All problems are solvable - but new obstacles often emerge faster than old ones are removed

The problems arise when you have moved or have been cross border commuting for some time. The border obstacle currently highest on the list is unemployment insurance systems.

“Inflexible rules on unemployment insurance means cross border commuters and people who move within the Nordic region risk ‘falling out’ of the unemployment insurance system, or they risk seeing their benefit dramatically reduced when they become unemployed because they have moved or because they work on the other side of the border,” says Lóa Brynjúlfsdóttir, general secretary at the Council of Nordic Trade Unions, NSF.

“The problems arise when each country’s set of regulations clash with another country’s set of regulations. That’s why we need a better coordination of the Nordic systems for unemployment insurance.”

35 border obstacles

The Nordic Council of Minister established a Forum on Border Obstacles in 2007 led by Ole Norrback. It comprises former politicians with a lot of experience of how society works. The Forum on Border Obstacles has identified 39 border obstacles which have since been reduced to 36 obstacles. A group of 12 Nordic officials have been tasked to find solutions to these.

“We wrote a final report with suggested solutions to all the 35 border obstacles left on the list. In certain cases we have changed the approach because the way a problem was described was not accurate - ‘isn’t it rather this which is the basic problem,’ we’ve been asking ourselves,” says Essi Rentola, head of coordination of international issues at The Social Insurance Institution of Finland, Kela.

The final report will be presented at a conference on border obstacles hosted by Norway, the current chair of the Nordic Council of Ministers.  Results from further work will then be presented to ministers for social affairs in June and ministers for labour in September.

“Nearly all of the problems are solvable in some way, but we haven’t yet calculated the costs,” says Essi Rentola.

Border obstacles mean costs in any case - in the form of less flexible labour markets and fewer opportunities for Nordic citizens.

New obstacles emerge all the time

But both Essi Rentola and her group and officials and the Forum on Border Obstacles warn failure to establish routines to prevent the emergence of new obstacles will mean new ones will be created faster than old ones can be solved. Every time a new law or reform is introduced, the negative impact on free movement should be taken into account. 

“New legislation often comes in fast. One wants to solve a certain issue in their own country and don’t think about the consequences this could have for citizens who live in another country,” says Essi Rentola.

One thorny issue is rules on taxation.

Danish capital pension earned in Denmark will for instance be subject to 40 to 60 percent taxation in Denmark if it is taken out of the country when a person moves. 

When the pension is then received in the new country (Norway or Finland) it will be subject to further taxation. There will be no deduction for the Danish taxation because taxes and excise are not deducted against each other according to the Nordic rules on double taxation. 

One solution to this problem could be to change the double taxation rules to allow bilaterally deductible taxes and excise.