Constructing Labour Standards in the new Europe: East meets West Charles Woolfson Marie Curie Chair,

1
Constructing Labour Standards in the new Europe
East meets WestCharles WoolfsonMarie Curie
Chair, University of Latvia

• "Construction anno 2006 - myths, realities and
  perspectives" General Workers Conference Centre,
  Kampmannsgade 4, 1790
• CopenhagenTuesday 25th April 2006
• c.woolfson_at_law.gla.ac.uk

2
Main themes of presentation

• European Social Model
• The new EU member states Latvian labour
  conditions
• The neo-liberal European agenda of
  business-friendly soft law and better
  regulation
• Eastern enlargement and labour mobility

3
A European Social Model?

• Social dimension guaranteeing a basic minimum
  of social protection available to every worker in
  the European Union
• Directives which enhance minimum standards of
  social protection in the European Union
  Framework Directive on Safety and Health at Work,
  Transfer of Undertakings, Working time, and
  Posted Workers Directives
• ESM creates a balance of market and social
  priorities a social market economy
• The proposed Services Directive would upset this
  balance in favour of business and against labour.

4
An Unstoppable tide of Globalisation?

• European Social Model depicted as an outdated
  concept of the 1960s and the 1970s.
• International financial institutions argue that
  European competitiveness depends on being able to
  compete in the global market place.
• Harmful rigidities in the labour market which
  undermine necessary flexibility and
  adaptability harming competitiveness (eg
  minimum wages, too high unemployment benefit
  levels, unwillingness to accept lower pay and
  benefits eg reduced state pension rights

5
The New Member States of the EU

• The post-communist New Member States are playing
  a key role along with UK, Italy and Germany as
  supporters of neo-liberal agenda (eg Services
  Directive, Better Regulation of de-regulation)
  in the European Union.
• The political and business elites in the
  post-communist New Member States are resistant to
  the ideas that underpin the European Social Model.

6
World Bank Group Report. Washington, D.C.
September 12, 2005

• Eastern European and Baltic nations are
  aggressively courting entrepreneurs with
  far-reaching reforms that streamline business
  regulations and taxes.
• Every country in Eastern Europe has improved at
  least one aspect of the business environment.

7
Ease-of-doing-business

• The top 30 economies in the world in terms of
  ease-of-doing business New Zealand,
  Singapore, the United States, Canada, Norway,
  Australia, Hong Kong/China, Denmark, the United
  Kingdom, Japan, Ireland, Iceland, Finland,
  Sweden, Lithuania (15), Estonia (16),
  Switzerland, Belgium, Germany, Thailand,
  Malaysia, Puerto Rico, Mauritius, the
  Netherlands, Chile, Latvia (26), Korea, South
  Africa, Israel, and Spain.
• For the three Baltic countries to be in the top
  30 is a remarkable achievement, as only a decade
  has passed since they first began reforms.

8
Latvia General Social Indicators
9
Gini Index of Income inequality including Baltic
States
10
State Capture Index
Source World Bank (2000) Anticorruption in
Transition
11
Recent demographic developments in Europe 2004.
Strasbourg Council of Europe Publishing 2005
12
Gender differences of life expectancy at birth
(years)
13
Infant mortality
14
Source Earth trend country profiles
http//earthtrends.wri.org/pdf_library/country_pro
files/pop_cou_428.pdf
15
Death by suicide (standardised death rate per 100
000 persons)

• (3X to 5x higher)
• EU 15 16.0
• Lithuania 80.8
• Latvia 56.9
• Estonia 46.0
• (Source EuroStat, 2002 figures)

16
Death in transport accidents (standardised death
rate per 100 000 persons)

• (2x or 3x higher)
• EU 15 15.7
• Latvia 48.0
• Lithuania 35.5
• Estonia 28.8
• (Source EuroStat)

17
Economic Indicators
18
Real GDP Growth Rate
19
GDP in 1999 compared to1989 (100)

• Poland 121
• Slovenia 107
• Slovakia 101
• Hungary 99
• Czech Republic 95
• Estonia 79
• Romania 74
• Bulgaria 66
• Lithuania 65
• Latvia 60

