Concerns about undocumented labour in construction industry

Tax official laments “toothless” legislation

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The construction industry estimates that there are between 20,000 and 30,000 foreign construction workers in Finland, most of whom work in the greater Helsinki area.
      The greatest numbers of foreign construction workers come from Estonia and Poland, but there are already dozens of people of different nationalities. For instance, builders at the new Olkiluoto nuclear reactor include members of 60 different nationalities.
      At the same time, the unemployment rate among Finnish construction workers has risen to 25 per cent. This translates into more than 20,000 jobless construction workers.
     
The vice president of the Construction Trade union, Kyösti Suokas, believes that tens of thousands of foreign workers are not paying tax on their income.
      The union believes that the use of undocumented labour and the problems that arise from it are well known, but nobody is doing anything about it.
      “We have appealed in the matter to all possible decision-makers. Only the President is missing”, Suokas says.
      “If all foreign workers were here legally, and were paid in accordance with labour contracts, paid taxes, and if their employers paid the social welfare fees, there wouldn’t be so many of them”, Suokas says.
     
From 2008, tax authorities have been conducting inspections at building sites, uncovering EUR 30 million in unpaid employers’ fees, EUR 23.5 million in VAT arrears, and EUR 81 million in wages paid without the withholding of income tax.
      Free movement of labour within the European Union means that citizens of the EU do not need work permits to work in Finland.
      The workers should be registered, but the implementation of this is not adequately enforced.
      Furthermore, companies registered abroad are not obliged to withhold taxes in advance, which means that the payment of income tax is up to the initiative of the employee or the company.
     
Suokas criticises enforcement measures as lax.
      “The tax authorities and the insurance companies only check papers, but if there are no papers, then there is nothing to inspect”, he says.
      The Construction Trade union would like to give each employee an identification card with a microchip, which would contain taxation records, among other information. Such a chip is in use in Austria, for instance.
      “We have a completely silly tax system. There is no supervision at all”, Suokas says.
     
The government is currently working on legislation that would relax rules for work-based immigration from outside the EU.
      “If implemented, the reform would mean that a company could bring in labour from China or Vietnam, for instance, for five years at a time, without official evaluation of work permit applications”, Suokas says.
      The Construction Trade Union fears that the reform could give rise to something of a “slave market” in Finland.
      “Already now, police are investigating cases in which people coming from some dictatorships have been compelled to work long working weeks for monthly wages of a few hundred euros.”
      Suokas knows of one case in which a Vietnamese worker who spoke no Finnish, was paid the full contract wage onto his bank account, but the employer had the right to use the account. After payday, the employer would take most of the money from the account.


Previously in HS International Edition:
  Estonian construction workers heat up emotions in north of Finland (9.4.2010)

Links:
  The Finnish Construction Trade Union

Helsingin Sanomat