The Nordic Labour Market two years after the EU enlargement

Mobility, effects and challenges

image of The Nordic Labour Market two years after the EU enlargement

Two years after the enlargement of the EU a certain pattern has emerged in the labour migration streams from the new EU member states to the Nordic countries. Individual labour migration is growing, but varies strongly among the Nordic countries. Labour mobility related to services has increased strongly, and seems to exceed regular labour migration in key sectors. In a context of strong growth and emerging labour shortages, the Nordic economies and labour markets have clearly benefited from the growing influx of labour but also faced new challenges in terms of regulation, enforcement and control of working conditions for posted workers. At the European level the implementation of the Posting of Workers Directive 96/71/EC is under evaluation, the Laval/Vaxholm case is pending in the European Court of Justice, and the proposed Services Directive accentuates questions concerning the control of conditions for posted workers. In parallel, several Nordic and other European countries have repealed the transitional arrangements for individual labour migration, and many other countries have signalled a gradual lifting of their arrangements until 2009. Also these changes will confront parts of Nordic working life with demanding tasks in securing equal treatment for foreign workers. The purpose of this report is to give an overview of the development in the Nordic labour markets during the first two years after EU enlargement, and sketch some of the main challenges the Nordic labour market models are facing in the open European labour market. The report is prepared on the basis of the cooperation within a Contact Group under the Labour Market Committee of the Nordic Council of Ministers, and is written by Jon Erik Dølvik and Line Eldring (Fafo), who have coordinated the work of the Contact Group.



Development of individual labour immigration

In 2004, Denmark, Finland, Iceland and Norway made use of the opportunity to establish a two-year transitional arrangement restricting labour market access for persons from the new member states, while Sweden opened its labour market from day one. During the first two years, none of the countries reported any material distortions or imbalances in their labour markets. The arrangements have contributed to a certain measure of overview and control of the supply of labour, while the low level of registered individual immigration to several of the countries has spurred a debate of whether the arrangements exert an inappropriately limiting effect on the recruitment of desired labour. The transitional arrangements can be prolonged until 1 May 2009, with a provision for further prolongation until 2011, if a risk of serious distortions in the labour market prevails. In the spring of 2006, the countries that have such transitional arrangements therefore had to decide whether to repeal, prolong or revise the arrangements. The Nordic countries again opted for different solutions and a different pace in the phasing out of their transitional arrangements. Finland and Iceland have repealed their arrangements, while Denmark and Norway maintain their arrangements for the time being, with a certain relaxation in Denmark.


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