Since the EU enlargements in 2004 and 2007, Norway has experienced its largest level of labour immigration. Out of a total workforce of 2.8 million, almost 185,000 people from the Central and Eastern European (CEE) countries were working in Norway in 2019. The figure includes both residents and employees who enter Norway to work, but whose main place of residence remains elsewhere. The latter group includes tens of thousands each year. The main reasons for this ‘immigration shock’ are a shortage of labour in Norway and wage levels that are among the highest in Europe.

Since 2007, labour immigrants have contributed most of Norway’s employment growth, according to Statistic Norway. Labour migrants are principally employed in construction, followed by manufacturing and healthcare, so they are concentrated in low-wage sectors. The vast majority of labour migrants come from Poland and Lithuania; Poland, Lithuania and Romania account for around 80 percent. Unlike other groups of immigrants (specifically refugees), labour migrants live and work in all parts of the country. Many are employed in shipyards (western Norway) and in the fish-processing industry (in the North). The average monthly salary in 2019 was NOK 47,290 (€4,418), while workers from CEE countries earned NOK 37,700 (€3,522 Euro) on average.

There is widespread agreement that labour immigration has had a positive effect on the economy. Labour shortages are a thing of the past, and employers now have the opportunity to use

 a wider range of labour strategies. One example is hiring companies as subcontractors from CEE countries that bring their own (posted) employees to complete a task, instead of the Norwegian company employing own workers. Other employers establish a temporary agency or contract local agencies in an Eastern European country to hire temporary workers when needed.

Effects on the labour market

Due to the prevailing labour shortage, immigration has not for the most part replaced Norwegian workers. Nevertheless, there has been concern about recruitment of young Norwegians into skilled construction work. The predominance of foreign workers in the construction industry in many parts of the country has made it less attractive for young people to join the construction industry because they consider that the industry has become “foreign”. Another worry is that labour immigration might make it more difficult for persons with challenges such as low education or health problems to find work.  The logic is that it might be easier for an employer to take on a labour migrant than to train and follow up someone who needs more intense attention in the day-to-day business. These factors have been part of the public debate. Discussion about the future supply of construction workers has mainly been between the social partners.

Cooperation between employers and workers’ representatives at the company and sector levels is a key element of the Norwegian labour market model. One precondition for this system is high union density. Immigrants are less likely to join a trade union, altering the balance of power between employers and the employees in some parts of the labour market.

Effects on wage levels  

Wages are governed by collective agreements or, where these do not exist, the written employment contract between employer and employee. Although there is no general minimum wage in Norway, minimum rates have been introduced in certain sectors (general application of collective agreements to all workers in the sector): construction, shipbuilding, agriculture and horticulture¸ commercial and household cleaning, fish processing, electricians, road freight haulage, tour bus drivers, and the hotel and catering sector. Studies show that sector-wide application of collective agreements has improved pay for the lowest-paid in construction. At the same time, there are indications that labour immigration has had negative effects on wages for workers higher up the wage scale (who tend to be Norwegians). This means that better-paid construction workers have seen less wage growth than they would have without low-wage competition. This type of analysis has not been conducted for other sectors. In cleaning, sector-wide application of collective agreements has had a general positive effect on wage levels. The same pattern is seen in hotels and restaurants, where the proportion of employees paid below the minimum rate in the collective agreement was more than halved between 2017 and 2018.

Regulations

The most effective regulation addressing the effects of labour immigration has already been mentioned: sector-wide application of collective agreements in the most affected industries. The law on sector-wide application of collective agreements was passed in 1993 but not implemented until 2004 after the rise in labour migration from the new CEE EU-members. Its main purpose is to ensure that foreign workers receive wages and working conditions similar to those of Norwegian employees and to prevent unfair competition in the labour market. The Labour Inspectorate has the authority to check wages paid in areas covered by sector-wide application of collective agreements.

Another regulation introduced since the EU enlargements requires enterprises that carry out work on construction sites or provide cleaning services must provide their employees with a health and safety card identifying the employee and their employer. Chain liability was introduced in 2010, and is based on the German system. This means that all contractors in the chain are liable for unpaid wages and holiday pay owed to employees further down in the chain. Additionally, certain local authorities use the public procurement system to require decent conditions for subcontractors.

Integration

A large proportion of labour immigrants are settled in Norway with their families. Yet language remains a challenge, except for those working in health care. EU citizens are not entitled to free language courses, and many do not prioritise paying for them themselves. In addition, migrants often lack knowledge about regulations, trade unions and workplace culture (including trust between management and employees, trust in trade unions and trust in authorities such as the labour inspectorate). This can create challenges for those more familiar with pronounced hierarchies and low trust in authorities. It is fair to conclude that workers from CEE countries are not currently well integrated into the Norwegian industrial relations model. Inability to speak Norwegian will also affect their ability to make Norwegian friends and integrate in their neighbourhoods.

Public debate

Since 2004, phrases like “social dumping” and “work-related crime” i.e. criminal acts associated with the exploitation of workers and illegally distorting competition, have become commonplace in the public debate. Despite disagreements between politicians and social partners about how to define and combat social dumping, there is a shared understanding that problems exist. Within the trade unions, the scale of labour migration has led to discussions questioning the EEA agreement. Although it is widely supported across Norwegian society, there are strong voices arguing that the country would be better off with an ordinary trade agreement. The overall attitude during the past sixteen years has been that labour migrants are welcome as long as they are treated well and receive Norwegian salaries. Problems with social dumping still persist, but the measures taken over the past decade have obviously had an effect, most importantly the Labour Inspectorate has the authority to check wages paid in areas covered by sector-wide application of collective agreements. At the same time, migrants have contributed much-needed labour, for example in depopulating rural areas. Discussions about labour migration have not been conflated with the question of taking in refugees. These two types of migration are treated separately in Norway.

Author:

Anne Mette Ødegård, Senior Researcher, Fafo Institute for Labour and Social Research. September 2020.