Jørgen Svalund

Norwegian employers use of labour. Central and Eastern Europe after the EU-enlargement

Jørgen Svalund, Fafo Institute for Labour and Social Research, Oslo
Rolf Andersen, Fafo Institute for Labour and Social Research, Oslo
Anne Mette Ødegård, Fafo Institute for Labour and Social Research, Oslo

» Full paper: ilera-2019-paper-164-Odegard.pdf

This paper focuses on employers use of East-European workers since the EU enlargement, their motives for recruiting them, and especially whether these workers are hired in precarious positions or over time to a larger degree are hired as permanent employees. Thus, we study whether employer motives change, and whether they to a larger degree hire East European workers as employees rather than through temporary work agencies (TWA) or subcontractors?

National labour market consequences in the aftermath of the EU enlargements in 2004 and 2007 have been widely discussed, and there has been special attention on cross border flow of services and hiring staff through national and foreign temporary agencies, as the access to international labour has led to at drift towards outsourcing of projects and more atypical and flexible work-arrangements (Hassel 2014). The Norwegian labour market is known as an inclusive labour market with limited wage differences, high employment and high levels of mobility (Gallie 2007). Labour adjustment in Norway has traditionally emphasized external flexibility and reallocation of labour from less to more productive companies, as centralized wage bargaining force companies to restructure or go out of business, preventing them from resorting to downward wage competition. The EU-enlargements gave Norwegian companies new opportunities for recruiting labour, and the enlargement has led to a great influx of workers and companies from the new member states in central and Eastern Europe. Over half of the registered migrant workers heading to the Nordic countries from new EU countries in the first years after the enlargement went to Norway, resulting in a “labour supply shock” which had a strong impact on companies’ recruitment and labour strategies (Dølvik & Eldring 2008). A large majority of the Central and Eastern European workers (CEE-workers) have been recruited to low-skilled jobs in construction, manufacturing and private services (cleaning and hotels and restaurants).

Friberg, Arnholtz, Eldring, Hansen og Thorarins (2014) show that the foreign workers/immigrants often were subjected to insecure types of employment; hired through temporary agencies or contracted on a temporary basis. The East-European work immigration has challenged established norms in the labour market, regarding (low) wages, (long) working hours and (poor) health and safety standards, and trade unions and the labour inspectorate have been concerned that the large influx of foreign workers could lead to increased low wage competition and labour market dualisation, at least in some industries. According to Statistics Norway, more than 150 000 Eastern Europeans are living in Norway in 2017. Among these, around 22 000 are born here. On the basis of this development, the main question in this paper is whether companies still use CEE-workers in precarious positions, or whether a larger share of employers employ them in ordinary forms of employment? The EU-enlargement provide a rare possibility to study how and why employers in inclusive labour markets may use migrant workers, and whether employers in such labour market use CEE-workers in insider positions as time go by. As part of this, the paper first investigates Norwegian employers’ motives for recruiting Eastern European workers since the EU-enlargement, and whether these motives have changed between 2006 and 2017. Since the EU-enlargement, several regulations have been introduced to combat exploitation of immigrants from the newest EU-countries. These regulations can be regarded as attempts to prevent a more profound division between “insiders” and “outsiders” in the labour market, and a shift towards dualization, were collective agreements erodes in parts of the private sector, while being intact in other parts of the labour market in Norway. The influx of workers could lead to a dualisation of the labour market in some industries in Norway, with East-European workers holding precarious positions, but it is also possible that the use of these workers change over time, where the CEE-workers to a larger degree hold permanent positions as time go by.

Studying these questions, we use three large employer surveys conducted in construction, manufacturing and hotels and restaurants in 2006, 2009 and 2017, and find that the share of companies who have used employees from the CEE-countries increased from 15 percent in the beginning of the period, before declining between 2009 (35 percent) and 2017 (30 percent). The decline has been largest in manufacturing, probably due to economic shifts and lower demand within ship building/ship yards. The surveys show that a tight labour market, and difficulties recruiting Norwegian or Nordic workers is the main reason for the use of CEE-workers. Since the labour market, and not low wage strategies, were the most important reason for employers use of these workers, one could expect that the probability that employers integrate these workers in their own company increases. The surveys show that the share of companies who have CEE-workers as temporary or permanent employees have increased substantially from 2006 to 2017. Analyzing companies’ probability of only employing CEE-workers individually rather than by way of TWA or subcontracting, the study shows that the probability of only employing CEE-workers on an employment contract have increased between 2006 and 2017, and further, that the probability is highest in hotels and restaurants and lowest in manufacturing.  We also find that companies with a collective agreement to a lower degree hire CEE-workers only through an employment contract.

References

• Dølvik, J. E. & Eldring, L. (2008). Mobility of labour from the new EU states to the Nordic region. Development, trends and consequences. Copenhagen: Nordic Council of Ministers.
• Friberg, J. H., Arnholtz, J., Eldring, L., Hansen, N. W. & Thorarins, F. (2014). Nordic labour market institutions and new migrant workers: Polish migrants in Oslo, Copenhagen and Reykjavik. European Journal of Industrial Relations, 20(1), 37-53. doi:10.1177/0959680113516847
• Gallie, D. (2007). Employment regimes and the quality of work. Oxford ; New York: Oxford University Press.