Free movement of labour and services in the EEA

Free movement of labour and services in the EEA Line Eldring, Fafo Institute for Labour and Social Research EEA EFTA Forum of local and regional authorities, Staur Gård, 11 June 2015

The EU enlargements in 2004 and 2007 10 East- and Central European countries joined the EU: Estonia, Latvia, Lithuania, Poland, Slovakia, Slovenia, Czech Republic, Hungary, Bulgaria, Romania Far lower wage and cost levels and living standards than in the West

The Nordic debates 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 (DK, FI, I, NO) but free flow of services Risk of social dumping? Or rather social jumping?

THE ANSWER: Stock of citizens from EU8+2 in the Nordic countries,* 2003 and 2014 + numerous posted workers, non-settled workers and service providers *Excluding Iceland Source: Nordic Statistics 2014

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

Employees from EU8+2 in Norway, by residential status and sector (4th quarter 2013) Construction 24 230 10 245 Labour hire, cleaning etc 17 306 9 666 Manufacturing 15 733 5 816 Retail etc Health and social services Transport 7 733 5 603 7 943 1 236 1 136 212 Agriculture Property and technical services 3 187 4 024 2 702 995 Restaurants Hotels Teaching Other 3 872 489 3 152 515 2 193 75 6 011 1 166 0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 Settled Non-settled Source: Statistics Norway 2014

Consequences? Huge supply of labour new recruitment base for employers, contribution to growth Internationalisation of the labour markets and the societies But: the development has challenged the labour market regimes in the receiving countries (and welfare states..?) Consequences for local and regional authorities? - labour supply, procurement, integration

Welfare benefitsa EU regulations Recruitment strategies LavalA Language Labour InspectorateA Public procurement Financial crisis Low wage competition Rüffert Social dumpinga IntegrationA PostingA Minimum wage Housing Skills Extension of CAs Construction workersa Posting Transitional rules Free flow TU responses Mobility of services Undeclared work Integration Measures Roma Living conditions Lack of labour Labour hire Cleaning

The big questions Does labour migration pose a threat to the receiving countries models and regimes? Or do the receiving countries fail in securing labour migrants a decent working life?

Social dumping? There is no general definition of social dumping. Core elements: Work environment Health and safety Working time Housing standards Wages

Social dumping: Risk factors Low skilled service work Low education and short duration of stay Employment in foreign firms (posting) Atypical employment Lack of union representation and work in private household Source: Friberg, Arnholtz, Eldring, Hansen & Thorarins (2013)

Trade union density in European countries Iceland Sweden Finland Denmark Norway Belgium Italia Romania Austria UK Portugal Netherlands Germany Switzerland Spain Poland France 8 17 16 14 19 19 18 28 27 33 35 50 52 69 69 69 85 0 10 20 30 40 50 60 70 80 90 100 Main source: ICTWSS Data Base (2013)

Trade union density and collective bargaining coverage Iceland Austria Belgium Finland Portugal France Sweden Italia Netherlands Denmark Spain Norway Germany Switzerland UK Poland 31 29 49 61 67 99 99 96 90 90 90 88 85 84 83 73 0 10 20 30 40 50 60 70 80 90 100 Trade union density Collective agreement coverage Main source: ICTWSS Data Base (2013)

Source: Eldring & Alsos (2014) Belgium Bulgaria Czech Rep. Estonia France Germany Greece Hungary Ireland Latvia Lithuania Luxembourg Netherlands Poland Portugal Romania Slovakia Slovenia Spain Cyprus Malta UK Austria Finland Iceland Norway Switzerland Denmark Sweden Italy Statutory minimum wage Legal extension of collective agreements YES NO

Where would you go? Wages for Polish migrants in three Nordic capitals absolute wages, relative wages and purchasing power Source: Friberg, Arnholtz, Eldring, Hansen & Thorarins (2013)

Regular or atypical employment? - Type of employment among Polish migrants in three Nordic capital cities 18

Cases of exploitative and illegal treatment of Polish migrant workers in three Nordic capitals Source: Friberg, Arnholtz, Eldring, Hansen & Thorarins (2013)

Polonia in Copenhagen, Oslo and Reykjavik All three capitals/countries have huge challenges in ensuring equal treatment of labour migrants: High degree of atypical employment (Oslo and Copenhagen) Lack of language skills and language training (HES risks) Significant lower wages than native workers (largest gap in Reykjavik and smallest in Copenhagen) Source: Friberg, Arnholtz, Eldring, Hansen & Thorarins (2013)

EU10 migrants in Norway: A flexible workforce? Increasing tendency to permanent settlement Weak integration in the working life, and few signs of economic assimilation over time No indications of permanent exclusion or welfare benefits dependency (so far) Vulnerability - very high levels of periodical unemployment «Subisidised flexibilization» in parts of the labor market Source: Friberg (2015))

European East-West labour mobility Key political challenges «Mismatch» between markets and institutions: Transnational labour markets national labour and welfare models Crisis in Europe: How to ensure that migration promotes growth and welfare rather than a race to the bottom i labour markets and welfare policy? Labour market regulations: How to use the scope for action within the EEA-agreement and EU-directives to create labour market policies better adjusted to European free movement? The guest-workers all over again? «We imported labour, but instead it was human beings who arrived» Long term integration: How to create policies for social inclusion that fits temporary mobility as well as permanent settlement?

Outlook European labour mobility will continue Still high potential for low wage competition and social dumping Increased competition for native workers? A new bottom segment in the labour markets? Acceptance of unequal wage and working conditions? Lack of integration and inclusion Atypical employment: temporary contracts, labour hire, posting Supplementary forms of minimum wage regulation? Extension of collective agreements? Statutory minimum wage? Integration and welfare The role of local and regional authorities from passive to more active? Poor working and wage conditions may increase the migrants need for assistance and welfare services Segmentation and increased inequality can undermine the sustainability and legitimacy of current regimes

«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

References: Friberg, J. H. & L. Eldring (eds.) (2013), Labour migrants from Central and Eastern Europe in the Nordic countries. Patterns of migration, working conditions and recruitment practices. TemaNord 2013:570. Copenhagen: Nordic Council of Ministers Eldring L. & K. Alsos (2014), European Minimum Wage: A Nordic Outlook an update. Fafo-paper 2014:21 Eldring, L. & K. Alsos (2012), European Minimum Wage: A Nordic Outlook. Fafo-report 2012:16.