Increase in foreign temporary agency workers due to EU enlargement

Since 1 May 2004, temporary employment agencies from the new EU Member States have been free to offer their services in Finland. The number of Estonian agency workers in particular is likely to increase as a result. Finnish social partner organisations have reacted to this prospect by introducing new measures for controlling the use of foreign labour.

Under transitional arrangements agreed by the EU and the new Member States in central and eastern Europe which joined in 1 May 2004, the existing Member States may limit movements of workers from the new Member States for a period of up to seven years after enlargement. The Finnish parliament has thus set a two-year transition period for the free movement of labour from the new Member States, except Cyprus and Malta. However, workers entering the labour market temporarily through employment agencies have been free to enter the country’s labour market since 1 May 2004. This is because restrictions on the movement of services between Finland and the new Member States have been lifted.

It is expected that, of the agency workers entering Finland, by far the greatest number will come from Estonia, as has been the case thus far. At present there are about 13,000 Estonian nationals living in Finland and only about 3,000 people from the other new EU Member States. In a recent survey by PRAXIS and the University of Tartu, 42% of Estonians aged 15 to 64 expressed their will to work abroad after the country’s accession to EU (EE0404101F). Of those, a third chose Finland as their preferred destination. It is difficult to estimate how many of them will actually look for and find employment in other countries, but 11% of those wanting to work abroad indicated that they had already taken some steps towards that end.

Up to now, 5% of Estonians aged 15 to 74 have worked in Finland at some stage, according to a survey by TNS Gallup. The workers have typically been young people doing short-term work that is relatively low-skilled. Temporary employment agencies often specialise in supplying this kind of labour services and are therefore in an advantageous position now that they are free to expand their businesses to Finland. Various employment agencies have been established in Estonia in recent years, among which are half a dozen Finnish companies. Many of them plan to provide labour services to Finland or are already doing so.

The prospective influx of foreign temporary agency workers has caused concern among Finnish trade unions. The Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK) and some of its affiliates have expressed fears that employment agencies may, unlawfully, pay their workers wages that are below those agreed in Finnish collective agreements. They also worry that the enforcement of labour standards will be inadequate. Service Union United (Palvelualojen ammattiliitto, PAM) has stated that advertisements by a temporary employment agency offering underpaid labour have already been circulating among some service sector undertakings. According to the TNS Gallup survey, 27% of Estonians would agree to take up illicit work if they worked in Finland.

Several steps have been taken in Finland in order to increase control over foreign labour. Within the institutions of the state, among other measures a separate unit has been established at the National Bureau of Investigation (Keskusrikospoliisi, KRP) to this end. Among social partner organisations, SAK has demanded that foreign-based temporary employment agencies should be required to register with the Finnish tax administration and disclose information about wages. SAK has also negotiated with two employers’ organisations, the Employers' Confederation of Service Industries (Palvelutyönantajat, PT) and one of its affiliates, the Private Employment Agencies Association (Henkilöstöpalveluyritysten Liitto, HPL), on how to curb illegal employment. The three of them have agreed that contracts between HPL-affiliated temporary employment agencies and their customers will include collectively agreed terms and conditions of employment. Consequently, in the event of 'social dumping', an employment agency can be held responsible for reach of contract and its payments can be frozen. The Confederation of Finnish Industry and Employers (Teollisuuden ja Työnantajain Keskusliitto, TT) does not see any need for increased regulation of foreign labour. Its position is that there is no real threat of social dumping and that the trade unions’ statements about an influx of foreign workers are alarmist and could lead to increased discrimination towards foreigners in Finland.