The Nordic Labour Market two years after the EU enlargement

Mobility, effects and challenges

image of The Nordic Labour Market two years after the EU enlargement

Two years after the enlargement of the EU a certain pattern has emerged in the labour migration streams from the new EU member states to the Nordic countries. Individual labour migration is growing, but varies strongly among the Nordic countries. Labour mobility related to services has increased strongly, and seems to exceed regular labour migration in key sectors. In a context of strong growth and emerging labour shortages, the Nordic economies and labour markets have clearly benefited from the growing influx of labour but also faced new challenges in terms of regulation, enforcement and control of working conditions for posted workers. At the European level the implementation of the Posting of Workers Directive 96/71/EC is under evaluation, the Laval/Vaxholm case is pending in the European Court of Justice, and the proposed Services Directive accentuates questions concerning the control of conditions for posted workers. In parallel, several Nordic and other European countries have repealed the transitional arrangements for individual labour migration, and many other countries have signalled a gradual lifting of their arrangements until 2009. Also these changes will confront parts of Nordic working life with demanding tasks in securing equal treatment for foreign workers. The purpose of this report is to give an overview of the development in the Nordic labour markets during the first two years after EU enlargement, and sketch some of the main challenges the Nordic labour market models are facing in the open European labour market. The report is prepared on the basis of the cooperation within a Contact Group under the Labour Market Committee of the Nordic Council of Ministers, and is written by Jon Erik Dølvik and Line Eldring (Fafo), who have coordinated the work of the Contact Group.




In retrospect, it appears evident that the influx of labour from the new EU member states has exceeded expectations, but also that its distribution is more skewed than what was expected. One of the best known extrapolations made by Boeri and Brucker (2003) estimated that the net immigration from the EU-8 to the Nordic countries would increase from approximately 50,000 to 230,000 over a period of 30 years, i.e. by 6,000 per year on average, though at a somewhat higher rate during the first years. Around 40 per cent were estimated to be economically active. After two years, we can observe that in the Nordic countries as a whole approximately 75,000 first-time residence permits have been issued to citizens from the EU-8 connected to work, and close to 30,000 renewals. Even though a considerable part of these permits apply to temporary work – so-called revolving door migration – the current development of valid/active permits indicates that the number of individual labour migrants in Norway alone will vary between 13,000 and 40,000 during the course of 2006, corresponding to 0.6 – 1.8 per cent of employment. Whereas only 11,976 valid permits were registered by end of June 2004, their number had grown to 28,596 on the same date in 2006, i.e. more than a doubling over two years. In 2005, the number of residence permits allowing for work accounted for approximately 1.6 per cent of the workforce, and in 2006 this figure is likely to exceed two per cent, whereof renewals account for around half in both years. In Norway, we can also observe an increase in the number of labour migrants who settle and bring their families, even though the numbers remain moderate so far: net immigration from the EU-8 constituted 4,213 persons in 2005, or equal to 22 per cent of total net immigration. In Iceland, the relative growth of labour immigration has been even stronger, and the number of permits granted in the period 1 January to 30 April 2006 corresponded to approximately 2.4 per cent of the workforce. In the Nordic countries as a whole, the number of granted permits in 2005 accounted for a supplement of 0.4 per cent to the workforce. In 2006, it appears as if the net volume of labour migrants from the EU-8 in the Nordic countries will fluctuate between 20,000 and 50,000, or between 0.2 and 0.4 per cent of the total Nordic workforce.


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