Mobility after the enlargement - too much or too little?

Norway takes part in the free movement of labour through the EEA-agreement. The Norwegian Confederation of Trade Unions, LO, demands that all construction workers in the Oslofjord region receive the same pay as their Norwegian colleagues enjoy through their trade union agreements. In 2004, LO persuaded the oil industry to pay Norwegian salaries for all those involved in on-shore construction projects in Norway.

According to a new survey on behalf of 17 trade unions, there are 5 000 construction workers from Poland and the Baltic nations working in the five counties around the Oslofjord. The lowest hourly rate registered was 20 kroner – far less than what is necessary in order to live in a high cost country like Norway. A Norwegian worker is paid at least 125 kroner an hour.

Cheap Polish labour

“70 per cent of my painters have been made redundant because of the competition from cheap Polish labour. There is no need to feel sorry for me, I can always hire Poles. But who’s to take responsibility for the development of the trade here at home?” asks master painter Cato Oddsett. He’s one of two partners in Mal-Consult, a company with 30 employees.

It’s a different picture from a Polish point of view. There, many are surprised that not more people move abroad to work. Maybe the pay on offer so far has been too low, hampering the EU goal of increased mobility?

Not even an unemployment rate of 19,1 per cent has been enough for the Poles to emigrate in large numbers in order to find work. Despite having to deal with the toughest labour marked in Europe, according to a study from Manchester University researchers, most Poles prefer to stay poor, as long as they can stay at home.

In all 70 000 Poles worked abroad last year, according to the same study. Most of them chose to go to Great Britain.
“Labour immigration from new EU member states to the Nordic countries varies in size. Last year, Norway granted 25 000 work permits to citizens from the new EU member states. That is more than Denmark, Finland and Sweden put together”, says Sten Lundbo, the Norwegian ambassador to Warsaw.

Most work permits, however, were granted seasonal workers. Take those out of the equation, and only 6 – 7 000 people remain.

“That is still double the number of work permits compared to the previous year, and considerably more than expected”, says Jon Erik Dølvig, research director at Fafo, a research foundation specializing in employment issues.

The strawberry effect

The ”strawberry effect” is often given as an explanation to the high Norwegian figures. Not able to find enough domestic labour, the Norwegian berry industry has for many years relied on foreign berry pickers during the summer months.

“Research shows that labour migration is closely linked to networks. People move to places they have been before, or to where they already have relatives and friends. But the statistics for Sweden and Finland on seasonal labour isn’t really good enough to draw proper comparisons”, says Jon Erik Dølvig.

Despite warnings from the trade unions, manpower from the new member states hasn’t had a negative effect on the Norwegian labour market, if employment rates are anything to go by. In January, the unemployment rate for construction workers in Norway sank by sixteen per cent.

Like most EEA countries, Norway has introduced some temporary measures to deal with labour migration from new EU member states. These measures only apply to individual job seekers, however. Foreign businesses have carte blanche to compete for building contracts in
Norway. If they win a tender, they can import their own workers, and pay them on their own domestic terms.
There are 80 businesses offering Eastern European labour to Norway today, according to Norwegian trade union research. The Norwegian manpower company ARPI in Warsaw is one.

The bonanza is over

“Many want to exploit the differences in wages and make a quick buck from hiring Poles cheaply, then selling on their labour with big profits to Norwegian employers”, the company’s director, Jan Prejsnar, tells Nordic Labour Journal.
But according to Jan Prejsnar, the ”bonanza-season” is over however.

“Serious construction firms work with contracts stipulating daily fines for any delays. They want qualified workers who do a good job, and who are happy with their working conditions”, he says.

Today ARPI has 50 people who are on contracts in Sweden and Norway. They are mostly construction workers, butchers and cleaners.

Opinions on labour immigration are split in Norway. The employers’ organisation, the Federation of Norwegian Construction Industries (BNL), is also split on the issue.
Entrepreneur businesses are more than happy to hire cheap labour from Eastern European countries, while craft businesses are afraid they’ll be squeezed out by the competition.

“The most serious issue is the loss of competence, which will hit the industry. I can see the danger of a salary spiral in reverse. We’ll witness an escape from the craft businesses and suffer big recruitment problems in the future”, says Kjetil Eriksen, leader of the Association of Norwegian Master Builders.

Changes won't happen quickly

Jon Erik Dølvig also points out that it is important to study the long-term effects. Changes won’t happen quickly - businesses won’t be laying off Norwegian workers over night to replace them with foreign labour.

It is more a question of businesses slimming down their basic staff in the long term, while making use of hired labour or sub-contractors to a larger extent. Norway always suffered a lack of construction workers during booms. There has, however, been a high Nordic mobility amongst construction workers. It is possible to recognise accusations of salary dumping and bad working conditions from earlier debates on Finnish and Swedish labour in Norway.

“Could it actually be Swedish builders being exchanged for Polish ones? Or is there a labour reserve in Norway which will end up being worse off? Why aren’t unemployment rates sinking more while there’s economic prosperity?” says Jon Erik Dølvig.

In Poland too, labour emigration is no longer viewed as something singularly positive for the country. Polish wharfs, dealing with impressive new orders for vessels in the range of three billion dollars, suddenly discover some of their most competent labour has left for Germany or Norway. In Poland a wharf worker makes 25-30 kroner an hour. In Germany he can get 130-150 kroner an hour. In Norway he could get 150-200 kroner. The difference in competitiveness is not, however, as big as the difference in pay. The Polish wharf industry is not subsidized by the state, like in other European countries.

Brain drain

“We’ve observed the trend for a while, and we’ve already lost a hundred good workers. There’s still no catastrophe, since we have 9 000 employees. But we have increased the education of our new welders, and our pay conditions aren’t that bad, Polish wages taken into consideration”, says Andrzej Czech, vice MD at the Gdynia-concern.

And within Polish health care they are worried about 20 000 doctors who have moved abroad over the past year. The result is talk about importing workers from the Ukraine, within both health care and the wharf industry.

“We’ll look at such an arrangement for the future”, confirms Andrzej Czech.