Increase in posted workers a challenge for trade unions

In recent times, a significant increase in the number of construction workers from eastern European countries seriously challenges the country’s well-established industrial relations system. Most of these workers are posted workers, whose wages and working conditions are not regulated by a Danish collective agreement. These are the findings of a study by the Employment Relations Research Centre on eastern European workers employed in the Danish construction sector.

A large number of migrant workers from eastern European countries in Denmark work under the provisions of the European Parliament and Council Directive 96/71/EC on posted workers. This means that, in most cases, they receive a wage that is well below the level paid to workers who are covered by a Danish collective agreement. This is one of the findings presented in the study on Eastern European workers in the Danish construction sector (in Danish) carried out in the autumn of 2007 by the Employment Relations Research Centre (Forskningscenter for Arbejdsmarkeds- og Organisationsstudier, FAOS) at the University of Copenhagen.

Rise in demand for eastern European workers

The question concerning wages and working conditions of eastern European migrant workers has been a central topic of public debate in Denmark since the accession of these countries to the EU on 1 May 2004 (DK0404103F, DK0512101N, DK0605029I, DK0704059I). In December 2007, the further positive development of the Danish economy combined with a record low level of unemployment – at 78,400 persons or 2.7% of the total labour force (seasonally adjusted) – has resulted in a demand for qualified labour in most sectors of the economy. This situation has led to an increase in the number of companies wishing to hire workers from eastern European countries. A majority of these companies are in the construction sector. FAOS estimates that about 450–500 Danish companies in the building and construction sector currently employ 6,750 eastern European workers. These workers are registered and covered by Danish collective agreements, but they only constitute a third of all eastern European workers currently working legally in Denmark. According to the study, two thirds or about 13,000 persons are employed by companies in eastern Europe and come to Denmark as posted workers.

Collective bargaining and minimum wage structures

Those workers who are covered by a Danish collective agreement are guaranteed a wage higher than the agreed minimum level. They are also entitled to a labour market pension, sick pay, a sixth holiday week and other collectively agreed rights. But those who work as posted workers for a subcontractor in Poland, for instance, do not have to be officially registered in Denmark and can work under the provisions of the posted workers directive. This option raises a few problems in relation to the Danish collective bargaining system. At present, neither a legally defined minimum wage in Denmark nor a collectively agreed national minimum wage has been introduced. Therefore, the collectively agreed minimum wages in place differ between sectors of the economy. For instance, a Polish construction company can only be covered by a collective agreement in the construction sector in two ways: either through membership of the relevant employer organisation or by signing an extension agreement with the local trade union. However, this means that, since there is no statutory national minimum wage, a Polish company which is not a member of a Danish employer organisation can pay its workers according to the relevant Polish pay guidelines until the Danish trade unions demand the negotiation of a local collective agreement.

Wages and working conditions

The FAOS report shows that wages and working conditions among the group of posted workers vary significantly. Up to 23% of this group work more than 50 hours a week. Hourly wages as low as DKK 40 (about €5.36 as at 22 January 2007) were recorded, but the average wage equals the agreed minimum wage in the sector. However, the sectorally agreed minimum wage only functions as a guideline for wage levels and real wage increases are negotiated at company level. The agreed hourly minimum wage in the construction sector currently stands at DKK 105 (€14), while the average hourly wage for workers under a collective agreement amounts to DKK 167 (€22.40) or 60% more.

Tasks of trade unions

It is thus in the trade unions’ interests to gather knowledge on the jobs taken up by posted workers and demand the negotiation of an agreement with the foreign employer; however, this is a resource-consuming task. At the same time, the trade unions would have to monitor that foreign employers comply with the provisions of the agreements and – in cases when they do not – that breaches are sanctioned according to Danish labour law. This proves more difficult for a few reasons:

  • posted workers often work without Danish colleagues;
  • the majority of posted workers do not consider the possibility of joining a representative body;
  • many posted workers leave Denmark with what they consider a good wage before the trade unions have even known about them.

European Court of Justice ruling

In December 2007, the European Court of Justice (ECJ) ruled that the national trade unions cannot take action against a European company if the employer pays the statutory or agreed minimum wage (see The Laval case (117Kb PDF), SE0706029I; EU0706029I). Therefore, Danish trade unions cannot demand – whether through negotiations or industrial action – that an eastern European company respects any collectively agreed wages and working conditions governing the various economic sectors. Interestingly, this represents a significant weakening of the collective bargaining system. The question thus emerges concerning the motivation of a foreign employer to sign such an agreement which may involve higher labour costs and more bureaucracy if they could simply keep paying a minimum wage to their workers.

Carsten Jørgensen, FAOS

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