Construction company YIT has said it will start demanding Finland-issued residence and work permits from its employees that have arrived from outside the European Union (EU) and European Economic Area (EEA).
The company's decision will apply to all of the company's contractors and subcontractors, and will take effect from October.
The move came after an internal audit revealed serious hurdles in the clarification of work permits, according to YIT's vice president Juhana Häkkänen. The company has for instance, previously struggled with verifying documents that vary in language.
"The verification of work permits of non-EU employees is very challenging. We are unable to fully comply with the legal obligation of verifying the work permits for this group of people," Häkkänen said.
Most of the foreign employees working in Finnish construction sites are Estonian. Other large groups are from Poland and the Czech Republic as well as non-EU states Ukraine, Belarus and Uzbekistan.
YIT's decision contradicts the EU law that would allow employees to work in Finland with a work permit issued by any country belonging to the EU. A non-EU, EEA or Swiss citizen must first have a work permit in the country of destination.
However they can temporarily work in another EU country, according to EU law.
Häkkänen argued that such exceptions should only be granted in posts requiring specialised expertise.
"The trend is that more and more people [belonging to the group mentioned above] are brought to Finland to work in ordinary construction posts, where no specialised skills are required," he said.
Non-Finnish permit holders prone to exploitation
Employees whose permits are not issued by the country where they work are in a weaker position and more vulnerable to labour exploitation, according to Häkkänen.
"[That worker] will rely on one card, meaning that the company that sent them can ask them to leave at any time. If they have a Finnish work permit however, they can apply to work for another employer more easily. They would thus be in a much better position," Häkkänen said, adding that the company did not want to wait until disadvantaged workers fell victim to exploitation at their construction sites.
The company's internal investigation did not reveal any blatant abuses, he added.
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This tightening of the licensing policy will only see a marginal loss of labour for YIT, the company said, as only a small number of employees working for the company currently lack Finnish work permits.
Häkkänen estimated that only around 100 workers lack Finnish permits, out of some 8,000 employees now working at YIT construction sites.
He called for authorities to process permits more quickly, as the construction industry is suffering from a labour shortage.
"All nationalities are welcome to work. However, equal treatment is the number-one priority," Häkkänen said.
Bouncing of workers a "systematic activity"
Construction Workers' Union chair Matti Harjuniemi described the transfer of workers from outside the EU to Finland as a "systematic activity."
According to Harjuniemi, contractors -- who are not necessarily construction entrepreneurs -- make use of this grey area in the EU law by sending workers to Finland as soon as a residence permit is issued in another EU country.
"This is the activity of 'labour force traders'," Harjuniemi said, adding that "the idea is to trade cheap labour into the country precisely through this loophole, which is difficult to block and check."
Harjuniemi said YIT's new policy could tackle this budding area of the economy, which is neither appropriately taxed nor monitored by any form of government.
YIT's model an example for other companies?
Executive Vice President of the Confederation of Finnish Construction Industries RT (CFCI), Kim Kaskiaro, agrees that YIT's decision could better facilitate site routines.
"When a large construction company undertakes such an operation, it may be that the practice will rapidly become more common," Kaskiaro said.
Over the past few years, various taxation measures have been used by the construction industry to tackle the grey economy, but there seems to be a lack of consensus.
"Undeclared labour has been reasonably curbed, but financial crime is rampant within some companies. Each time one hole is blocked, a couple more are discovered," Kaskiaro said, referring to the systematic falsification of accounting data.
"Nobody knows what's actually going on inside companies. It is difficult for the subscriber, the main contractor, to catch up," he said.
The eradication of 'grey' workforce in the sector has been further hampered by exhaustingly long subcontracting chains.
YIT has limited contracting chains to at most one subcontractor, with the company's permission also required. The new requirement for a Finnish residence and work permit will apply to the entire employment chain.