20
Source (Yves Jorens,Enlargement a common
European social model?, Social Europe after
Enlargement,Ghent 13, 14 May 2004)
21
(No Transcript)
22
Labour productivity per person employed (EU 25)
23
Labour-intensive exports in total manufacturing
exports in CCE 8 ()
Adapted from Bohle and Greskovits, 2004
24
Wages and Working Conditions in Latvia
25
National minimum wage 2004 (EUR)
26
Latvia Gendered Wage Differential
Source Antila and Ylostalo, 2003 Baltic Working
Environment Survey
27
Working hours in Latvia
Source Hazans, 20058
28
Working hours, Latvia
29
Source Antila and Ylostalo, 2003
30
Industrial relations and trade unionism in Latvia
31
(No Transcript)
32
(No Transcript)
33
Source Antila and Ylostalo, 2003 Baltic Working
Environment Survey
34
Source European Foundation Survey of Working
Conditions
35
Source Antila and Ylostalo, 2003 Baltic Working
Environment Survey
36
Size of undeclared work in selected CEE countries
Source Renooy et al.2004
37
Shadow Economy in of GNP 1999/2000
Source Schneider, 2002
38
Share of undeclared labour in specific sectors
Latvia
39
(No Transcript)
40
Labour contract violations

• In 2005 each fifth Latvian enterprise inspected
  had violated the labour legislation.
• A total of 1994 enterprises were inspected - 936
  employees of 406 enterprises did not have any
  contract.
• Employees without contract were working in wood
  industry (24), construction (23), retail
  trading (14), agriculture and medicine (each 8)
  
• (http//www.betwa.org/bw/?div41id2006-01pid96
  ).

41
Workforce attitudes

• 15 respondent were willing to work overtime
  hours without pay
• 22 or employees reported that the collective
  agreement was only formality.
• 31 of Latvian employees admitted that they would
  be ready to work without contract
• 37 respondents would work even if social
  guaranties were not paid
• 38 respondents would be ready work without
  annual holidays
• (Source SKDS,Survey 2005, 35)

42
How Democratic is Latvia?

• Human rights violations in labour relations have
  been at the top of the list since 1996 (in
  1996-38, in 1998-45, in 2000-47.
• Violations most often cited by the unemployed
  (82), people with low income (68), people in
  the age groups 35-49 (62) and 25-34 (52), civil
  and public servants (57), people from rural
  areas (56), men (54) and non-Latvians (49)
• The current Latvian law on right to strike
  requires a 75 threshold voting in favour of
  industrial action
• Source Audit of Democracy, Advanced Social and
  Political Research Institute, Commission of
  Strategic Analysis, University of Latvia,
  2005Chapter on Economic and Social Rights, F.
  Rajevska and A.Vanags, p.65.

43
Health and Safety Indicators in Latvia
44
Index of Fatal Accidents at Work (per 100,000
employees) CEE New Member and Candidate Countries
45

• Workforce injuries including fatalities among
  self-employed not included in official data
  bases of Labour Inspectorate
• During labour inspection in one enterprise it was
  discovered that in the first aid kit there was
  medicine with expiry date of 1974.
• Source Strautin, P. Kvalitate, gadajot ari
  par droibu. Diena, 2006, 23.janvaris, 1.lpp.

46
Factors supporting non-compliance with labour
protection legislation

• Widespread concealment of industrial accidents.
• Low level of investigation of even those
  accidents which are reported (approximately 36
  per cent of the total)
• Proliferation of new businesses, mostly in the
  small and medium sized category.
• Low level of fines for safety violations
• Hostile assumptions about the role of regulation
  in securing health and safety

47
SourceINFLUENCE OF ADMINISTRATIVE PROCEDURES ON
THE BUSINESS ENVIRONMENT IN LATVIA RESULTS OF THE
SURVEY OF LATVIAN ENTREPRENEURS September
November, 2005 marketing and public opinion
research centre SKDS p.27
48
Latvia - Country Reports on Human Rights
Practices  - 2004, Bureau of Democracy, Human
Rights, and Labor. US Dept of State

• Acceptable Conditions of Work
• The laws establish minimum occupational health
  and safety standards for the workplace. In the
  first 6 months of 2005, 27 fatal workplace
  accidents and 605 workplace injuries were
  reported.
• Workers have the legal right to remove themselves
  from hazardous work situations without
  endangering their continued employment however,
  authorities did not enforce this right
• http//www.state.gov/g/drl/rls/hrrpt/2004/41691.ht
  m

