Research: Tax Deduction for Domestic Services Has Created a Cleaning Market That Exploits Vulnerable Migrants

Research shows that the Swedish tax deduction scheme for domestic services (RUT), combined with a disposable migrant workforce, has created opportunities for ruthless exploitation and weakened the influence of workers and trade unions in the workplace.

According to the industry organization for the service industry Almega, the commercialisation of cleaning services serves both as a tool for integration and as a way for the growing middle class to manage the demands of everyday life. However, research conducted at Lund University and Malmö University shows that the RUT system also contributes to an unregulated and largely invisible labour market that places migrant workers, particularly women, in a vulnerable position.

“Based on our research findings, we are critical of the RUT reform. Domestic cleaning has grown enormously since the introduction of the tax deduction in 2007, and the question is whether the state should be supporting an industry that is so difficult to regulate and that enables the exploitation of labour,” says Rasmus Ahlstrand, researcher at Lund University.

Together with fellow researcher Sara Eldén, Professor of Sociology at Malmö University, he argues that the tax deduction for household services forms part of a broader transformation of the labour market: employers have strengthened their position at the expense of workers.

A key factor in this development is the reform of labour immigration rules that followed shortly after the introduction of the RUT deduction. The new regulations made it possible for Swedish companies to recruit workers directly from countries outside the European Union.

“This has given Swedish companies access to a pool of labour that is cheaper and more readily available than the domestic workforce, weakening the bargaining position of trade unions.”

Fear of Deportation

Ahlstrand and Eldén have conducted participant observation and interviewed workers in the cleaning industry.

“Migrant workers whose residence permits are tied to a specific employer often do not dare to complain, for fear of losing not only their jobs but also their right to remain in Sweden,” says Ahlstrand.

According to the researchers, employers take advantage of this situation in various ways. Their findings show that even large, established cleaning companies that formally operate under collective agreements often deviate from parts of those agreements in practice, for example by refusing to pay holiday compensation or overtime pay. Meanwhile, many of the smaller cleaning firms that emerged following the RUT reform operate largely outside formal regulatory frameworks and systematically disregard workers’ rights.

“The RUT reform increased demand for cleaning services, and new companies entered a highly competitive market. In practice, the pursuit of greater market share has often taken the form of deteriorating working conditions. This has been made possible by the availability of migrant labour,” says Ahlstrand.

Similar Trends Across the Nordic Countries

The research conducted by Ahlstrand and Eldén is part of the Nordic research project Tackling Precarious and Informal Work in the Nordic Countries. Studies of the cleaning, construction, and platform-economy sectors in Sweden, Norway, and Finland point to a broader trend towards insecure working conditions and the exploitation of migrant workers throughout the Nordic region.

Read the full research article here.

More Information

Rasmus Ahlstrand
Researcher in Sociology, Lund University
+46 70 686 8019
rasmus.ahlstrand@soc.lu.se

Sara Eldén
Professor of Sociology, Malmö University
+46 72 212 1542
sara.elden@mau.se