Large-scale unregulated labour migration puts pressure on wages

23 January 2017

Large-scale unregulated labour migration puts pressure on wages

The opening of the borders to central and eastern European (CEE) workers just a decade ago has led to labour market dislocation in the countries from which people have been attracted and repression, exploitation and underpayment in the Netherlands. The SP wants to see rogue temping agencies banned and work permits introduced for workers from CEE countries.

by Tijmen Lucie

The opening of the borders to central and eastern European (CEE) migrant workers has, particularly in sectors such as construction, horticulture, road transport and the food industry, led to repression and exploitation. Rogue temping agencies have had a free hand in putting people, especially those from central and eastern Europe, to work at low wages, using a number of dubious legal constructions. In this way worker is set against worker, wages are forced down and working conditions deteriorate.

The requirement that people from CEE countries wishing to work in the Netherlands to apply for a work permit was abolished on May 1st, 2007. Work permits were granted only if to fill a vacancy no suitable employee could be found amongst the already resident population. During the debate in 2004 on the opening of the country’s borders, then Secretary of State for Employment Henk van Hoof, of the right-wing VVD, stated that at most 10,000 workers from CEE would come to the Netherlands. By the following year, however, there were at least 50,000, while the Social Economic Council now estimates the figure at 340,000. This in a country whose population is under 17 million. With 150,000, Poles form the biggest group.

From the start the SP was critical of unregulated labour migration from CEE. As early as January 2004, just prior to the admission into the EU of the Baltic Republics, the Czech Republic, Slovakia, Slovenia, Hungary and Poland, then SP Member of Parliament Jan de Wit, in an opinion piece in national daily De Volkskrant, warned of the consequences of a high level of labour migration. Allowing people to work here without giving them the same rights as indigenous workers would not only create a new layer of second-class (non)-citizens, but would also mean unfair competition on the labour market for Dutch workers, the unemployed and those whose availability for work was restricted, for example by disability.

Exodus of educate and skilled workers

De Wit pointed in addition to the consequences for the CEE countries themselves when it was precisely the kind of people who would come here who would be most needed in rebuilding their economies, fearing that there would be a veritable exodus of well-educated and skilled workers. That this was correct was confirmed by SP Member of Parliament Paul Ulenbelt during his visit to Poland in 2007, when work permits for Polish nationals in the Netherlands had just been abolished. From conversations he had with various people involved it turned out that in widely different sectors, such as the building trade and ICT, shortages of personnel trained and educated in practical and theoretical aspects of appropriate trades and professions had emerged as a result of the large-scale labour migration to, amongst other countries, the Netherlands. In addition to this problem, out-migration had had disadvantageous results for the children, for family links, and for social cohesion in Poland. The dislocation of society in the countries of origin has always for the SP been an important reason to oppose the unrestricted opening of borders to migrant labour.

Exploitation and oppression

Since 2004 the SP has conducted research, held demonstrations, proposed motions in the national parliament and elsewhere, published action plans and participated in a parliamentary enquiry – all in order to attract attention to the problems associated with labour migration, particularly from CEE countries, as they affect both the countries of origin and ourselves. The arrival of what is often extremely cheap labour and workers forced to adopt a false ‘self-employed’ profile has led to downward pressure on wages and working conditions, the growth of ‘flexible’ contracts, oppression of workers in sectors such as transport, horticulture, construction and production, as well as exploitation by rogue temping agencies and employers. At the same time firms in the countries of origin are suffering shortages of educated and trained workers and many children are growing up with effectively no mother or father. SP leader Emile Roemer precisely summed up the situation when he said that “there are still half a million Dutch people looking for work. Many workers from eastern Europe and elsewhere are being exploited by devious means, far away from their families, and put to work on starvation wages. They frequently live in very old working class districts with far too many people crammed into poorly maintained accommodation, and the result is trouble. And it’s estimated that the state loses €1.5 billion per annum in taxes and social payments. The only winners? Companies and temping agencies whose earnings model is based on exploitation.”

Take back control

Anyone who really wants to do something about large-scale, unregulated labour migration from CEE needs to reintroduce work permits and put an end to abusive temping agencies. In order to take back control over who can come to work here from CEE, the European Union treaty – the “Lisbon Treaty” – that guarantees free movement of labour, must be adapted. CEE countries can be expected to oppose this, not wishing to hinder the export of their workers. Nevertheless, Dutch Employment Minister Lodewijk Asscher must present the argument for amendment of the treaty in the Council of Ministers, and if necessary the Netherlands must take unilateral action, reintroducing work permits in transgression of the treaty.

In order to put an end to rogue temping agencies, you have to place restrictions on the way employment services earn their money, first of all by reintroducing a licensing system for the agencies, a system which was abolished in 1998 as part of the law aimed at making the labour market ‘more flexible’. With such a system, in the event of a serious transgression or repeated transgressions of the law, the licence can be withdrawn. The person responsible is then banned for life from holding such a licence. Secondly, the opportunities provided by the fiscal system for a migrant worker to pay out less in taxes than a Dutch worker or a foreign worker domiciled for tax purposes in the Netherlands must be scrapped. Equal pay for equal work must be in all cases be the principle. Lastly, flexible contracts must be made dearer and payroll constrictions by means of which temping agencies rake it in should be banned.

The SP’s 10-point plan to combat oppression, exploitation and underpayment
  1. The Netherlands must take back control over who can come here from CEE countries to work. Free movement of workers must be scrapped. Employers should be required once again to apply for a permit if they wish to employ workers from CEE.
  2. Rogue temping agencies should be banned by reintroducing compulsory licences.
  3. Flexible employment should be made more costly than permanent employment by increasing the unemployment insurance premium for the former and using the income from this to lower the latter.
  4. Zero-work contracts must be abolished.
  5. “Payroll firms” are used by employers to avoid their responsibilities, with the employee as victim. These payroll constructions should be banned.
  6. €25 million should be added to the budget for the labour inspectorate to enable the service to hire around three hundred additional inspectors.
  7. The offer of an employment contract conditional on acceptance of such things as tied housing or health insurance should be illegal.
  8. Employers should have the duty to enable their foreign employees learn Dutch during their paid working hours and at the employer’s expense.
  9. Constructions under which taxes and social payments are paid in the country of origin rather than the country where the worker is employed should be made illegal. In order to achieve this, the EU treaty would need to be amended, but if that proves impossible we should regulate this at the national level. The rule which enables en employee’s gross wage to be subject to deductions for such things as housing and transport should be scrapped.
  10. The labour inspectorate must be given the power to impose maximum fines on an employer or contractor who fails to offer equal pay for equal work.

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