Outside my office window a new Copenhagen University building is going up: cranes swirling, high-pitched whistles and flashes of neon safety jackets. I’ve already taken to calling the building the tower of Babel – if you look here you can see why. Numerous workers waiting outside the gates of the construction site wait to be picked up in buses and driven to their temporary accommodation somewhere around town. Few of the workers speak Danish, I hear a cacophony of (mostly) Eastern European languages.
The above could very easily be a description written by the Danish People’s Party (DPP) – though it would probably be followed by the obvious cry of “migrants are stealing our jobs”. It is all too easy and lazy to blame Eastern European workers for the issues currently affecting the Danish and other European labour markets and welfare states. In the run up to the European parliamentary elections, freedom of movement and its much derided cousin – “benefit tourism” have again been topics of heated discussion. Headlines throughout Europe have been decrying the “scourge” of people who migrate only to take advantage of “generous welfare benefits” in other European countries – evidence of this so-called epidemic remains scarce.
Nevertheless, the DPP and its European cousins did exceedingly well in the recent EU elections. 26.6% of the electorate in Denmark voted for the DPP, making it the largest party and the undisputed winner of the elections in Denmark. These results have caused much needed introspection on the left: why did so many voters abandon the traditional left wing parties to vote for the far right? One explanation may be the pervasive perception that immigrants from other EU countries come to Denmark with the intention of taking advantage of the Danish welfare system. According to a recent survey by the centre left think tank CEVEA 55% of Danes fear this and 58% think it constitutes a threat to the Danish welfare state.
In the ten years since the EU expansion and the inclusion of 10 and then 2 more countries, the issue of freedom of movement has continuously reared its head. Denmark, along with the majority of “old” EU countries, instituted so-called transitional agreements out of fear of a wave of Eastern European migration. These transitional agreements finally came to an end in 2007/09 allowing citizens from the former Eastern bloc full access to the Danish Labour market – on par with every other EU citizen. While a number of the fears expressed prior to the expansion were unjustified, others – including ones that few predicted – have emerged. One that few predicted was the use of temporary workers hired through Eastern European temp agencies as well as the use of “self-employed” contract workers. These are often referred to as “legs and arms” companies by the unions, since these workers are not actually self-employed i.e. they have no actual management responsibility but labour market regulations allow for employers to avoid a number of responsibilities towards such employees, such as holiday pay, sick days, pensions etc. if they are “self-employed”.
The Danish labour market model is based on a so-called tri-party system of collective bargaining, i.e. employers’ organisations and trade unions bargain collectively approximately every second year for wages and working conditions. If they cannot agree with each other, the state i.e. the third party, can step in and force through an agreement. Peculiarly, in the Danish system there is no actual minimum wage, instead wages and conditions are agreed collectively between employers and employees by sector. This means that companies that are not part of the collective bargaining system, i.e. companies that are not members of an employers’ organization, are free to offer any wage they please with workers being free to accept any wage they think is fair.
However, when it comes to temporary immigrant workers, the so-called freedom to choose and ability to accept or (walk away) from poor conditions is not a given. In a recent documentary on the Danish national TV station, DRTV, the tactics and methods employed by temp agencies operating across Europe were revealed. These temp agencies mainly specialise in bringing in Eastern European workers for construction, meat packing and other types of jobs that used to be rather well paid and highly organised in Western Europe and that have generally seen a decline there – either being outsourced to other countries or staffed by immigrant labour. The use of immigrant labour in such sectors has been a discussion topic for the past 10 years and the practice is often referred to as “social dumping”.
The documentary used as an example a construction project in Stockholm paid for by the Stockholm local authority/municipality (as the documentary makers had been unable to get access to the budgets of any of the major Danish public construction projects). According to the budget made available to the documentary makers, the municipality was paying 500 SEK an hour for construction work, however, the Polish workers received 35 SEK an hour – the remaining 465 SEK went straight into the pockets of several layers of contractors, agencies and subcontractors – to “pay for their services”. 35 SEK an hour does not amount to a living wage in Sweden and it points to a much more insidious issue, one that puts pressure on the entire Scandinavian welfare model of high wages, high taxes and high service levels. A Danish worker earning 500 DKK an hour will pay about 40% of that in taxes – however, most of the agencies and subcontractors are not paying taxes in Sweden or Denmark, and the Polish worker’s salary is too low to pay taxes, thus Denmark and Sweden lose out on substantial tax income when using subcontractors, while the state still has to pay workers various different entitlements that you are eligible for when you work in Denmark and Sweden. Furthermore, it also means that the Danish and Swedish construction workers are entitled to unemployment benefits, creating additional pressure on public coffers. Thus the question remains whether using “cheap labour” isn’t actually rather costly for the society involved.
There have been some attempts at the EU level to curb the exploitation of temporary workers through The Directive on Temporary Agency Work (2008/104/EC) which nominally gives temporary workers the same rights and entitlements as non-temp workers in their workplaces. However, as the Swedish example above illustrates, this does not have much of an effect when the Directive is not implemented or followed. It also fails to recognise the extreme power differential that exists between employers and temporary immigrant workers in the host country. As the documentary illustrated, different temp agencies blacklisted employees that had sought help and advice from unions in the host countries, simply refusing to hire them again. Even when unions successfully sue temp agencies and win cases to increase compensation or back pay, the money is rarely paid. 3F, one of the largest Danish Unions, estimate that about 30 million DKK won through arbitration is unpaid. Companies (many of them Eastern European) basically cease to exist when faced with a law suit and penalties. Recently, the concept of “chain liability” has been discussed, i.e. the main contractor would be responsible for any exploitation or irregularities by any party hired down the line of subcontracting. This has been implemented by a number of local authorities but was met with significant resistance from employers’ organizations as well from the current government when discussed at the national level.
Unfortunately, the construction site in Copenhagen serves as a potent illustration of why the DPP party, along with so many of their fellow extreme right parties, did so well in the recent European election. Instead of recognizing that the working conditions of Eastern Europeans and others in low-skilled work affect all of us, directly or indirectly, extreme right-wing parties across the EU are preying on the insecurities and fears stoked by the decline of the welfare state. Throughout Europe, blaming immigrant labour and the EU for these issues appears to be an effective way of rallying votes. This, combined with left-wing parties that are perceived as technocratic and less concerned with the very real effects of austerity on their traditional core electorate, has resulted in landslide elections for the far right across most of Europe. I doubt Danes would feel as strongly about Eastern European workers if they were employed under the same conditions as Danes, were paid the same, with the same benefits, however, this would of course also make it a lot less attractive for companies to employ them…
While the much derided “welfare tourism” by individuals seems to be mostly a figment of the far right’s imagination, a much more pervasive form of “welfare tourism” is becoming increasingly common: “corporate welfare tourism”. Contractors and subcontractors are benefiting from lenient rules and regulations that allow them to skim the cream and often avoid responsibilities when things go wrong.
 500 sek = 55.12 €/74.65$
 The Danish or Swedish worker will not get paid 500 skr an hour upfront as some of that wage will be subtracted for holiday pay and pensions, to be paid out later.