EU Labour Migration since Enlargement

Trends, Impacts and Policies

Béla Galgóczi, Janine Leschke

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317140191
• Edition: 1
• Topic: Politica e relazioni internazionali
• Subtopic: Politica

One of the most important consequences of EU enlargement in May 2004 was to extend the principle of the free movement of labour to the citizens of the central and eastern European new member states. In this book a team of labour economists and migration experts sheds light on the dimensions, characteristics and impacts of cross-border labour migration in selected sending (Hungary, Latvia and Poland) and receiving (Austria, Germany, Sweden and the UK) countries. Separate contributions detail the policy responses by governments, employers and trade unions in these countries to the challenges posed by both inward and outward migration. By setting out and analyzing the facts for seven countries, which vary greatly in their geographical situation, policies, and outcomes, the book contributes to the debate on this crucial issue in the ongoing process of European integration.

Chapter 1
Intra-EU Labour Migration – Flows and Policy Responses

Béla Galgóczi, Janine Leschke and Andrew Watt

1. Introduction

The first of May 2004 marked a historical watershed. A decade and a half after the fall of the Berlin Wall the continent of Europe was re-united in democracy, ending over 60 years of political division and hostility with the accession of eight new member states from central and eastern Europe (A8),1 followed in 2007 by Bulgaria and Romania (A2).

One of the most important consequences of eastern enlargement has been the full or partial opening up of national labour markets to citizens of the other member states, not just within the – relatively homogeneous – 15 ‘old’ member states, but for the entire EU of 25 (subsequently 27) countries. Many workers in the new member states in particular were keen to take advantage of the new opportunities to earn higher wages and broaden their experience, or even to find work at all. In Poland, for example, the number of people ‘temporarily residing’ in another EU country more than doubled between 2004 and 2007, reaching almost 2 million. This increase was reflected in some, but by no means all of the receiving countries: 2005 saw probably the largest inflow of foreign labour ever recorded in the UK, hugely exceeding all prior predictions. However, other ‘sending’ (such as Hungary) and ‘receiving’ (for example, Sweden) countries experienced much less dramatic flows.

In the accession countries, ‘free movement’ was seen unanimously as a fundamental right. In the EU-15 countries, accession was preceded by intensive and at times controversial debates about likely immigration flows and whether countries should immediately open up their labour markets fully, permitting unhindered labour mobility, or whether existing restrictions should be maintained for the foreseen transitional periods. These debates took place against the background of a discussion about the role of migrant labour in advanced economies and societies, in some cases rising populism and xenophobia, and, at least in some countries, still high unemployment. Dire warnings were issued concerning a possible influx of job-seekers – and so-called ‘welfare scroungers’ – and there was considerable uncertainty among large sections of the population already worried about the impact of globalization and the relocation of workplaces abroad. In some countries – such as the Netherlands and Denmark – such debates led to a reversal of the initial decision not to implement transitional measures (Kvist 2004).

The cross-border labour flows – which had occurred also prior to enlargement, but took on a new dynamic and quality after May 2004 – in turn formed a background to wider debates about appropriate labour market rules and institutions for an ever more integrated ‘single market’ in Europe. Social conflicts at national level regarding the validity of national rules and practices led, at European level, to the European Court of Justice being called upon to rule on the legality of existing national labour and industrial relations laws and practices. At the same time, national policy debates in areas such as minimum wage legislation were often conducted with explicit reference to the challenges of intra-European labour mobility. Even more broadly, such mobility interacted with economic and social processes and debates on subjects such as inequality, demography, unemployment and globalization.

This post-enlargement intra-EU migration – or ‘cross-border labour mobility’, in the preferred official Euro-terminology – is the subject of this book. It seeks to shed light on its characteristics, its impacts, and the attitudes and policy responses of governments and the ‘social partners’ – employers and trade unions – in selected sending (Hungary, Latvia and Poland) and receiving (Austria, Germany, Sweden and the UK) countries. By setting out and analysing the facts ‘on the ground’ for seven countries, we hope to help facilitate debate on this crucial issue of the ongoing process of European integration. To our knowledge the present volume is the first attempt since enlargement to analyse, based on comparative research, both developments and policy responses in a group of sending and receiving countries.

This chapter introduces and provides necessary background information at European level to frame the national-level analyses presented in the 14 chapters that follow. First, we set out the scope of the book and explain why we selected our seven case-study countries. We then provide an overview of the debate on intra-EU labour migration, explaining the different options open to and taken by member states regarding freedom of movement. Difficulties arising from definitional differences in carrying out EU-wide comparative research in this area are also noted. We then consider the drivers of international migration flows and present relevant data for the EU in the run-up to and since enlargement.

Against this background we present and assess the synthesized findings from our country chapters. We discuss overall migration flows and migrants’ characteristics, the impacts on the labour markets of sending and receiving countries and, finally, the policies adopted in both sets of countries by governments, trade unions and employers’ organizations.

