Workers from new EU Member States undeterred by restrictive policy

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The Dutch government is pursuing a restrictive policy on the free movement of workers from the new EU Member States in central and eastern Europe. Despite this, over 2004-5 their numbers have swelled - especially those from Poland. The restrictive policy is also leading to increasing numbers of self-employed individuals and illegal workers. Recent legislation means that all employees seconded from abroad will henceforth fall within the scope of Dutch collective agreements.

Under transitional arrangements agreed by the EU and 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 Dutch government decided to introduce transitional restrictions on the free movement of workers until 1 May 2006. In May 2005, it carried out an intermediate evaluation of the movement of workers from the new Member States.

Dutch government’s restrictive policy

The Dutch government’s policy is based on the premise of testing applications by workers from the new Member States in central and eastern Europe against the demand for such labour. To this end, the Centre for Work and Income (Centrum voor Werk en Inkomen, CWI) conducted a labour market analysis of the various sectors. This resulted in identifying the following occupations in which a more relaxed policy is being pursued:

  • international drivers in road transport and haulage;
  • seafarers, able-bodied seafarers and navigating officers in inland shipping;
  • operating theatre assistants, radiotherapy laboratory assistants and radio diagnostics laboratory assistants in the healthcare sector; and
  • boning and slaughterhouse workers.

Also, during summer 2004, the market gardening sector was exempt from the so-called 'labour market test' as a consequence of a motion adopted by parliament. However, for 2005, a decision was reached to try, as far as possible, to increase the number of Dutch benefit recipients finding seasonal work in the agricultural sector. Additionally, only the first two of the abovementioned occupations have since been maintained.

Despite the relatively restrictive policy, the number of employment permits for employees from the new central and eastern European Member States increased from 5,487 to 24,728 between 2000 and 2004. More stringent checks carried out by the Labour Inspectorate (Arbeidsinspectie) and increasing the fine imposed in cases of infringement to a maximum of EUR 8,000 (NL0406104T) are among the reasons for the dramatic increase in the number of work permits.

The share of permits for workers from central and eastern European Member States as a percentage of all permits for foreign workers rose in the same period from 20% to 56%. For the most part, this growth can be attributed to developments in agriculture and market gardening and slaughterhouses; in most cases, this relates to semi- or unskilled work. By far the most permits were issued to employees from Poland (82%). An important reason for this is that since the 1980s many people from Poland have come to the Netherlands to do seasonal work in the agricultural and market gardening sectors. However, the actual number of Poles working in the Netherlands is far higher. The Council for Work and Income (RWI) estimated the figure for 2004 at between 34,000 and 53,000. One of the reasons for the large number is that many Polish people have German passports. The figure also includes self-employed individuals (see below). Poles residing illegally in the Netherlands have not been counted in the figure.

Based on the developments described above, the government expects the number of employees from central and eastern European countries to increase rapidly if the Dutch labour market is opened up completely. In view of this, the government will be maintaining the existing restrictions until 1 May 2006.

Freedom of establishment

The restrictive policy has precipitated a search for alternative routes for people from central and eastern European Member States to work in the Netherlands. After all, the above restrictions apply to Dutch companies wishing to engage employees from central and eastern European countries, but not to companies from the latter countries that bring along their own employees to the Netherlands, and not to self-employed individuals from central and eastern European countries.

It is noteworthy that the number of Poles establishing new businesses in the Netherlands increased six-fold to 1,200 in 2004. This mainly relates to Polish people starting their own businesses in the construction sector. This number was only exceeded by the figure for Turkish start-ups (1,700 in 2004), where it should be noted that there is a significant Turkish minority in the Netherlands.

Entrepreneurs from Poland and the Czech Republic have complained to the European Commission that the Netherlands imposes unnecessary obstacles for companies from these countries wishing to bring along their own workforce. A separate work permit must be requested for each and every employee. In practice, this takes prohibitively long and is expensive. Although in November 2004 the Dutch government announced its intention to convert the present system of permits into a system of notification, no proposal to this effect had been submitted to the Lower House of parliament by the end of June 2005.

Illegal workers

The above applies to legal employees and people who are otherwise legally working in the Netherlands. From numerous indications, however, it can be ascertained that there is a sizeable group of people from central and eastern European countries working illegally. A survey conducted by the Labour Inspectorate in the construction sector found that, at the group of 483 companies surveyed in 2004, 20% of their employees were working without having obtained a work permit. Numerous illegal employees were also discovered working for private individuals. The total number of illegal workers amounted to 764, with approximately 70% of them originating from central and eastern Europe.

The construction sector itself applauded the activities of the Labour Inspectorate. Employers announced that in time they would like to make more use of legal employees from central and eastern European countries. In recent months, the government has adopted various measures directed at combating illegal employment, including an increase in capacity at the Labour Inspectorate (NL0405102F).

Collective agreements apply to employees seconded from abroad

In February 2003, the Minister of Social Affairs and Employment, Aart Jan de Geus, submitted a legislative proposal to the Lower House, whereby all seconded employees from abroad working in the Netherlands should be paid in line with the applicable collective agreements. This regulation previously applied only to the construction sector. Despite resistance from the liberal People's Party for Freedom and Democracy (Volkspartij voor Vrijheid en Democratie, VVD), one of the governing parties, this law has since taken effect. It does not apply to self-employed individuals and employees engaged by temporary employment agencies.

Unfair competition in the agricultural and market gardening sector was among the reasons for submitting the legislative proposal. However, it appears from figures published by the Council for Work and Income that many Polish people who work (legally) in the Netherlands are no less expensive than Dutch employees, especially because of the travel and accommodation costs covered by the employer. A relatively high proportion of employers show a preference for Polish employees because - whether or not this is the case - they are thought to have a better work ethic.

This does not, however, mean that in all cases, Polish employees in the agricultural sector accept their employer’s assignments. On 28 June 2005, 25 Polish employees held a wildcat strike when they heard, after working a 12-hour night shift, that they would be required to continue working for a further three hours.

Commentary

The relatively restrictive policy pursued by the Dutch government with respect to the entrance of employees from the new Member States is by no means unchallenged. The largest employers' organisation, the Confederation of Netherlands Industry and Employers (Vereniging van Nederlandse Ondernemingen-Nederlands Christelijk Werkgeversverbond, VNO-NCW), and the organisation for small and medium-sized businesses, MKB Nederland, are generally in favour of non-restrictive policies when it comes to meeting labour shortages in the labour market. Especially in the agricultural sector, employers complain about how difficult it is to find sufficient numbers of employees during the high season. Trade unions focus on the need to both combat illegal employment and increase inspection activities to ensure decent terms of employment and working conditions.

In the area of employment conditions, a new step has been taken in this respect by bringing all employees working in the Netherlands through secondment under the cover of the applicable sector-wide collective agreement (and not only employees in the construction sector). This does not resolve all the problems though. In the first place, monitoring compliance is often difficult in practice and, secondly, the rule does not apply to (pseudo) self-employed individuals and - by definition - illegal employees. (Robbert van het Kaar, HSI)

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