Dealing with Low Wage Labour Migration: Norway

Line Eldring, Fafo Institute for Labour and Social Research,

Friedrich-Ebert-Stiftung & Arena Idé Conference,

Stockholm, 14.11.2014

The Norwegian debate in 2004

What will be the scale of migration from the East?

will migrants rather go to other destinations?

what about «welfare tourism»?

Transitional restrictions ‘just in case’

but free flow of services

Risk of social dumping? Or rather social jumping?

THE ANSWER: Stock of citizens from EU8+2 in Norway, 2004 and 2014

Source: Statistics Norway

+ numerous posted workers, non-settled workers and service providers

Stock of citizens from EU8+2 in the Nordic countries, 2003 and 2014*

Source: Nordic Statistics 2014*Numbers for Iceland are from 2006 and 2013

+ numerous posted workers, non-settled workers and service providers

Measures

Erga omnes

ILO 94

Construction

workersA

Lack of labour

Welfare

benefitsA

Transitional

rules

Financial

crisis

Poles

Roma

LavalA

TU responses

Housing

IntegrationA

PostingA

Mobility of

services

EU

regulations

Undeclared

work

Labour hire

Free flow

TWA

Language

Low wage

competition

Skills

Extension of

CAs

Recruitment

strategies

Living

conditions

Action plans

Social

dumping

Labour

InspectorateA

Minimum

wage

Labour

market crime

Who is threatened?

Does labour migration pose a threat to the “Nordic model”?

Or does the model fail in securing labour migrants a decent working life?

Nordic minimum wage regulations

Coverage of

collective

agreements in

private sector

Statutory

extension of

collective

agreements

Type of

regime

Denmark 74 % No Autonomous

collective

agreement

modelSweden 85 % No

Norway 50 % Yes, some Mixed model

Finland 85 %

Yes, widespread

Regulations

by law (and

strong unions)Iceland 95 % Yes, widespread

Source: Alsos & Eldring (2008/14)

The Norwegian government’s action plans against social dumping

2014: The government is preparing a strategy against

labour market crime

Action plan 1 (2006):Strengthening the sanctions at the disposal of the Labour Inspection Authority

Increased resources for controls and supervision

Ensuring more orderly conditions in connection with the hiring and hiring out of employees

Improving the system for the general application of collective agreements

Combat unscrupulous contractors and in the establishment of sole proprietorships

Include requirements for Norwegian pay and working conditions in municipal tender procedures (ILO 94)

Introduce extended responsibility for clients and ID cards in the building industry

Implement measures in coastal shipping and agriculture

Improve statistics and the basis for analysis

Improve coordination of the efforts of government agencies throughout the country

Strengthen cooperation between the authorities and the social partners

Action plan 2 (2008):Increased resources to the Labour Inspection Authority

Improving the system for the general application of collective agreements

Joint and several liability

ID cards in the cleaning sectorEstablish a regional safety representative scheme in the hotel & restaurant and cleaning sector

Industrial Injury Insurance – improve information on right and duties

Information and advice – give sufficient information to foreign employees and employers

Measures against social dumping in the agricultural sector – more information, supervision and control

Evaluation of the action plans (Fafo)

Regulations and enforcement was strengthened

The measures against social dumping had a positive effect

High probability of more social dumping without themeasures

But:

This is the situation in areas with extendedcollective agreements – where both regulationsand controls are strenghtened – but to a far less degree in sectors without legally extendedagreements

Legal extension of collective agreements in Norway: A novelty

The Act Related to General Application of Wage Agreements came into force 1. January 1994, but was not in use until 2003/4

The purpose of the act is to protect foreign workers and to ensure fair competition for companies (not to ensure a widespread diffusion of collective agreements in the labour market)

Only wages and individual working conditions can be extended

Extended agreements as of today:

Construction

Ship-building

Agriculture

Cleaning

Applications for extensions of collective agreements fish industry, electricians, transport are currently processed.

Legal extension of collective agreements: Experiences & effects

Employers:

Positive in construction and cleaning

Strong opposition in ship-building

Trade unions:

So far no free rider problems

Tool for recruitment of migrant workers

Current extension system needs revision

Migrant workers’ wages:

Positive effects – but still evidence of wage dumping

Average wages lower than among native workers

Source: Eldring et al. (2011)

Low wage: Share of Polish construction workers in Oslo with wages below the extended minimum rate(2010)

Permanently employed in Norwegian

company

0 %

Temporary employed in Norwegian

company

23 %

Employed by temporary work agency6 %

Employed by foreign sub-contractor38 %

Total19 %

Self-employed 34 %

Source: Friberg & Eldring (2011)

Dealing with low wage in Norway: Summary remarks

«Everybody» is against social dumping – but it is still disputed where the borderline between acceptable and unacceptable conditions is

Collectively agreed minimum wage rates accepted (by trade

unions, government, some employers’ association) as benchmark for dumping/non-dumping

Extension of collective agreements; most important tool

But only applied in four sectors so far

Average (native) wages far above minimum rates in most sectors

Some employers’ associations and political parties want to replace the extension mechanism with statutory minimum wage – this is strongly opposed by the trade unions

«We thought we were going to

the civilized Europe...»

«We don’t think we ever will

become proper members of

the Norwegian society.»

Latvian construction workersin Norway, 2013

www.fafo.no/Oestforum