posted workers; (3) Hiring employees from temporary work agencies; (4) Hiring independent single-person firms offering temporary services; (5) Direct foreign investment, outsourcing and leasing production in EU-8 Still huge gaps in labour costs compared to Nordic levels.

Norwegian companies’ use of labour from EU-8 Source: Fafo 2006 GROWTH IN 2007!

Employment, hire or subcontracting? Source: Fafo 2006

Regulations and realities Large control problems in all Nordic countries, regardless of level of regulations Numerous stories on social dumping and low wage competition Minimum wage level lower than national market level Labour inspectorates, tax authorities, police and trade unions all experience major capacity problems Unsolved problems related to efficient sanctions

Oslo survey: Gendered labour market 26% of polish migrants in Oslo are women (average 10 years younger than men) Practically all men work in construction, 4 out of 5 women work in cleaning – mostly for private households 70% in construction are skilled workers. 30 of women have higher education Source: Fafo PMO-survey (2007)

Oslo survey: Medium to long term migration  Most people plan to stay for years – not months. 1 in 5 plan not to return – most plan to return, but don’t know when. Real short term: ca 10%  Migration perspective: No substantial difference between labor and service mobility  ”Bogus posting” – Only 15 % of posted workers was employed by same company in Poland Source: Fafo PMO-survey (2007)

Working conditions for Poles in Oslo Generally lower wages and longer working hours than Norwegians  Feeling of discrimination increases by duration of stay Transitional Restrictions push migration into alternative channels  dual labor market for migrants Source: Fafo PMO-survey (2007 )

Challenges ahead Differences in regulatory framework for different kinds of migrant labour have caused substition effects and control problems in all Nordic countries Need for further development and strengthening of national wage regimes for posted workers Unsolved monitoring problem; need for more and better statistics, and better registration routines Need for improvement of: –access to information on wages and employment conditions –control of temporary work agencies –strengthening of control mechanisms and labour inspectorates Nordic companies and authorities are eager to keep EU-10 workers and to recruit even more in the years to come.

More information: Nordic Council of Ministers’ Report: 58.pdf Fafo’s Forum on EU Enlargement: