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Nordic region increases fight against social dumping

| Text: Björn Lindahl

335,000 citizens from EU’s new member states moved to the Nordic region between 2004 and 2011. A considerable number of workers and service providers from these countries have also been posted there during the same period of time. Foreign labour has represented a positive contribution to the economic growth, but it has also put pressure of wages and working conditions.

Social dumping is not a clearly defined term. Out of the Nordic countries, Denmark and Norway use it the most, while in Finland they talk about ‘the grey economy’. In Sweden social dumping is a term which is hardly used at all in public speech, according to Kerstin Ahlberg, one of the authors of a new Nordic pilot study about how social dumping is being fought in the Nordic region. 

She has been writing about Sweden and Finland, while Line Eldring from the Norwegian research foundation Fafo has been the project’s leader and has written about Norway. Klaus Pedersen from the Danish Employment Relations Research Centre, FAOS, has written about Denmark.

Despite all the talk about the Nordic model, with its three-partite cooperation, social safety nets and high degree of organisation, the Nordic countries‘ ways of dealing with the problem of social dumping vary a lot. 

“Norway is an example of the changes that are taking place. From being a country which had no system for universal applicability of collective agreements, which is commonplace in Finland and Iceland, it has now become more common - even though so far it has only happen in four trades,” says Line Eldring.

The Norwegian government has defined social dumping as the act of offering foreign workers wages and other conditions which are unacceptably low compared to what Norwegian workers normally get, or when other conditions like working hours, living quarters and working environments don’t live up to existing rules or the expected standard.

Denmark and Sweden stand apart not only in a Nordic comparison - they are different from the rest of the EU because they have neither minimum wages or any way of making collective agreements universally applicable, so that they include hired or posted labour. 

In Sweden and Denmark the social partners agree that they should carry the full responsibility for wage moderation. There is great reluctance to state involvement, despite the fact that it is becoming increasingly difficult to safeguard wages and other hiring conditions:

“The calls of isolated voices for Sweden to introduce some kind of universally applicable collective agreements or legally binding minimum wages are falling on deaf ears,” Kerstin Ahlberg writes about the situation in Sweden.

“It is my impression that both the trade unions and employers in Denmark are more interested in looking at the Norwegian experience than what people in Sweden are. But they consider introducing universally applicable agreements to be a step back,” says Line Eldring.

One explanation to the differences between the Nordic countries’ politics on social dumping could be the considerable differences between them in the degree of organisation and in how dominating collective agreements are.

Country Degree of organisation Degree of collective agreement cover  
Denmark 68  80
Finland 69  90
Iceland 85  99
Norway 52  74
Sweden 71  91

2009 numbers, except for Iceland (2011).

Källa: Fafo

Norway has the lowest degree of organisation, while nearly 100 percent of Iceland’s labour force are covered by a collective agreement.

There are also differences between the authorities who oversee the labour market. In Finland it is the Occupational Safety and Health Administration and in Norway the Labour Inspection Authority that are responsible for controlling that companies follow wage agreements if they are universally applicable. In Denmark and Sweden these institution play no such role - wages are the parties’ responsibility, nobody else’s.

“It is obvious that if authorities have a control function also when it comes to wages, they get a more overarching grip of the issue of social dumping,” Line Eldring writes in her conclusion. 

There are, however, no simple answers to why Denmark and Sweden, who both leave wage negotiations to the parties, still stand out when it comes to how many people work in the Danish Working Environment Authority  and the Arbetarskyddsförvaltningen. Denmark has 420 inspectors, but in Sweden - with twice the number of citizens - there are only 286.

A common trait, however, is an increased interest in trades that use a lot of foreign labour. This is reflected in the increase in money granted to the Norwegian Labour Inspection Authority and Finland’s Occupational Safety and Health Administration.

Nordic report on social dumping

Social dumping report


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