Social partners agree to lift restrictions on workers from new EU Member States

In February 2006, the Finnish social partners, together with the Ministry of Labour, agreed to end current restrictions on the free movement of workers from the 'new' EU Member States as of 1 May 2006. They also decided that migrant workers will be subject to compulsory registration and that their pay and working conditions will be closely monitored. Trade unions had demanded that the lifting of the restrictions should be conditional on employers assuming responsibility for the pay and working conditions provided by their foreign subcontractors, but the situation in this area remains unclear.

Finland was one of the 12 'old' EU Member States that decided in 2004 to impose transitional restrictions on the free movement of labour from the eight new EU Member States in central and eastern Europe that joined in May 2004. These restrictions will end on 1 May 2006 unless renewed by the governments in question. In Finland, the fate of the transitional arrangements has been under debate in a tripartite committee made up of representatives of employers’ and workers’ central organisations and of civil servants from the Ministry of Labour. On 10 February 2006, the committee issued its unanimous recommendations, which the government and parliament are expected to adhere to when deciding on the matter later in spring 2006.

The agreed measures

The tripartite committee proposed that the Finnish labour market should be opened to all EU citizens on 1 May 2006 and that new restrictions will not be needed in conjunction with EU enlargement to Bulgaria and Romanian, due in January 2007. While in favour of lifting the restrictions, the committee argued that new forms of regulation are needed to deal with the expected inflow of workers. To this end, it proposed that all foreign employees should have to register with the authorities so that monitoring of labour movements is possible. The specific form of the registration process is to be decided by the end of March 2006 by a separate committee. Obligatory registration will also, it is hoped, make it easier for the authorities to monitor foreign workers’ pay and working conditions. According to the committee, the regulation of labour standards is particularly challenging in the case of subcontracted labour and temporary agency workers, and the resources of the authorities that regulate these should be strengthened. Furthermore, a press release issued by the committee states that conditions are to be created such that, first, it will be easier for Finnish companies to keep track of labour movements and, second, these companies can ensure compliance with labour standards at their foreign subcontractors and at the foreign work agencies from which they hire workers. The necessary technical and institutional arrangements for achieving this are to be developed by a separate tripartite committee, which has until 10 March 2006 to issue its proposals.

Fulfilment of union objectives unclear

Both the employers’ central organisation, the Confederation of Finnish Industries (Elinkeinoelämän keskusliitto, EK), and the three union confederations, the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK), the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK) and the Confederation of Unions for Academic Professionals in Finland (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA), expressed their satisfaction with the agreed measures. The former stressed the economic importance for companies of being able easily to hire workers from new Member States, while the latter greeted the decision to develop new regulatory instruments to control migration.

SAK in particular had been a staunch advocate of the labour controls in 2004 and in the course of 2005 it repeatedly argued that they could be lifted only on two preconditions. These were also backed by STTK and AKAVA. SAK demanded, first, that employers must be made responsible for any breaches of workers’ pay and working conditions committed by their foreign subcontractors and, second, that unions have to be granted the right to take legal action against employers when they suspect that the rights of individual workers have been violated, even if the latter do not give their consent for doing so. Neither of these demands was met prior to the February 2006 agreement to lift the free movement restrictions. Nor were such measures announced in the committee's press release about the agreement. SAK insists, nonetheless, that its demand to make employers responsible for the actions of their subcontractors was agreed upon in the committee and that clear guidelines were given by it to the separate tripartite committee on the issue whose decisions are due on 10 March. EK strongly disagrees with SAK, however. Its position is that the work of the other committee was simply acknowledged and that nothing was agreed as to what its decisions should be.

Commentary

The decision by the social partners to argue for ending the restrictions on free movement of labour from the new Member States was a widely expected one. Unlike in 2004 when the curbs were imposed, as of February 2006 the number of jobs is on the rise and foreign workers are seen as a welcome and needed addition to the economy. The restrictions, furthermore, did not stop workers from the new EU Member States from coming to Finland, but resulted in phenomena that trade unions in particular have come to see as undesirable; the freedom of movement of services, guaranteed by EU legislation, means that posted and temporary agency workers can freely move in and out of the country and the monitoring of their pay and working conditions has proved to be very difficult. Some migrant workers have been driven into the shadow economy and major violations of Finnish labour law and collective agreements have been revealed in some instances. Unions hope that lifting the curbs will result in Finnish employers hiring foreign employees directly instead of from work agencies and subcontractors and that in this way breaches of labour standards will become less frequent.

The increasingly favourable stance of unions towards the free movement of workers meant that SAK was no longer willing or able to use the issue as leverage to further its other goals. In fact, it seems likely that neither of SAK’s preconditions for lifting the labour controls will materialise in the near future. EK is unlikely to accept any increases in the responsibilities of employers vis-à-vis their subcontractors now that it has been decided that the matter is to be decided separately, without connection to a wider package of measures. Moreover, a trade union right to take legal action independently was not even referred to as part of the agreement to end the restrictions. Both parties may be happy with the end result but SAK’s credibility was arguably undermined in the process. (Aleksi Kuusisto, Labour Institute for Economic Research)