Social dumping as reality and perception

– foreign workers and local wage negotiations in Danish construction

The inflow of foreign labour to the Danish construction sector has caused huge amounts of public debate and conflicts between the otherwise corporative social partners. While trade unions and common construction workers talk of ‘social dumping’ and downwards pressures on wages and working conditions, employers and their representatives argue that it is virtually impossible to register that foreign worker have had a negative effect on wages in the sector. They argue that any decline in wages has been caused by the economic crisis, which have seen every fourth job in the sector disappear. As such, the ‘objective’ effect caused by the increasing number of foreign workers is hard to disentangle from the general effect of economic decline and increasing unemployment amongst domestic workers.

However, there may still be a very real effect caused by the perception of domestic workers. To understand this, we should recognize that the construction sector has one of the most complex systems of local wage negotiations in the Danish labour market. There exist a number of different principles calculating and determining the local wages in the sector, and it is not always clear which principle should apply. It is certain, however, that a very large proportion of the actual salary is determined by local negotiations. There is virtually no Danish construction workers working for the agreement minimum rate of pay, and the average wage in the industry is typical somewhere between 30-40 percent higher than these minimum rates. However, with the EU enlargements of 2004 and 2007 foreign workers willing to accept wages far below the minimum rates came into the industry. This has challenge Danish workers and their local negotiation - especially after the crisis.

This article draws on interviews with Danish construction workers to understand how their pay is usually negotiated at the local level and how it has been affected by the crisis and the presence foreign labor. Drawing on these issues, the article argues that ‘social dumping’ does not only consist of objective pressures on working conditions and measurable wage decreases. Instead, the insecurity of domestic workers fearing for their jobs and their future should be seen as part of the phenomenon of social dumping; the mere presence of low-paid foreign workers may make them domestic workers more inclined to accept poorer condition during local negotiation, even if they are not directly replaced with foreign workers.

The full paper was presented at The 7th Nordic Working Life Conference, Göteborg, Sweden, June 11-13 2014.