Nordic working environment authorities with different views on social dumping

Iceland might have experienced the fastest pace of change, where tourism has overtaken fisheries as the most important sector in just a few years. Many bus drivers, hotel workers and restaurant staff come from Eastern Europe, or else they are volunteers from Western Europe. Their working conditions are often poor, while some employers cheat on taxes and VAT. 

In Denmark working environment measures have failed in several areas, and will be reorganised as a result.

In Finland consecutive governments of all political hues have worked to promote working environments as a competitive advantage, trying to highlight good domestic examples rather than criticise foreign employers.

“We try to highlight the positive aspects,” says Margita Klemetti, coordinator of the government campaign which aims to create Europe’s best working life by 2020. 

Nothing replaced the National Institute for Working Life in Sweden when it disappeared in 2007. Now a new knowledge centre is being prepared. 

The Swedish Work Environment Authority, the Norwegian Labour Inspection Authority and the Danish Working Environment Authority are facing major changes. A 2016 Nordic report, ‘Nordic working environment inspections of foreign labour in the construction and transport sectors’ highlighted some of the differences between the three countries.

The report was written by Anne Mette Ødegård and Line Eldring. It looks at the two sectors where social dumping is most prevalent. In their introduction the two researchers note that ‘social dumping’ is a well-known term in Denmark and Norway, but nearly unknown in Sweden.

“They use the term ‘grey companies’ instead, and recently (since 2016) ‘unhealthy competition’,” they write.

EU expansion created new problems

There was a considerable increase in work related crime in the wake of EU expansions in 2004 and 2007. Borders were removed between the national labour markets in the west and the east, where salary levels and working conditions were wildly different. This affected Norway as an EEA member just as much as it affected EU members Denmark and Sweden.

While working environment authorities in Denmark and Norway consider foreign labour to be a limited problem, Sweden takes a different view:

A report from the Swedish Work Environment Authority (AV) states: “On the whole the issue of foreign companies and workers has been turned into a problem. An overarching problem is that these are often linked to problems related to security, working conditions and salaries. This gives an inaccurate definition of what is the real problem. It is AV’s belief that companies which neither want nor are able to create a good working environment or a good working life, the so-called ‘grey sector’, are the real problem. This is the case whether the companies are foreign or not.”    

As a result, the Swedish Work Environment Authority does not have as clear a task when it comes to monitoring foreign companies and social dumping as their colleagues in Denmark and Norway. No extra money has been set aside for the control of companies from the newest EU member states either.  

The number of inspections vary

If you look at the number of inspections, a major reform of the Swedish Work Environment Authority masks possible differences because of an increase in the number of inspections of workplaces employing foreign labour.

Source: annual reports from working environment authorities

The development shows a dramatic fall, from 35,000 inspections in Sweden five years ago to 20,000 in 2015. In Denmark the number of inspections have remained nearly the same, 27,000 for the entire five year period (a number which also has been the authority’s mandate).

Considering the number of inhabitants in Denmark is only around half of that in Sweden, it is remarkable that the country carried out more inspections post 2014 than Sweden. The main explanation is that the Swedish Work Environment Authority was reorganised during the previous centre-right government in 2013 and 2014. The aim was to increase flexibility. Three inspection offices were merged into one, and the number of regional offices was reduced. 

The inspectors’ mandate was also changed. Rather than focusing on sectors, they would now focus on subject areas, like ergonomics. As a result, inspections had to be more carefully planned and the number of inspections fell with one third compared to 2011, according to a critical report from the Swedish National Audit Office published in October last year. 

Extra measures in Sweden

The centre-left government is now dealing with the consequences and putting in extra working environment measures.

“An extra 125 million kronor (€13m) has been allocated. Most of it goes to more inspections from the Work Environment Authority,” says Minister for Employment Ylva Johanson.

There has been criticism in Denmark too that things are going in the wrong direction – read more about it here.

Norway has seen a steady increase in the number of inspections. An increase in the number of controls of posted workers has impacted on the ordinary running of the Norwegian Labour Inspection Authority. Its budget has increased from 431 million kroner (€47m) in 2011 to 541 kroner (€59m) in 2015 – an increase of over 25 percent. 

The number of staff has remained constant, but so-called social dumping inspections are always carried out by two people because of the increased risk of violence. Norway is the only country where working environment inspectors are also tasked with controlling salary levels in sectors covered by collective agreements which also apply to posted workers – so-called generally applicable agreements.

New ways of cooperating

New ways of cooperating have emerged in both Denmark and Norway. Working environment inspectors work with personnel from other authorities. The Norwegian Labour Inspection Authority cooperates with the labour and welfare administration NAV, tax authorities and police. 

“On their own, the authorities could not have achieved what they have managed to do together,” write the four administrations in a joint annual report for 2016. 

Joint centres for fighting work related crime have been established in five different places around Norway. There are some limitations, however.

“Professional confidentiality has always been a challenge for the cooperation on work related crime, both in terms of analysis work and how inspections are being carried out,” the report states.  

Going into detail

If you go into detail, there are differences both in what the working environment authorities inspect and in the inspectors’ mandates.   

In all of the three Scandinavian countries, companies with posted workers as well as foreign sole traders must all register. Denmark uses the so-called RUT register (Register of foreign service providers), set up in 2008. This is being used by the Danish Working Environment Authority in order to decide which companies to inspect.

In Norway, foreign companies and employees must register with The Central Office for Foreign Tax Affairs (SFU). The inspectors from the Norwegian Labour Inspection Authority have no direct access to the register, and have therefore asked for the establishment of a register similar to the Danish RUT. Compared to their Swedish colleagues, however, the Norwegians can ask for special ID cards which all foreign construction workers must carry.

Sweden introduced compulsory registration for foreign companies with posted workers in 2013. The register’s main aim is to secure the rights of the posted workers in accordance with the EU directive covering this area. The register is managed by the Swedish Work Environment Authority, but their inspectors to not have the right to ask for ID during their inspections, and there is also no document to show that you have registered. 

“One of the inspectors we interviewed put it this way: How do we carry out controls. There is no-one we can call. We are not allowed to ask for ID at all. Only the police can do that,” write Anne Mette Ødegård and Line Eldring in their report.