EU Labour Migration in Troubled Times

Skills Mismatch, Return and Policy Responses

Béla Galgóczi, Janine Leschke

• Publisher: Routledge
• Year: 2016
• Print ISBN: 9781409434504
• eBook ISBN: 9781317140221
• Topic: Economics
• Subtopic: Labour Economics
• Index: Economics

The debate on the free movement of labour within the EU has gained new momentum in the wake of the economic crisis. Building on the earlier Ashgate publication EU Labour Migration Since Enlargement, the editors have assembled a team of experts from across Europe to shed light on the critical issues raised by internal labour mobility within the EU in the context of economic crisis and labour market pressures. The book's chapters tease out the links between economic developments, regulatory frameworks and migration patterns in different European countries. A central focus is on issues of skills and skills mismatch and how they relate to migration forms, duration and individual decisions to stay or return. Based on detailed analysis of European and national-level sources, the results presented clearly contradict assumptions about a "knowledge driven migration". Rather, over-qualification and the corresponding underutilisation of migrant workers' skills emerge as a pervasive phenomenon. At the same time the characteristics of migrants - not just skills, but socio-demographic characteristics and attitudes - and also their labour market integration are shown to be very diverse and to vary substantially between different sending and receiving countries. This calls for a differentiated analysis and raises complex issues for policymakers. Examples where policy has contributed to positive outcomes for both migrants and domestic workforces are identified. Unique in analysing labour migration flows within the European Union in a comparative manner putting skills into the centre and taking account of the effects of the economic crisis, while addressing policy concerns this is a valuable resource for academics, policymakers and practitioners alike.

Chapter 1
EU Labour Migration and Labour Markets in Troubled Times¹

Béla Galgóczi, Janine Leschke and Andrew Watt

1. Introduction

The accession of eight new central and eastern European countries (EU8) to the EU in May 2004 and the subsequent accession of Romania and Bulgaria in January 2007 (EU2) marked an important step in the history of European integration. It reunited a continent divided since (at least) 1945. An important consequence was the extension of the free movement of capital, goods, services and people to Central and Eastern Europe. European law guarantees these freedoms within the EU – in principle. However, there were fears of a massive influx of workers from the new Central and Eastern European member states (NMS) with expected negative impacts on the receiving countries’ labour markets (and welfare systems); in many western European countries the ‘Polish plumber’ came to symbolise this threat. As a result, all but three countries (the United Kingdom, Ireland and Sweden) made use of so-called transitional measures in 2004. These transitional measures restricted – to varying degrees – the right to work for EU8 citizens in EU15 countries for a period of up to seven years.

EU15 countries successively opened their labour markets over the subsequent years, however, and only Germany and Austria made use of the entire seven-year transition period, fully opening up their labour markets only in May 2011. Workers from Bulgaria and Romania will not have complete freedom of movement until January 2014; currently, 11 Member States still have transitional measures in place with regard to EU2 workers, in several cases with simplified procedures or exceptions for certain groups of workers or certain sectors.² The darkening economic outlook from the summer of 2007 was a major factor here. Interestingly, Spain temporarily re-introduced restrictions on Romanian workers in July 2011, a step that was justified with reference to the labour market impact of the crisis. Transitional measures do not apply to those Romanian workers and their families already employed or registered as jobseekers in Spain (European Commission 12 August 2011).

Post-2004 labour mobility constitutes a historically new phenomenon in a number of respects, exhibiting characteristics that distinguish it from its previous forms as a result of EU enlargements. First of all, it is a multifaceted process, with different forms of labour mobility coexisting in a rapidly changing environment, a factor whose importance has more recently has been further accentuated by the economic crisis. This is why a key focus of this book is on different forms of cross-border labour mobility, including commuting, short-term, circular and more permanent migration.

It is also new that migrants from low-wage countries have a comparably high educational profile in absolute terms and in relation to nationals in the target countries. Although a number of studies have pointed to a mismatch between immigrant workers’ skills and the jobs they are performing, this essential issue has not received enough attention. It is, however, a focus of this study, in which we address such questions as: To what extent are skills transferable across borders? Does the length of stay in the receiving country improve the skills–job match of migrant workers? Do migrant workers experience human capital augmentation (or depreciation) during their time abroad and what does that imply for the jobs they get on their return? Do specific forms of cross-border labour mobility such as cross-border commuting lead to more positive outcomes in terms of skills–job match?

