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 In parallel, several Nordic and other European countries have repealed the transitional arrangements for individual labour migration, and many other countries have signalled a gradual lifting of their arrangements until 2009.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.



Increasing service mobility and posting of workers

The free movement of services is enshrined in EU treaties (article 49) as well as in the EEA agreement (article 36), and is not comprised by the transitional arrangements related to EU enlargement. In spite of deficient statistics, all Nordic countries report a marked growth in service mobility from the EU-8, and that this type of mobility in some sectors – such as construction and manufacturing – in all likelihood exceeds ordinary labour migration. Norwegian tax authorities have reported a tripling of the number of posted workers every year since 2004, and a study undertaken by Fafo shows that in the construction and manufacturing industries the number of posted workers exceeds the number of directly employed workers from the EU-8 (Dølvik et al. 2006). The growth in service mobility has had positive effects for the economy and has served to remove bottlenecks, but has also created problems of social dumping, low-wage competition, circumvention of legislation and collective agreements and tax evasion in parts of the labour market. A number of subcontractors and individual enterprises engage in activities that in reality appear to comprise an illegal supply of ordinary labour (‘fictitious posting’). While the increasing mobility of services gives rise to new challenges in terms of regulation, registration, control, enforcement and sanctions, it also contributes to changes in the enterprises’ labour strategies that may influence the functioning of parts of the labour market.


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