49
The workforce response exit strategy

• 23,000 Latvians are officially working and living
  in Ireland.
• 15,000-20,000 Latvians work in the United Kingdom
  (UK)
• 1,500 in Norway and Germany
• 1,055 in Denmark,
• 1,000 in Sweden
• 400 in other EU countries.
• These figures are an underestimate of 2x or 3x

50
Labour Migration

• Between 50,000 to 100,000 Latvian have emigrated
  over the last 18 months alone, as many as 25,000
  to 50,000 of them to Ireland (EUbusiness, 2006).
• These figures amount to between 4 and 10 of the
  entire workforce of Latvia.
• Workforce emigration has taken from Latvia
  almost the same number of people as deportations
  under Soviet occupation, (quoted in EUbusiness,
  2006).

51
A once proud people

• Marcis Nikolajevs, managing director of an
  association of Latvian construction contractors,
  said that companies were being forced to import
  workers from nearby Ukraine and Belarus.
• The association is considering flying in
  temporary construction workers from Ghana. We
  used to be a proud people, Nikolajevs said.
  This migration is a national tragedy. (quoted
  by Bilefsky, International Herald Tribune, Dec
  2005)
• New phenomenon in CEE of secondary reinforcing
  informalisation as workers from NIS are imported
  into CEE to fill growing labour gaps.

52
(No Transcript)
53
(No Transcript)
54
ab
55
The Happy Worker Syndrome

• Migrants were said to be more likely to
  demonstrate lower turnover and absenteeism be
  prepared to work longer and flexible hours be
  satisfied with their duties and hours of work
  and work harder in terms of productivity and
  speed.
• Indirect comments from employers suggested
  migrant workers were better thought of because
  they were more likely to be happy with the
  minimum wage (as it was higher pay than in their
  home countries).

56
Latvians in Ireland (also happy)

• I am not afraid to talk with my supervisor which
  was the case in Latvia. Here (in Ireland) there
  is trust, and confidence in the employee. And so
  the work is better done in such an atmosphere
• In Ireland we live a life which is human
  worthy - we can afford not always to be thinking
  of prices and about unpaid wages (Latvian
  immigrant worker).
• (Latvian Strategic Analysis Commission, Report on
  Migrant Labour in Ireland, December 2005).

57
Irish in Ireland (not happy)

• 78 of those polled believe people from the
  central and east European states should now be
  required to apply for work permits before coming
  to work in Ireland.
• 23 believe more foreign workers should be
  allowed to come to Ireland,
• 41 think there are now enough in the country and
  no more should be admitted
• 29 believe there are too many foreign workers
  and that steps should be taken to reduce their
  number.
• EUbusiness http//www.eubusiness.com/Employment/06
  0123111722.mmkqoki0

58
Invest in people Irish PM tells Latvia

• New European Union member Latvia should follow
  Ireland's example and invest EU funds in its
  people, to halt the exodus of workers from the
  Baltic states (Irish Deputy Foreign Minister
  Dermot Ahern, seminar on migration in Riga,
  January 2006).
• EUbusiness 20/01/2006 http//www.eubusiness.com/Ea
  st_Europe/060120174833.hhlgknww

59
Transnationalisation of informalised labour?

• Ending of transitional arrangements limiting East
  European workers (2006,2009, 2011)
• Migration flows likely to continue and will be
  significant
• Much of the labour coming to older member states
  from the East lacks experience of trade unionism
• Poses major challenges to organised workers and
  labour standards

60
Some conclusions

• Labour migration from Eastern Europe is
  introducing qualitatively new levels of
  informalisation into previously regulated
  labour markets.
• Eastern enlargements (current and future) may
  create by stealth the erosion of labour standards
  (so-called flexibility) that the political
  class in the older EU member states (eg in
  France) is finding hard to implement through
  active policy interventions.

61
Questions to be addressed

• If the European Social Model is being demolished
  by neo-liberalism what is the point of being a
  member of the European Union?
• How can different national trade union movements
  develop strategy that will protect labour
  standards?
• Can we prevent a new race to the bottom in
  which new member states are being used by
  neo-liberal forces to undermine labour standards
  throughout Europe?