The Nordic labour market in an extended Europe

All of the sudden, the cooperation has changed. Those countries, which recently were entitled to receive help and support, are now members of the same club and on equal terms. With an extended EU, the Nordic countries are being introduced to a common labour market with among others Estonia, Latvia, Lithuania and Poland, all of which have become next-door neighbours. The consequences of such an extended labour market have been widely discussed by the Northerners during recent years.

Speculations have been raised whether there will be a massive immigration of job seekers bound for the Nordic countries. Presently these countries enjoy significantly higher levels of wages, laws that regulate the labour market and social security benefits that vary greatly from those found in what used to be Eastern Europe.

The question has been raised whether the surge of willing hands will reach levels that are likely to threaten the Nordic model? This consequently led to the next question, i.e. whether it is at all possible to talk about a Nordic model? And if so, will it influence the integration favourably? Or will it be threatened by the extension of the EU?

Today, the working population of the Nordic countries lives under conditions quite different from those in the Baltic countries and in Poland. For instance in Poland, monthly wages average 550 euro, which is well below the lowest wages in the Nordic countries.

The countries to the east are also burdened by a substantially higher rate of unemployment. In Poland, for example, the unemployment rate is 17.8 percent.

However, the new member states are viewed as attractive by many business enterprises. Wages are low, as are corporate taxes, and the level of education is high. The region constitutes a vast labour market. The new neighbours in the EU can boast of an able-bodied population of some 20 million, which is more than the entire working population of the Nordic countries.

Will the Nordic model prevail?

In the report “Work for everyone – a Nordic profile for an open labour market”, the question whether the Nordic model is likely to prevail or not has been raised. The report was commissioned by the Nordic Council of Ministers and prepared by Lecturer Per Kongshøj Madsen, of Copenhagen University, and Research Officer Christofer Lindgren at the National Institute for Working Life, in Norrköping. The report deals with the many aspects of integration, both with regard to the integration of those immigrants to be found in the Nordic countries, and the new labour force. Sketches were drawn, showing scenarios within an extended EU.

“People should be shy when talking about the Nordic model, at least when it comes to integration.

It is not as though the Nordic countries have a model, but there does exist a series of unifying institutional regulations, such as the tradition of cooperation.

Ambitious welfare policy

Another item that unites is the fact that the integration goes forward against a back-drop of similar systems, characterised by an ambitious welfare policy, high tax levels, regulated labour markets, collective bargaining and formalised cooperation between the social partners. We share a common background,” Christofer Lindgren says.

“We are facing the same challenges, collectively, and we have to face them together. We have labour markets and welfare systems that are pretty much the same. All Nordic countries face the same demographic challenge as well. The political challenge suggests that we may still learn from each other,” Per Kongshøj Madsen goes on.

In the course of a seven-year period following the extension, the present member states and the countries within the EU territory may request provisional measures for a transitional period, in order to curb the influx from the new member states. Finland has requested such regulations, so far the only Nordic country to do so. It implies for a start that a work permit is needed in order to work in Finland during the first two years.

The Danish, Swedish and Norwegian governments have so far claimed to be in favour of an open labour market from day one. The trade unions, and certain trade organisations, have as a whole shown some reluctance, and there has been at times a lively debate. Quite recently, the Norwegian trade unions’ Central Board LO opposed an open labour market from the outset.

No uncontrolled influx

Neither Per Kongshøj Madsen nor Christofer Lindgren believes there is going to be an uncontrolled influx that threatens the Nordic welfare- and labour market models.

“I don’t see any risk to the Nordic model. The trade unions are strong and conscious, and I suppose they have some strategies ready when the new immigration of job seekers arrives. There is a very limited space for competition,” Christofer Lindgren continues.

The new member states along the EU’s borders do not visualise a future where hordes of their citizens will move out. Most of those who wish to work abroad already are doing so, whether legally or illegally. In Poland, to cite one example, the authorities have warned their fellow citizens against moving to Sweden, as they have observed many incidents where labour has been exploited, as documented by the Swedish TV programme, “Assignment Research”.

“Today 400,000 Poles are working legally within the EU, and at least as many work illegally. Those are impressive numbers, and it may be said with a clear conscience that Poles, who in general don’t care that much about travelling in order to get work, already have had ample opportunity to emigrate,” says Jerzy Hausner, Minister of Labour in Poland.

Another scenario suggests that those with high education would be tempted to move to positions with higher salaries. During the Nordic Council’s session in Oslo at the end of October, the Norwegian Prime Minister Kjell Magne Bondevik for one stated that he did not fear an invasion of workers from the former eastern countries.

Solidarity conflict

“The EU makes efforts to create better living conditions for people, and progress in one country is not precisely a reason why people would want to move. But if people do want to move, it will apply to the young ones with higher education and training. That may lead to a solidarity conflict between the Nordic countries and those countries that have paid for the education of those youngsters,” Prime Minister Bondevik went on.

A similar line of reasoning has come from the Swedish professor Casten von Otter at the National Institute for Working Life, who recently called attention to his report of “Locks and solutions within Swedish working life”. The report contains conclusions drawn from an analysis of trends in the Swedish working life, made by a group of researchers at the Institute, charged with the task by the Swedish government. The report offers analyses of whether the Swedish working life can be sustainable in the long run, as well as addressing the great pressure to readjust, both in regard to the extension of the EU and to globalisation. In comparison with

Bondevik, Casten von Otter stresses not only the mobility of the labour force, but also the mobility of jobs. In general, it is the jobs that are on the move, more so than the people. Casten von Otter holds that it is not just workers within traditional low wage industries who are facing major upheavals.

Competence at lower cost

In the new member states, there are many highly educated people who offer genuine competence at lower cost. The demands from the sectors exposed to competition are going to spread to all fields of economic activity.

“It is not as simple as a threat, against unqualified jobs. No one is protected any longer,” he claims.

Increased competition in the sectors demanding highly skilled knowledge is already a fact of life, and not limited to the intercourse between old and new EU members. Already x-rays taken in the USA are being analysed in India. They are processed during the night, and the results are available when the USA wakes up. Both India and China are making active efforts to attract activities based on highly skilled professionals, and taking advantage of the time zone differences.

“From the point of view of employers, immigration of labour may be attractive. It is certainly more enticing to employ a young and highly skilled person than an elderly one, who needs rehabilitation, and would prefer an early retirement,” Casten von Otter says.

Many left outside

He adds that we are living in a time of great changes, and the picture drawn by “Working Life" is loaded with contradictions. On one hand, we live longer and are healthier, the economy works and employment is good. On the other hand people are worried about the future, and many are left outside the labour market. There is a worry that those groups already exposed shall be left along the road when borders fall and the world turns increasingly global. Even though the migration so far has not become too overwhelming within the EU, history shows that during certain periods vast numbers of people may be on the move, in search of a living.

“We are living in a time of great upheavals. At the same time, many positive things do occur.

There is substantial growth in the  economies of Eastern Europe. That means a contribution to the new European economy, and in an expansive economy, there are always opportunities,” says Casten von Otter.