Free labour mobility within a heterogeneous economic and political union has been (progressively) introduced in a rapidly changing environment. The regulatory environment has changed as more and more countries opened their labour markets for intra-EU labour mobility, but the context remains one of different coexisting regulatory frameworks. The economic crisis further changed the environment for cross-border labour mobility, as both source and target countries were affected but with large intra-country differences and in waves that were not completely synchronised. Key questions addressed by this publication include the impact of the economic crisis on migrants’ opportunities and perspectives. To what extent has the crisis led to increased return migration? Have those that have stayed been disproportionately affected by employment losses and unemployment? And what have been the policy responses in this context?

The approach taken in this book is primarily comparative, and the majority of chapters make use of quantitative data sources, among them European and national Labour Force Surveys, the WageIndicator data and the International Adult Literacy Survey. For more detailed information on these data sources, and their limitations, as well as on common definitions used in this book refer to Annex 1. Beyond the thematic unity, all the chapters take a predominantly ‘macro’ view, in other words, discussing the position of migrants on (national) labour markets in the aggregate and, in some cases, by migrant category and sector. The chapters of this book are structured in three parts. The first part looks at the issue of jobs–skills mismatch with regard to migrant workers and cross-border commuters in the post-accession period and especially during the crisis. The second part deals with selectivity in return migration: in other words, what are the characteristics of migrant workers and of those returning to their home countries after a period working abroad. Part III analyses the policy implications of and responses to cross-border labour mobility.

This introduction proceeds as follows. We provide an overview of the existing literature on post-2004 labour mobility and situate the various chapters of this book within that context (2). Taking a birds-eye European perspective, we then present, in Section 3, an overview of relevant empirical developments using the latest ELFS data. We begin with overall population movements, and then turn to employment and unemployment trends, with a focus on the impact of the crisis. Finally, we look in a more disaggregated way at migrant stocks and flows, considering issues of sector, skill levels and types of employment contract. Section 4 presents the structure of this book and reports the main findings from its chapters.

2. Existing Research into the Key Topics of the Book

In this section we discuss the available evidence on the key topics covered in this book and situate its chapters in that context. We first discuss the different forms of labour mobility; second, we consider the as yet sparse evidence in the literature on the impact of the economic crisis on labour mobility, including return migration; and third, we look at the evidence on skills mismatch.

2.1 Different Forms of Labour Mobility Including Return Migration

One simple distinction is between temporary and permanent labour mobility.³ Temporary labour mobility can be either a matter of choice of the migrant worker (leading to voluntary return migration) but it can also be due to limited residence or work permits (contract migration) (see, for example, Dustmann and Weiss 2007). The latter is becoming less important with the successive implementation of free movement of labour in Europe. Temporary migration is sometimes seen as a possibility to limit the brain drain on sending countries (compare, for example, OECD 2009: 155–60; Wickramasekara 2002; see also next section). In this regard, the role of policy measures from sending countries in incentivising return migration is also frequently pointed out (OECD Migration Outlook 2009: 155–60; for specific examples see Galgóczi, Leschke and Watt 2009).

A specific form of temporary labour mobility is circular migration, where migrant workers move back and forth between their home and their host country. The most obvious example is seasonal migration in, for example, agriculture but non-seasonal circular migration may also have become more important in the light of frequent and cheap airline connections. Another form of labour mobility and, in a way, a substitute for full geographic mobility is cross-border commuting. Overall, its quantitative role is limited, but it is of great significance in border areas (see Huber in this book and Huber and Nowotny 2009).⁴

Particularly given the transitional measures applied to workers (which ended for EU8 workers between 2004 and 2011, depending on the destination country, and are still in place for EU2 migrants in the majority of EU15 countries) another important distinction is that between labour mobility and services mobility, including service provision by the self-employed and the posting of workers by foreign firms, as there is evidence that these have been used to circumvent transition measures (for a critical assessment of service mobility in the Nordic countries compare, for example, Dølvik and Eldring 2008: 36–49). Krings (2009) for Germany and Austria and Fellmer and Kolb (2009) for Germany address the relationship between the maintenance of transition measures and the recourse to and abuse of the freedom of services (for example, posting of workers and bogus self-employment) and likely incentives to irregular work as an alternative to regular labour market mobility. We look at this issue in Section 4.3 below.

Several studies on pre-enlargement migration have concluded that return migration of migrants from European countries working in other European countries is substantial (on the United Kingdom, see, for example, Dustmann and Weiss 2007). But the evidence on duration of migration is still very limited and sometimes inconclusive which, besides the abovementioned data deficiencies, also reflects the fact that it is still relatively early to assess this phenomenon comprehensively. Indeed, according to the European Integration Consortium (2009: 159) the existing studies on return migration rather show the methodological difficulties than provide reliable data. This is a notable gap that a number of the contributions to this volume help to fill.

