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Line Eldring (Fafo) – Dealing with low wage labour migration in Norway

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Arena Idé
Arena Idé

This document discusses Norway's approach to dealing with low-wage labor migration from Eastern Europe. It outlines Norway's debates around the potential scale of migration after EU expansion in 2004 and measures taken in response. These included transitional restrictions and two government action plans to strengthen sanctions against social dumping. Evaluations found the plans positively impacted wages but dumping still occurred without collective agreement extensions in some sectors. Legal extensions of such agreements to protect foreign workers and ensure fair competition have been applied in construction, shipping, agriculture, and cleaning with varying employer responses and some migrant wages still below standards. Overall, Norway uses collectively agreed minimum wages as a benchmark but extensions only cover some sectors.

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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* *Numbers for Iceland are from 2006 and 2013 Source: Nordic Statistics 2014 + numerous posted workers, non-settled workers and service providers
Erga omnes Measures ILO 94 Construction workersA Lack of labour Welfare benefitsA Transitional rules Financial crisis Poles LavalA Roma 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 model Sweden 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 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 sector Establish 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 2014: The government is preparing a strategy against labour market crime
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 the measures But:  This is the situation in areas with extended collective agreements – where both regulations and controls are strenghtened – but to a far less degree in sectors without legally extended agreements
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 agency 6 % Employed by foreign sub-contractor 38 % Total 19 % 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 workers in Norway, 2013
www.fafo.no/Oestforum

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Line Eldring (Fafo) – Dealing with low wage labour migration in Norway

  • 1. 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
  • 2. 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?
  • 3. 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
  • 4. Stock of citizens from EU8+2 in the Nordic countries, 2003 and 2014* *Numbers for Iceland are from 2006 and 2013 Source: Nordic Statistics 2014 + numerous posted workers, non-settled workers and service providers
  • 5. Erga omnes Measures ILO 94 Construction workersA Lack of labour Welfare benefitsA Transitional rules Financial crisis Poles LavalA Roma 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
  • 6. 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?
  • 7. 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 model Sweden 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)
  • 8. The Norwegian government’s action plans against social dumping 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 sector Establish 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 2014: The government is preparing a strategy against labour market crime
  • 9. 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 the measures But:  This is the situation in areas with extended collective agreements – where both regulations and controls are strenghtened – but to a far less degree in sectors without legally extended agreements
  • 10. 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.
  • 11. 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)
  • 12. 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 agency 6 % Employed by foreign sub-contractor 38 % Total 19 % Self-employed 34 % Source: Friberg & Eldring (2011)
  • 13. 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
  • 14. «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 workers in Norway, 2013