The Government's strategy for combating work-related crime

State Secretary Guro Angell Gimses statement at CEO suppliers meeting March 20th 2019 – prevention of unethical and illegal labour practices

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Thank you for inviting me to this meeting. Combating work-related crime and irresponsible working conditions is a priority for the Government. MOREOVER, in order to combat work-related crime – a joint effort from all the stakeholders in the labour market is essential. A comprehensive approach focusing on both preventing and combating work-related crime is required.

At first, I will say some words about the characteristics of work-related crime. Then I will present the Governments strategy, with an emphasis on the regulation on public procurement and the responsibility companies have to «follow-up» in their contract chains.

Work-related crime has developed at a rapid pace, and now appears to be complex and highly organised. Norway is not the only country dealing with work-related crime. Many other countries in Europe also face this challenge. Work-related crime in Norway is not necessarily linked to increased labour immigration, but immigrant workers have a higher risk of being exploited than Norwegian employees, since they are often willing to accept very poor pay and working conditions. The authorities find that many of the workers who come to Norway have little knowledge of labour market regulations, and that this increases their risk of being exposed to poor working conditions.

Most Norwegian employers are responsible and law abiding. The open market is sometimes exploited, however, by players who seek to secure gains for themselves by systematically violating laws and regulations. Employees fail to receive the pay and working conditions they are entitled to, and responsible enterprises cannot compete on price with enterprises that disregard regulations and fair practices. Work-related crime also entails consequences for the society as a whole, for example through loss of tax revenues by the central government.

It is reported that illegal activities in the labour market have become more comprehensive and better organised than before. Public agencies like the Labour Inspection Authority are in many cases dependent on receiving information and tips about irregular practices to be able to intervene. I also want to emphasize the importance of the work done by the employees' elected representatives. Even closer cooperation between the various control authorities is therefore necessary. Broad cooperation between the social partners is required in order to achieve this, and to fulfil our shared obligation to assist the victims of work-related crime.

The operative cooperation between various Norwegian authorities have revealed that criminal players and networks are becoming more adaptable and creative in their quest to reduce the risk of detection and to avoid controls and sanctions. Control agencies increasingly find that some elements of the activities, often with professional help, are registered and reported in public registries, so that the enterprise appear to the outside world to be law-abiding.

The use of straw men in connection with bankruptcies and professional administrators appears to be widespread. The companies typically appear and then disappear again shortly after, for example, a company is declared bankrupt when criminal activities are detected, and the same activities are subsequently established under a new company name.

The use of a chain of contracts for procurements is also a method that criminals use to reduce the risk of being detected, thereby enhancing their opportunities for tax evasion. The use of forged ID documents or the misuse of ID documents belonging to others is another example of a method used by criminals to cheat the system when registering employees, establishing enterprises, taking out loans, or buying equipment, etc. Criminals also make use of modern payment solutions, whereby money can be transferred without leaving any trail.

For several years politicians, the social partners and society in general have focused on the challenges of work-related crime. In 2015, the Government presented a Strategy for combating work-related crime. The strategy was revised and updated in 2017. The main background for the strategy was the fact that the authorities and social partners found work-related crime to be an increasing problem, and thus saw the need for a broad and focused effort.

Earlier this year, a third revision of this strategy was introduced, focusing on both preventing and combating criminal activities and other wrongdoings related to working life. A key area of the strategy is strengthened focus on measures to reduce the marked for the criminals, by helping public and private purchasers to choose serious suppliers. More and better knowledge, more and better information to employees and enterprises, and strengthened control of identity information are other key areas of the strategy.

Cooperation between the authorities and social partners is a key element of the strategy. There is a common acknowledgement of the challenges. The labour unions saw the challenges for vulnerable workers early on. The employers have also been highly involved.

Work-related crime affects the competitive conditions in the markets, as well as the key role of working life as an arena for vocational training and skills development. The authorities and social partners have established joint measures and arenas of cooperation within vulnerable sectors, such as the construction industry, cleaning services, restaurants, bars and nightclubs and transport. During this period, the Government's strategy has been developed further and followed up through regular dialogue between the Prime Minister and the leaders of the main social partners.

