Union demands transitional arrangements for free movement of workers from new EU Member States

In October 2003, the Norwegian United Federation of Trade Unions (Fellesforbundet) - the largest trade union in the Norwegian private sector - called for the introduction of transitional arrangements in relation to the free movement of workers from the new Member States due to join the EU in 2004. The union is worried that employers will take advantage of foreign labour, and thus put pressure on pay and employment conditions in Norway.

In autumn 2003, significant debate has emerged on the issue of'social dumping' and sub-standard working conditions in Norway. Examples of underpaid workers and breaches of employment regulations (for example, in relation to working time) have been brought to the public’s attention both by the media and by shop stewards. This has intensified discussions on whether or not Norway should make use of the opportunity under the transitional arrangements agreed by the European Union and the new Member States from central and eastern Europe which will join the EU in 2004, enabling the existing Member States to limit movements of workers from the new Member States for a period of up to seven years after enlargement. This also applies to Norway, which is not an EU Member State, under the terms of theEuropean Economic Area (EEA) agreement. The issue of transitional arrangements to prevent Norwegian employers offering employment with sub-standard conditions to workers from the the new Member States was high on the agenda at the nationalconference of Norway’s largest private sector union, the Norwegian United Federation of Trade Unions (Fellesforbundet), held in October 2003.

Call for transitional arrangements

Fellesforbundet organises employees in parts of the manufacturing industries, in the building and construction sector, and in the primary industries. Several delegates at the October conference expressed concerns about sub-standard working conditions within their branches. Research findings were presented indicating that a substantial number of companies have experienced competition from companies with sub-standard employment practices, for example in the form of breaches of the legal framework or collective agreements, or by providing wages below normal levels. This is often due to both Norwegian and foreign companies bringing in workers from central and eastern Europe and providing them with poorer pay and employment conditions than is normal in Norway. It was further argued that recent changes to the Norwegian legal framework, notably in relation to the hiring out of labour, also contribute to these sub-standard working conditions (NO9801144F).

The conference approved a demand for the continuation of the present arrangements on work permits for people from the new EU Member States, for a transitional period. At present such permits - which are a precondition for taking up work in Norway for workers from outside the EU/EEA area - stipulate that workers' pay and employment conditions must not be below what are regarded as normal standards in the various sectors, eg as stipulated in relevant collective agreements. There are also restrictions placed on the number of such permits issued each year. The adoption of this demand meant that a proposal put forward by Fellesforbundet’s national delegates' meeting (Representantskapet) was rejected. This committee had proposed not limiting the entry of workers from the new Member States, but merely having provisions that enable the authorities to monitor and control their pay and conditions. A majority of the delegates at the October conference thus opted for a proposal which is more restrictive vis-à-vis labour immigration than was considered necessary by their own leadership.

The Fellesforbundet conference also called on the authorities to strengthen monitoring capacities in order to prevent sub-standard practices and restrict opportunities to circumvent regulations. It was also decided to seek the inclusion of provisions on the hiring and outsourcing of labour in all collective agreements, and to explore mechanisms for the extension of collective agreements, in order to provide foreign workers posted to Norway with the same pay and employment conditions as Norwegian employees.

Uncertainty elsewhere

It is not at all certain that Fellesforbundet will receive support for its demand for transitional arrangements. The leadership of the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) - to which Fellesforbundet is affiliated - has on previous occasions expressed reluctance over such arrangements because it does not want discrimination between workers from current and new EU Member States. An internal committee is presently considering the issue, and LO's final stance on the matter is expected in the form of a decision by its executive committee in the near future.

The Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO) has also yet to position itself on the issue. Its director of labour relations, Sigrun Vågeng, wants few restrictions in this area from the outset, but believes that EU enlargement poses significant challenges for Norwegian working life. An internal NHO committee has considered the issue of labour immigration from the EU candidate countries. Among its proposed recommendations are the introduction by legislation of a minimum wage, which would be a completely new development in Norway. The purpose of such a move would, according to NHO, be first and foremost to provide protection for foreign employees working on short-term, temporary assignments in Norway. The working group does not regard transitional arrangements as necessary.

Introducing transitional arrangements for workers from the new EU Member States has so far not been regarded as a desirable option by the centre-right minority coalition government - comprising the Conservative Party (Høyre), the Christian Democratic Party (Kristelig Folkeparti, KRF) and the Liberal Party (Venstre). There have, however, been some concerns about the effects of increased labour immigration on Norwegian social security institutions. A working committee of representatives from the various ministries has stated that enlargement will lead to increased labour immigration to Norway, although it is unlikely to be dramatic. However, the committee does not draw any conclusions with regard to transitional arrangements. Neither the largest opposition party, the Labour Party (Det norske Arbeiderparti, DnA), nor the Socialist Left Party (Sosialistisk Venstreparti, SV), currently see a need to introduce such transitional arrangements. It is, however, reasonable to assume that the decisions made in Sweden and Denmark (DK0310101N) regarding such arrangements will have a bearing on the decisions made by the Norwegian authorities.

Commentary

The question of whether or not to make use of transitional arrangements for the free movement of workers from the new EU Member States is not an easy one for LO and its member unions. There are two main questions: the political feasibility of discriminating between old and new EU Member States; and whether transitional arrangements would be sufficient to deal with the challenges generated by a wider area of free movement for the Norwegian labour market and social security system. While the previous position of the LO leadership on such arrangements was one of reluctance - not least out of a wish to avoid discrimination - the most recent debate has made it less evident what the chosen position will be. No doubt, the recent call for the maintenance of present work permit arrangements made by LO’s largest private sector union will have a significant impact on the outcome.

At the same time is evident that transitional arrangements will to only a limited degree meet the challenges generated by increased labour immigration. Notably, existing arrangement do not guarantee the prevention of sub-standard employment conditions, not least because of poor monitoring and control of the conditions stipulated in work permits. An equally important argument is that the provision of services would not be covered by transitional arrangements. This is interpreted to mean that, from the time of EU enlargement, providers of services (which would include the posting of workers), regardless of the transitional arrangements in place, will be able to bring with them their own employees to work in Norway. These workers will be covered by Norwegian rules regarding working time, the working environment etc. However, since Norway has no legally based minimum wage and no tradition of extending collective agreements (TN0212102S), posted workers of this kind will not be covered by Norwegian wage provisions (NO0306104T). Both trade unions and employers recognise that this may lead to increased competition for Norwegian companies in areas where pay is a key competitive factor.

In this context, the issue of extension of collective agreements (ie to non-signatory employers and employees) has been placed on the agenda. There is a - hitherto unused - law in force, dating from 1993, authorising such extensions in order to ensure that foreign workers' pay and employment conditions are equivalent to those of Norwegian workers. In autumn 2003, LO decided to call for the extension of agreements in several large building and construction projects. This is the first time that such a demand has been put forward, and there is great suspense associated with the administrative handling of this case, as well as the potential effects of such an extension. It is also expected that NHO will oppose an extension of these agreements. NHO's recent call for a statutory minimum wage may be viewed as its preferred alternative to the extension of collective agreements if, in the future, experience show that workers coming to Norway from the new EU Member States receive such low pay that measures are needed. (Kristine Nergaard, FAFO Institute for Applied Social Science)

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