2. The Scope and Aims of the Book and Data Comparability Issues

This book reviews the empirical patterns and dimensions of labour migration after the 2004 enlargement and the associated economic and labour market effects, as well as policy responses by governments and social partners. The major questions to be answered are as follows. What trends of intra-EU labour mobility can be observed? How have different actors responded to the challenges of labour migration and what impact have the asymmetric labour market liberalization policies adopted by individual EU-15 countries had on migration patterns? How does post-2004 reality compare with pre-enlargement expectations, fears and prognoses?

The seven country chapters discuss quantitative trends in migration flows, the characteristics of migrant workers (country of origin, demographics, skill levels), their regional distribution, and employment and wage-related outcomes (sectoral and occupational distribution, employment status, working conditions, wage differences). These chapters also assess the impact of cross-border labour migration on labour market outcomes: skills shortages and wages (in sending countries) and unemployment and workers’ bargaining power (in receiving countries).

The focus is on legal migration by workers. So-called ‘posted workers’ – sent abroad by their employer – and illegal migrants are not treated in the statistical part of the empirical chapters, although in some cases they come under scrutiny in the context of migration policies. The same holds for third-country migrants. Since the accession of Bulgaria and Romania took place relatively recently, more emphasis is given to the eight countries which joined in 2004, for which several years of data are available.

For the same seven countries policy chapters address the attitudes and views of governments and social partners in the public debate on cross-border labour mobility, and describe and analyse the policies and initiatives that have been introduced in sending and receiving countries in response to the challenges posed by migration.

The seven selected countries exhibit different magnitudes of migration in- and outflows and varying institutional characteristics and policy approaches.

Among receiving countries the UK, which opened its borders to intra-EU labour mobility in May 2004, has seen the largest influx of migrant workers from eastern Europe, much higher than first predicted, against the background of a strong labour market performance. There has been a major political debate on the impact, and restrictions were imposed in 2007 on workers from Bulgaria and Romania. Sweden also immediately opened up its labour market, but inward migration has been quantitatively limited, despite considerable economic growth. The reasons for this will be examined, taking into consideration labour market developments and also the role of the Swedish industrial relations model. Germany imposed transitional measures but has continued to see a large volume of immigration under special programmes and especially seasonal workers from the – neighbouring – A8 countries. The effects on the German labour market are of particular interest given its high unemployment. Austria’s geographical location and high wage level make it particularly susceptible to cross-border commuting and short-term migration. It also imposed transitional measures but, relative to population size, now has one of the highest proportions of workers who are citizens of another EU state.

Taking the receiving countries together, Sweden and the UK offer a contrast between two countries that opened up their labour markets, but experienced very different quantitative outcomes against the background of different economic developments and very different institutional structures. Both Germany and Austria have long borders with A8 countries, in contrast to the other two destinations, and have substantial inflows despite retaining labour market barriers. There are important institutional differences between these two countries – and with Sweden and the UK – the effects of which call for analysis.

Among sending countries, Poland has been the source of by far the largest number of migrant workers from A8 countries. This has had major demographic, economic and social effects in the country. Hungary, by contrast, has seen relatively small numbers of emigrants, against the background of comparatively high wage and welfare levels and, initially, a more favourable labour market situation. Latvia, the poorest A8 country, has experienced substantial population loss to migration, although its economy has been booming and wages rising fast. However, this rapid expansion has now come to an end.

These three countries also offer interesting perspectives for comparative research, enabling us to assess the relative importance of income differentials, labour market developments, geographical and other factors for the propensity to emigrate.

It is important to note a number of problems that arise when comparing migration flows and the characteristics of migrant workers between European countries. This limits the comparability of the country chapters in some respects. The most serious problem is that some migration flows are not being picked up by either survey or administrative data. The most obvious example is undocumented work but also commuter migration and other forms of short-term migration, such as seasonal work, are unlikely to appear in survey or administrative data because often migrant workers who stay for only a limited period of time are exempted from registering with the public authorities and are unlikely to be captured by standard survey procedures.

More generally, survey data on the migrant population are often considered to be of inferior quality because the survey coverage of the foreign-born population is usually poorer than that of locals (Hardarson 2006). Most data sources distinguish only by nationality. Once people have naturalized they are no longer considered as migrant workers. This is problematic if workers with certain characteristics are more likely than others to naturalize, as seems likely. In addition, there is often no possibility to distinguish between migrants who have been in the country for a long period and those who arrived only recently.

Recent migration flows are recorded by specific obligatory registration schemes such as the Worker Registration Scheme in the UK or the employment registration scheme in Finland that is used for monitoring purposes (compare EURES). However, these schemes risk underestimating flows because they often lack enforcement mechanisms. Furthermore, these schemes – and also regular population registers – usually do not pick up outward migration flows or return migration.2

More qualitative approaches, such as interviews with specific groups of migrant workers, can solve some of the above problems and allow researchers to obtain more detailed information on the labour market situation of migrant workers. The downside is that the results are not representative.

