Transitional arrangements introduced for free movement of workers from new EU Member States

On 1 May 2004 new rules came into force in Norway imposing, for a transitional period, restrictions on the free movement of workers from the new EU Member States in central and eastern Europe. The government has also proposed a number of additional measures aimed at preventing 'social dumping'.

On 1 May 2004, new rules came into force, in accordance with the European Economic Area (EEA) enlargement agreement and the EU Act of Accession, ensuring a partial continuation of national restrictions on the entry of foreign workers from the new EU Member States in central and eastern Europe. The implication of this is that workers from these countries will need residence permits to be allowed to take up employment in Norway. The new rules also provide for the possibility of introducing protective measures in case of significant disturbances to the labour market caused by labour migration from the new Member States. The issue of such transitional arrangements emerged quite late on the agenda of the Norwegian social partners, in late 2003 (NO0310102F), but once on the agenda it became subject to considerable discussion and deliberation. The government for a long time took a wait-and-see approach, pending the outcome of the debate in the EU Member States, in particular in the other Nordic countries. Thus when it seemed apparent that both Sweden and Denmark (DK0404103F) would opt for a transitional period, it was regarded as appropriate by the social partner organisations and the national authorities to allow for a transitional period also in Norway. On 28 May 2004, the government presented a proposal for supplementary measures to prevent 'social dumping' following EU enlargement.

Transitional arrangements

The Norwegian parliament (Stortinget) approved on 27 April 2004 amendments to the Act relating to the entry of foreign nationals into the Kingdom and their presence in the realm (the Immigration Act).

Residence permits a condition for work

According to the transitional rules, workers from the new EU Member States - apart from from Malta and Cyprus - must obtain residence permits before starting work, in order to take up employment in Norway. This requirement applies only to individual workers, and not to service providers (using posted workers), self-employed people and students. The granting of such a permit is conditional upon there being an offer of full-time employment, which is subject to the same wage and working conditions as apply to the same kind of work in Norway. Proof of employment and satisfactory pay and working conditions must be confirmed in writing by the employer providing the offer. The requirement of full-time employment is intended to enable workers to take care of themselves and their families, and thus prevent excessive pressures on the Norwegian social security system. The rules are not applicable to workers who have been resident in Norway as employees for 12 months or more. After 12 months of employment, workers from the new Member States will enjoy the same rights and entitlements as other EEA/EU citizens. Workers from the new Member States may apply to stay in Norway for up to six months while applying for work, although at their own expense.

The police and the Norwegian Directorate of Immigration ( Utlendingsdirektoratet , UDI) are responsible for the enforcement of the new rules. Despite the maintenance of some restrictions on the access of workers to the Norwegian labour market, EU enlargement has nevertheless entailed a significant liberalisation of rules vis-à-vis workers from the new Member States. There are, for example, no longer restrictions placed on the type of work or level of qualifications required to be allowed to enter the labour market.

Protective measures

The new rules also open up the possibility of taking protective regulatory actions to remedy possible negative effects of labour immigration from the new Member States on the Norwegian labour market situation. In accordance with the EU/EEA rules, such protective action may be taken only in case of disturbance, or expectations of such disturbance, in the labour market, which may have detrimental effects on the living conditions or employment situation within a particular region or occupation. However, these measures may not be stricter than allowed for by the legal framework prior to 1 May 2004. The decision to take counteracting measures is vested in the Ministry of Labour and Government Administration ( Arbeids- og administrasjonsdepartementet , AAD), but is to be taken in close cooperation with the other relevant ministries, and following consultations with the social partners.

