This equipment was donated by Thompsons solicitors SOS – Selling our Services: The draft Services Directive versus social Europe Wednesday 12 July 2006

This equipment was donated by Thompsons solicitors

SOS – Selling our Services: The draft Services Directive versus social

EuropeWednesday 12 July 2006

http://www.thompsons.law.co.uk/index.htm

‘Beyond Bolkestein – new threats to labour standards in a

liberalized Europe’

SOS – Selling our Services:The draft Services Directive versus Social Europe

Charles Woolfson

London12 July 2006

Institute of Employment Rights Services Directive 12 July 2006

The post-EU Enlargement context

Is there a ‘race to the bottom’ in European labour standards created by ‘new’ labour migration from post-accession Eastern Europe?


Latvia: labour standards in neo-liberal post-communism

- Economic and labour market indicators

- Working environment indicators

- Labour force exit – the scale of the phenomenon


• 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.

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

Neo-liberalism and post-communism


The top 30 economies in the world: ‘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’.


Real GDP Growth Rate


Actual 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


Source (Yves Jorens, Enlargement: a common European social model?, Social Europe after Enlargement, Ghent 13, 14 May 2004)

Labour productivity per person employed (EU 25)

Labour-intensive exports (%) in total manufacturing exports in CCE 8

Adapted from Bohle and Greskovits, 2004

Wages and Working Hours in Latvia


Gini Index of Income inequality including Baltic States


Gini Index of Income Inequality in CEE

National minimum wage 2004 (EUR)

Working hours in LatviaEmployees, who work at the main job more than 50 hours per week in 2003, per sectors (%)

Sector Males Females Total

Trade 16.0 42.0 25.1

Construction 20.9 2.1 14.3

Transport (land and sea) 12.1 1.2 8.3

Agriculture 5.9 4.1 5.2

State administration 5.6 2.5 4.5

Woodworking 5.7 0.4 4.2

Healthcare 1.2 9.6 4.2

Hotels and restaurants 1.4 9.3 4.2

Education 2.4 7.2 4.2

Other 31.2 28.8 30.0

Source: Hazans, 2005:8

Source: Antila and Ylostalo, 2003

Source: Antila and Ylostalo, 2003 Baltic Working Environment Survey

Source: European Foundation Survey of Working Conditions

Source: Antila and Ylostalo, 2003 Baltic Working Environment Survey

Country Year Estimate (% GDP)

Bulgaria 2002/03 22-30

Czech Republic 1998 9-10

Estonia 2001 8-9

Hungary 1998 18

Latvia 2000 18

Lithuania 2003 15-19

Poland 2003 14

Romania 2001 21

Slovak Republic 2000 13-15

Slovenia 2003 17

Size of undeclared work in selected CEE countries

Source: Renooy et al.2004

Share of undeclared labour in specific sectors Latvia

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: wood industry (24%), construction (23%), retail trading (14%), agriculture and medicine (each 8%)

(http://www.betwa.org/bw/?div=41&id=2006-01&pid=96).

Latvia: 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)

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.

Working Environment in Latvia


Index of Fatal Accidents at Work (per 100,000 employees) CEE New Member and Candidate Countries

• Workforce injuries including fatalities among ‘self-employed’ not included in official data bases of Labour Inspectorate

• During labour inspection in one enterprise in the first aid kit there was medicine with expiry date of 1974.

Source: Strautiņš, P. „Kvalitāte, gādājot arī par drošību”. Diena, 2006, 23.janvāris, 1.lpp.


US Dept of State, Country Reports on Human Rights Practices Latvia - 2004, Bureau of

Democracy, Human Rights, and Labor.

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.htm

http://www.state.gov/g/drl/rls/hrrpt/2004/41691.htm

Source:INFLUENCE 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

The ‘new’ labour migration


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).


• 30,000 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


Latvia: ‘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)Institute of Employment Rights Services Directive 12 July 2006

Source: European Foundation for the Improvement of Living and Working Conditions




Implications for labour standards


The Happy Worker Syndrome• Migrant workers “more motivated,

reliable and committed than domestic workers.

• 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.

• more likely to be happy with the minimum wage (as it was higher pay than in their home countries).”Institute of Employment Rights Services Directive 12 July 2006

Latvians in Ireland (some 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).


Latvians in Ireland (some not happy)

The abuses

Sonia

Irish in Ireland (not so 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.

• 41% think there are now enough foreign workers 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/060123111722.mmkqoki0

http://www.eubusiness.com/Employment/060123111722.mmkqoki0

Conclusions

• No ‘normalisation’ of labour markets in CEE

• If anything labour standards are deteriorating

• Eastern enlargements (current and future) may produce the erosion of labour standards


Questions to be addressed

• How can different national trade union movements develop strategy that will protect labour standards?

• How can a new ‘race to the bottom’ be prevented in which new member states are not used by neo-liberal forces to undermine labour standards throughout Europe?


Documents

This equipment was donated by Thompsons solicitors SOS – Selling our Services: The draft Services Directive versus social Europe Wednesday 12 July 2006