Due to the above described data limitations the country case studies in this book could not be based on a standard definition of the term ‘migrant’ worker. Often a mix of sources is used. Furthermore, the quality and timeliness of data vary between the countries under consideration. As regards sending countries, mirror statistics – administrative records in receiving countries – often have to be used because there are insufficient incentives to deregister and outward migration is severely underestimated.

3. The Freedom of Movement of Labour: EU-level Rules and the Positions of the Main European Actors

3.1 EU-level Rules Governing the Freedom of Movement of Labour

The EU accession of the A8 countries in May 2004, and of the A2 countries (Bulgaria and Romania) in January 2007, in principle extended the ‘four freedoms’ – free movement of capital, goods, services and people – throughout the new, enlarged European Union. However, due to fears of mass influxes and negative outcomes for the local labour market, most EU-15 member states initially decided to suspend full access to their labour markets for citizens of the A8 and A2 countries for a transitional period of up to seven years. The seven years are divided into three periods. During the first two years, with a possible extension of another three years – following a non-binding report by the European Commission and review by the Council (European Commission 2006) – countries could opt to apply national law and policy. This essentially means that citizens from new member states still need a work permit to enter the labour market in these countries. The application of transitional measures for another two years – for the A8 this means beyond 1 May 2009 – is possible, but only if the countries in question experience serious disturbances in their labour markets. Full free movement of labour will apply after 30 April 2011 for A8 countries, and after 31 December 2013 for A2 countries (European Commission 2008).

Against the background of a relatively favourable economic situation three of the EU-15 countries – Ireland, the UK and Sweden – fully opened their labour markets at the time of the accession of the A8 countries; a decision that was not uncontroversial, at least in Sweden. The UK implemented a mandatory Worker Registration Scheme. All other EU-15 countries maintained their work permit systems, although in some cases with modifications – exemptions for certain sectors or occupations – and sometimes combined with a quota system (for country-specific rules see European Commission 2008). Concern about the labour market situation was usually paramount in such cases. In the two countries in this category considered in this publication, unemployment had been rising inexorably since 2001, a trend that continued until 2006 when a slow decline set in. In Germany the unemployment level was very high (at over 10 per cent); and while the situation was rather better in Austria, the 5.2 per cent unemployment rate posted in 2005 was the highest ever recorded there. An additional factor was probably geographical proximity, with both the transitional-measure countries in our sample sharing long borders with A8 countries, in contrast to the UK and Sweden.

By September 2008, however, all countries but Belgium, Denmark, Germany and Austria had fully opened their labour markets to A8 nationals. Germany and Austria have voiced an intention to maintain access restrictions for the final two-year period, which starts in May 2009. Germany and Austria also apply restrictions on the posting of workers in certain – sensitive – services sectors, such as construction and industrial cleaning (see European Commission: Factsheet on Transitional Measures).

Cyprus, Sweden and Finland, as well as all A8 countries – with the exception of Hungary – have fully opened their labour markets to workers from Bulgaria and Romania. The remaining countries – including the UK and Ireland, which fully opened their labour markets upon the accession of the A8 but had severely underestimated inflows into their labour markets – oblige citizens of Bulgaria and Romania to obtain a work permit.

In some countries exceptions and simplified procedures apply for certain sectors and occupations (for in-depth information see the EURES portal on the EU website). In general, the accession treaty lays down that preference in terms of labour market access is to be given to nationals of other EU member states over those from third countries. Once a citizen of an A8 or A2 member state has legally worked for at least 12 months in an EU member state that applies restrictions he or she is granted free access to this labour market, but not automatically to others (European Commission: Guide for National Administrations). The system for coordinating social security schemes for people moving around has applied since accession (European Commission 2004). In principle, equal treatment as regards remuneration, other employment matters and access to social and tax advantages applies (Council Regulation [EEC], No. 1612/68 and amending acts).

3.2 The Positions of European Actors towards Freedom of Movement of Labour

What were the positions of the main EU-level actors – European Commission, European Parliament and social partners – regarding the free movement of labour at the time of the accession rounds 2004 and 2007?

The key point is that, in contrast to many member states, before the accession of the A8 countries European-level political actors were united in their view that free movement of labour should be granted as soon as possible and that transitional measures should thus be applied only if absolutely necessary.

At the beginning of 2006 the European Commission issued a report on the functioning of the transitional arrangements. It was based on consultations with member states and social partners, as well as statistical evidence on workers’ mobility pre- and post enlargement. According to the European Commission (2006) migration flows after enlargement have had positive effects on the economies of EU-15 member states: there was no evidence of the crowding out of national workers, but instead A8 nationals helped to alleviate skills bottlenecks, and enlargement has helped to formalize the underground economy. Also, no direct link could be found between the magnitude of mobility flows from A8 member states and the transitional arrangements adopted. With regard to the danger that persons would falsely pose as self-employed to circumvent transitional arrangements, as well as the positive experiences of those member states that had opened their labour markets fully to A8 nationals from the start, the Commission recommended that member states should carefully consider whether to continue applying restrictions (European Commission 2006)...