An important measure in the strategy has been to strengthen cooperation between the public supervisory and control authorities. We have established seven co-located joint operation groups, in which the Norwegian Labour Inspection Authority, the police, the Norwegian Tax Administration, the Norwegian Labour and Welfare Administration (NAV) and the municipal Tax Collection Offices cooperates. Together with other relevant authorities, they conduct joint controls at the operative level and cooperate on the follow-up of cases.

At the national level, the agencies are preparing joint action plans, and they are working to develop further goals and a management structure for their joint efforts to combat work-related crime. To strengthen the knowledge base for the efforts to combat financial crime and work-related crime, a national inter-agency analysis and intelligence centre has been established. Inter-agency cooperation provides a number of advantages. It gives the agencies an opportunity to use different measures and sanctions from the different agencies at the same time, which provides the greatest effect in specific matters.

This joint effort gets results. The Government has therefore increased the resources and the budget for technology for these operations in the State budget for 2019 with NOK 20 million.

The public sector is the largest consumer in the economy. This indicate that public sector has a certain responsibility. The main purpose of the Norwegian Procurement Regulations is to promote efficient use of society's resources. Another important part is to contribute to the public's confidence in socially responsible public procurement.Procurements being made in a socially responsible manner means, for example, that considerations of work-related crime, the environment, climate and social conditions are taken into account.

Stricter requirements in the area of public procurement are a key part of the Government's strategy. Both buyers and suppliers play an important key role and have a certain responsibility in preventing work-related crime.

In Norway we have a set of rules pursuing these objectives. The regulations relating to pay and working conditions in public procurement is essential. According to the regulations, the contracting authorities are obliged to stipulate requirements in the contract with the supplier that the employees of the suppliers and any subcontractors shall have specific pay and working conditions when performing the contract. The contracting authority also has a duty to carry out necessary controls to make sure that the stipulated pay and working conditions are complied with during the performance of the contract.

From 2017 the rules has been strengthened. It is a requirement that the number of levels in a contract chain shall be limited to one main supplier and two levels of subcontractors in contracts regarding construction and cleaning services. These provisions are useful instruments for counteracting work-related crime, as they aim to improve controls and enforcement. It is also required that the supplier is linked to an apprenticeship scheme, and that apprentices must participate in the performance of contractual work in the same sector…..when the contract is above a certain value.

Economic operators that provide services to public contracting authorities must comply with the applicable laws and regulations. It is the economic operators themselves that are responsible for complying with the laws and regulations, but at the same time the public sector can lead the way in efforts to promote a responsible working life through their procurements. This can be accomplished by the public sector stipulating stricter requirements for contracting authorities and economic operators supplying to the public sector.

The Labour Inspection Authority has the supervisory responsibility and monitors that both the contracting authorities and the suppliers comply with the rules.

An important measure in the strategy is to improve information and guidance for contracting authorities. In 2018 and 2019, a guidance has been given in the letters of allocation to all state agencies and enterprises to ensure that their procurements are carried out in a way that prevents work-related crime.

There has also been developed a guideline for all contracting authorities in public sector with regard to fulfilling their responsibilities in connection with procurements. Documentation that present the «best practices» for how contracting authorities can follow up the regulations in a better way have been prepared, and work on this continues. This may help public enterprises to take greater responsibility for combating work-related crime.

Other initiatives have been introduced, for example from municipalities, stipulating requirements to their suppliers. In some cases, these requirements are stricter than the applicable laws and regulations. It is positive that contracting authorities are taking responsibility and contributing to development in the right direction.

It is important that the regulations provide the necessary scope of action, so that contracting authorities can stipulate the requirements to their suppliers that they deem necessary in order to exclude criminals. At the same time, it is important that such requirements do not contravene to the principles of equal treatment and proportionality by the contracting authorities stipulating requirements or criteria that entail differential treatment of suppliers.

It is time for me to close my presentation. I would urge you to continue to focus on preventing work-related crime and irresponsible working conditions. My opinion is that a broad cooperation together with solid measures, will overcome even the most well-organized and cynical criminals!

Thank you for your attention!