Proposed measures to combat 'social dumping'

To supplement the transitional arrangements, several proposals for measures to combat 'social dumping' were put before parliament on 28 May 2004. If approved, they will entail changes to a number of items of legislation relevant to working life. The Labour Inspectorate (Arbeidstilsynet) is to be given the responsibility for supervising compliance with the new requirements for residence and employment during the transitional period. Moreover, the Inspectorate will also have the authority to monitor compliance with the pay and working condition requirements established through a recent decision to extend to non-signatories collective agreements at a number of larger building sites (NO0310102F). The Ministry of Local Government and Regional Development (Kommunal- og regionaldepartementet, KRD) is to be given the authority to introduce regulations requiring the use of on-site ID cards and employee lists in sectors in which this is deemed necessary to protect the health, safety and environment situation of workers. The duty on the employer (or the party commissioning the work) to report on the employment of foreign labour and contractors to the central tax authority will also be enhanced.

Social partner views

Against the backdrop of possible transitional arrangements being introduced in the other Nordic countries, there seemed for a long time to be a consensus among the main social partners, although with a few exceptions, about the appropriateness of the transitional measures also being introduced (or maintained) in Norway. The fact that Sweden decided in late April not to introduce a transitional period (SE0405103F) came as a surprise to most people, and by then the Norwegian government had already taken its decision.

The Federation of Norwegian Commercial and Service Enterprises (Handels- og Servicenæringens Hovedorganisasjon, HSH) opposed any protective measures being taken, regardless of the situation in the other Nordic countries. HSH maintains that there is no need to place restrictions on the entry of workers from the new Member States, and is particularly opposed to the strict requirements introduced in relation to the documentation of pay and working conditions. HSH argues that the opportunity to take counteracting measures to remedy negative labour market effects, as provided for by the EU Act of Accession, would suffice. The Confederation of Norwegian Business and Industry (Næringslivet Hovedorganisasjon, NHO), the largest employers' confederation in Norway, reluctantly accepted the need for a transitional period, but has argued that it must not entail excessive state intervention in matters that are traditionally dealt with by the social partners themselves, such as pay. HSH and NHO have yet to comment on the latest proposals from the government.

Both the trade unions and the employer side emphasise the fact that since the new rules are not applicable to service providers, they will not necessarily serve to prevent social dumping. Thus the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) and the Confederation of Vocational Unions (Yrkesorganisasjonenes Sentralforbund, YS) have called for further measures in this area, and propose, among other points, the implementation of International Labour Organisation Convention No. 94 on labour clauses (public contracts) in Norwegian labour law, and, through the legal framework, to strengthen the monitoring capabilities of health and safety officers/shop stewards.

Commentary

There were initial concerns, particularly within the trade union movement, about social dumping in relation to EU enlargement, partly based on previous experience in some sectors of the economy (NO0312103F). Although recognising the potential dangers of social dumping and pressure on the social welfare system, the government did not want to restrict the influx of workers from the accession states. The entry of new workers was on the whole regarded as beneficial to the labour market, not least because future demographic developments suggests that there will still be a significant shortage of labour in important parts of the Norwegian economy. Thus the attitude in Norway was for a long time a wait-and-see approach, and the decision was to be based on developments in the EU Member States, in particular the other Nordic countries. Thus when it seemed that both Sweden and Denmark would introduce transitional period for free movement of labour from the new Member States, the Norwegian government followed suit. Sweden later changed its position.

There is a general recognition that the transitional measures will have a limited effect regarding the prevention of social dumping, in particular given that providers of services are not covered. Moreover, it is argued that sufficient monitoring and control mechanisms are lacking in Norwegian working life, which will only add to the problems. Thus the trade unions have called for measures in this regard. The government’s latest proposal, made on 28 May 2004, is an attempt to remedy the shortcomings of the system in this regard. The unions have also called for a strengthening of the monitoring role of trade union representatives and health and safety officials. Trade unions wants to see their monitoring capabilities greatly enhanced by allowing them insight into the pay and working conditions provisions of individual employment contracts, as well as into tenders and contracts, in order to reveal social dumping practices. The employers totally oppose such a development, regarding it as an infringement on management prerogatives. (Håvard Lismoen, FAFO Institute for Applied Social Science)

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