Reviewing the existing research in this area, a number of authors present preliminary evidence on the duration of pre-crisis post-enlargement migration. Some (for example, OECD 2009: 5665) have suggested that the importance of temporary relative to permanent migration is greater than in previous migration waves. In this regard emerging labour shortages in sending countries, policies to incite migrants to come back home and changes in the size of the wage gap (also driven by currency appreciation in home countries) are pointed out, as are low travel costs. As an illustration, in 2007 59 per cent of A8 migrant workers reported in the British Workers Registration Scheme questionnaire that they intended to stay in the UK for less than three months and only 8 per cent said they intended to stay more than two years; about a quarter of respondents didn’t know yet (Clark and Drinkwater 2008). Of course the period since accession is still relatively short and such ex ante expectations on the part of workers embarking on a spell of employment abroad may, but need not, be realised. Pedersen and Pytlikova (2008) look at return migration of EU10 migrants in the five Nordic countries using data from the national statistical offices of the receiving countries up to the year 2007. According to the authors a comparison of flows and stocks suggests that return migration plays a significant role in migration from Hungary, Slovenia, the Czech and Slovak Republics, and Poland (on Poland see also Anacka and Fihel in this volume), whereas they conclude that the figures for EU2 migrants show rather low return migration tendencies. Their results for the Baltic countries are inconclusive. (for more recent results see Hazans in this volume).

Dølvik and Eldring (2008: 31–2) note that a large part of the labour migration to the Nordic countries has been of a short-term and circular character, but that Norwegian data in particular point to a clear tendency towards longer periods of residence and growth in the numbers of those who have moved permanently, including a growing level of family reunification. Register figures still indicate that most migrants stay only for short periods. However, a specific survey of Polish migrants in Oslo showed that most respondents had a time frame for their stay of several years rather than months (Dølvik and Eldring 2008: 31–2). Ivlevs (2008a and 2008b), comparing net immigration to total immigrant flows separately for Sweden and Denmark, concludes that for the period 2003 to 2007 the majority of migrants from the new member states stayed until the end of that period. In general, the proportion of ‘stayers’ was higher in Sweden and in NMS comparison it was highest for Polish, Lithuanian and EU2 migrants. OECD (2009: 60) confirms that EU2 migrants are less likely to return (probably due to the fact that restrictions on movement are still in place in most countries and wage gaps remain high) than, for example, Polish workers.

Studies on return migration point to a range of reasons for return: family and other social bonds in the home country, higher purchasing power of the host country’s currency in the home country; acquisition of human capital and/or financial capital in the host country that may increase earnings in the home country (for example, Dustmann and Weiss 2007: 246). Of course, return migration can also reflect the fact that the migration experience did not live up to the individual’s private expectations (an issue addressed by Anacka and Fihel in this volume). These studies also highlight that the (planned) duration of stay is likely to determine the labour market outcomes in that those migrants that plan to return home within a short period of time may be more willing to accept lower paid and less fitting jobs, considering the purchasing power of their earnings in their home country, and they are less likely to invest in acquiring the specific human capital of the host country, such as the language (Clark and Drinkwater 2008).

2.2 Impact of the Economic Crisis on Cross-border Labour Mobility

Although intra-EU mobility is still relatively low in terms of the share of the non-national EU population in individual member states from a sending country perspective the magnitude of outward migration has reached high levels already, with around 5 per cent of the Baltic labour force in the United Kingdom (Dølvik and Eldring 2008) and even higher rates for outward migration for Romania (Ambrosini et al. 2011).

The European Integration Consortium has estimated that the stock of migrants from the EU8 in the EU15 could increase from 1.9 million in 2007 to 3.8 million in 2020 under the present institutional conditions, and to 4.4 million when the free movement is eventually introduced by all EU15 member states; for Bulgaria and Romania the stock is estimated to increase from almost 1.9 million in 2007 to 3.9 million in 2020 under current immigration conditions, and to slightly more than 4.0 million if the free movement of workers is introduced (European Integration Consortium, final report 2009: 40–53). Beyond the more general uncertainty surrounding such forecasts, these estimates may be affected by the economic crisis, as the authors also mention.

Severe recessions have historically had a negative impact on net migration flows, and particularly labour migration flows; on the other hand, they have not usually affected long-term migration trends (OECD 2009: 63). With regard to the recent economic crisis, the literature is still sparse and...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Contents
• List of Figures
• List of Tables
• List of Contributors
• 1 EU Labour Migration and Labour Markets in Troubled Times1
• I Different Types of Cross-border Labour Mobility and Skills–Job Mismatch
• II The Extent and Qualitative Characteristics of Migration and Return against the Background of Crisis and Recovery
• III Policy Implications of, and Responses to, Cross-border Labour Mobility in the EU after 2004
• Index