In whose interests? Labour migration from the new Member States

3 July 2006

Stephen Pittam, Trust Secretary, Joseph Rowntree Charitable Trust, and Chair of the EPC-KBF Multicultural Europe programme, opened the discussion by underlining the importance of studying who benefits and who loses from increased mobility across the EU.

Perspectives from sending and receiving states

Kristof Tamas, Research Consultant, Institute for Future Studies, Stockholm University, outlined the findings of the study published by his institute on Labour Migrants Unbound? EU enlargement, transition measures and labour market effects. This examined whether people from the new EU Member States working in the ‘old’ EU-15 complemented or replaced the local labour force, and whether they increased productivity by filling labour market gaps or filled unwanted low-paid jobs. It also assessed the effect of this on local wage and unemployment levels.

Mr Tamas reminded the audience that when ten new countries joined the Union in May 2004, most EU-15 governments put ‘transitional regimes’ in place to restrict the number of workers from the new central and eastern European Member States (the ‘EU-8’).

Before 2004, about 1 million people (3% of the total EU population) from EU-8 Member States worked in EU-15 countries. Since enlargement, an additional 200,000-300,000 have entered EU-15 Member States each year. Most have gone to Ireland, Austria and Germany, but other countries with open labour markets - such as Ireland and the UK - have received more workers than anticipated.

In Sweden and the UK, most of these migrant workers are highly-skilled, but they are concentrated in low-skilled jobs in sectors such as hospitality, catering, agriculture and construction. In the UK’s poorly-regulated labour market, workers often experience substandard conditions and low wages.

Rainer Münz, Senior Fellow, Hamburg Institute of International Economics, and co-author of the study, outlined its findings for Austria and Germany. These showed that national labour market demands had more effect than national measures in determining the inflow of EU-8 workers.

The study concluded that legal migration from EU-8 to the EU-15 had increased since 2004 in line with forecasts, but that migrants had gone to different countries than expected. The share of EU-8 workers in the total labour force was stable in Germany and Sweden, but had doubled in Austria and the UK. The study also found that some EU-8 citizens living illegally in EU-15 countries before May 2004 had used enlargement as an opportunity to regularise their status.

In May this year, Finland, Greece, Portugal and Spain opened their labour markets, and the Netherlands is expected to follow suit soon. However, when Bulgaria and Romania join the EU in 2007/8, EU-15 countries are likely to introduce new transitional regimes to cope with inflows of migrants from these countries.

Andrzej Rudka, Chief Economist, Polish Mission to the European Union, looked at migration from both the receiving and the sending country’s viewpoint.

He said high unemployment had forced many EU-8 citizens to seek work in EU-15 countries, and enlargement had eased the pressure on their countries’ job markets. However, he accused EU-15 countries of double standards: they use EU-8 workers to compensate for their ageing labour forces, while also imposing restrictions on their numbers. Mr Rudka considered this a test of the EU-15 countries’ willingness to have an integrated union. “It is like being invited to a dinner where you can only eat the first course and have to wait for the rest,” he said.

Mr Rudka said the authorities in receiving countries viewed the inflow of EU-8 workers as a trade-off between accepting increasing numbers of migrants and seeing companies move their production further east, where labour costs were cheaper.

Sending countries see labour migration as a “brain drain” of their most skilled workers: for example, two million Poles have left the country, forcing small companies to recruit skilled workers from Ukraine or Belarus.

On the positive side, Poles working abroad have sent US$7 billion home in ‘remittances’, fuelling investment in houses, businesses and other developments.

Egbert Holthuis, Deputy Head of Unit, Employment Strategy, in the European Commission’s Directorate-General for Employment, said the evidence showed that the EU-15’s fears of being “flooded’ with legal and illegal migrants from EU-8 countries had been unfounded. He emphasised that the Commission considered it “fundamental right” of citizens to live and work wherever they wanted in the Union, and that EU-8 workers filled “skill bottlenecks” in EU-15 countries.

The EU-15 face “structural employment problems”, with some regions suffering from high unemployment rates while others lack skill workers. While EU-15 workers are unlikely to move to fill these vacancies, EU-8 workers take a more flexible approach to moving to where the jobs are, so their position needs to be regularised and they need to receive proper social protection.

Mr Holthuis suggested regularising the status of thousands of undeclared workers who do not pay tax and thus deprive the EU of funds to support the European social model; ensuring that workers are covered by the labour laws of their host countries, not those of their countries of origin; implementing minimum wage legislation and ensuring that this covers those in short-term, insecure work; and, lastly, improving the collection of data on labour flows.

Perspectives from migrants and their employers

British Green MEP Jean Lambert opened the session by highlighting the importance of civil liberties and “the human side” of migration.

Martin Ruhs, Senior Researcher, Centre for Migration, Policy and Society, Oxford University, introduced the findings of a study on Central and East European migrants in low-wage employment in the UK published by the Economic and Social Research Council Centre on Migration, Policy and Society (COMPAS) at Oxford University.

The report underlines the UK’s tough approach towards illegal immigration, its support for skilled workers from EU-8 countries and its resulting restrictions on third-country nationals. It found that there is confusion in the UK about what constitutes ‘illegal’ and ‘legal’ working, and that this enables unscrupulous employers to take advantage of migrant workers.

Most EU-8 workers are highly skilled but work in low-skilled jobs, with poor conditions and pay. They are prepared to accept this and use it as a “stepping stone” to better work. Employers favour EU-8 workers because they accept poor wages and working conditions, and have a “good work ethic”.

For employers, EU enlargement has increased their labour supply and UK laws enable them to employ workers on a flexible basis, but this also makes it difficult to retain good employees. As a result, some employers view immigration as flowing like “a rusty tap”, said Mr Ruhs.

A quarter of EU-8 workers in the UK said their working conditions had improved since their country had joined the Union and they found it easier to find work, although most of them (and their employers) were still only in ‘semi-compliance’ with the rules.

Göran Hultin, EU Affairs Advisor, Manpower, began by warning that “there is no magic in migration flows”, as they adapt to the dynamics of the labour market.

He differentiated between mainstream, permanent employment and ‘flexible work’, which employs just 2% of the EU’s workforce, and said migration had stepped in “to fill the void” of 500,000 vacancies in the UK and 460,000 in Germany.

Mr Hultin agreed that migration flows were low and that EU-15 countries’ fears of being “swamped” by EU-8 workers had been exaggerated. While the number of job applications from EU-8 nationals have increased from 16% to nearly 50%, British firms now look to migrant workers to fill vacancies in low-skilled sectors, such as warehouse and distribution, construction, the hotel industry and retail.

Monika Byrska, Legal Advisor, Citizen’s Signpost Service, European Citizen Action Service, used her own experience as a lawyer, born and trained in Poland and employed in the UK, to illustrate the problems of EU citizenship in practice. She said the authorities were unclear about migrants’ needs and that local rules and bureaucracy made it difficult for workers to move between countries. She also felt that employers used migrants’ ignorance about their legal position to exploit them.