Free movement of labor, redux

On the previously mentioned subject of Europe’s “free” movement of labor (and the possibility of a massive influx of cheap labor from the east come EU accession time) here’s an article I wrote on the topic in November for Czech and Slovak Construction Journal (for some reason the article’s not posted online).

If you’re too lazy to read the whole thing… It talks about the onset of “EU fatigue” in the east, plus it cites a bunch of studies that discredit the fear of a massive influx of eastern workers wrecking havoc on Western European job markets. And this is really about Polish construction workers already living illegally in Berlin, not Czech IT geeks in London (nor British chefs in Prague). Enjoy.

Confess, for the EU is nigh! Or not.

?Talk to the hand, because the face ain?t listening.?

That?s probably what a number of German politicians would like to have told Czech Foreign Minister Cyril Svoboda in September. In an interview with German daily Handelsblatt published Sept. 24, Svoboda urged Germany to let Czech workers move there to work, if they so desire, after the Czech Republic joins the European Union in May. That, of course, is just not going to happen.

The worst charge that one could level at Svoboda for these remarks is wishful thinking. Like most Europhiles in the east, he probably harbors a quixotic vision of fireworks and celebration across the Republic on May 1, when the Czechs? dream of becoming ?full? members of the EU becomes a reality ? at least on paper.

For people, Czechs included, who lived and worked here during the past decade-plus of change, it probably seems a bit odd that an event long imbued with something approaching the weight of the rapture is a mere seven months away. But the formal accession to the EU of eight former Communist satellites, including three small chunks of the former U.S.S.R. ? the Czech and Slovak Republics, Estonia, Latvia, Lithuania, Hungary, Poland and Slovenia ? will likely be something of an anti-climax. Few expect anything to actually change on May 1. And on one of the few issues that could potentially alter people?s lives significantly ? the right of new EU citizens to live and work anywhere in the EU ? most current Member States have insisted on a ?transition period? during which they will bar immigration of easterners seeking higher paying jobs and a better lifestyle.

In at least one substantial way, then, the new countries will enter as second-class EU members. (Let?s not even start thinking about adoption of the euro.)

By most economic standards, the countries of the east are already so tied to Western Europe that EU membership is by now just a formality. There was never much substance to the pro-EU advertisements in which Prague shopkeepers boasted that, thanks to the EU, they?d soon be able to open a store in Vienna. The truth is, any Czech person with enough means and ambition can already move to Austria and start a business.

Yet on free movement of labor, the one issue where accession might actually benefit everyday people, Brussels has balked. The ?transition period? could well last beyond the end of the decade. Considering that free movement of labor is considered one of the ?four fundamental freedoms? of the Union and a cornerstone of European integration, this takes more than a little shine off the May accession date.

It?s perhaps telling that this ?transition period? ? as though 15 years of remarkable change to a capitalist economy have not been transition enough ? has elicited so little protest from the east, where publics have grown accustomed to condescension from Brussels. If Svoboda is Don Quixote fighting windmills in Brussels and the Czech Republic his home of La Mancha, the Czech nation can only look on like a bemused Sancho Panza. As New York University?s Jiř? Pehe has pointed out, the euphoria in Eastern Europe once spurred by the ?back to Europe? battle cry of the 1990s has given way to ?EU fatique.? Doubts are mounting about the benefits of joining; for many, Brussels now seems less a guarantor of stability than a faceless authority issueing regulations on how Poles should cook their kielbasa.

Poland and Germany are the key players, says Roland Beck, an analyst with Deutsche Bank Research who recently completed a report on Poland?s political and economic in the run-up to EU accession. German politicians fear a flood of cheap immigrant labor, mainly from Poland. The issue is of special importance for the building industry, since many of the Polish workers who would move to Germany are construction workers. Indeed, a good number of Poles are in Berlin already, working illegally on construction sites there. The fear is that legalizing this workforce would push wages down for Germans, says Beck.

The appeals of easterners like Svoboda are likely to fall on deaf ears, and the ?transition period? may well last until at least 2010, says Beck. ?This decade there is not going to be free movement of Polish workers,? he says. ?Domestic political pressure on that issue is quite strong here in Germany.?

Some northern countries, such as Denmark and Great Britain, will welcome migrants from new EU members immediately upon accession. This may sound bold, but it is of little importance to the labor market. Unskilled labor is the contentious issue, not the educated workers that might be tempted by a job in London. ?In my view, the countries that will allow migration from Poland are not the ones of so much interest. The most interesting market for Polish workers in Germany,? says Beck.

In fact, most indicators discredit fears of a mass exodus of workers from Eastern Europe. Svoboda cited a study on the topic conducted in the Czech Republic that showed only about 19,000 Czechs would travel to Germany seeking jobs ? not a significant number in the scheme of things. Several years ago, a study produced by the European Commission projected that 335,000 easterners would go west ? and of these, only 35% would be employees. Another report suggested this migration would actually raise the Union?s overall GDP enough to offset the costs, provided the moves are not motivated by welfare benefits.

A spate of similar surveys have yielded numbers ranging from 100,000 to 400,000 migrant workers, which would mean that by 2015-2020, the number of migrant workers living in the ?old? EU would amount to only 0.5 to 0.8 percent of the EU?s current population, according to recent report by Katinka Barysch, chief economist at the Centre for European Reform. This is hardly enough to wreck havoc on the job market, considering an estimated 0.2% of current EU residents are easterners already. And many economists, pointing to the effects of the EU?s last round of enlargement, say even these numbers are played up.

Oddly enough, this debate obscures one important fact: Many of the eastern countries, such as the Czech Republic, actually see more immigration than emigration, with workers from Ukraine and other countries further east moving there in search of higher wages and often working illegally. The EU, again fearful of a larger and more porous eastern boundary, is pushing these countries to enact higher obstacles to such immigration.

It?s a cruel irony. Experts have long blamed the never-ending economic malaise of Western Europe at least in part on the notorious inflexibility of its labor markets. At a moment when one might expect to hear ?let freedom (of labor movement) ring? across the Continent, the EU is actually working hard to stanch the flow of workers across borders.

7 thoughts on “Free movement of labor, redux

  1. A few days ago Newsnight on BBC2 did a report on migration from the new EU member states. They interviewed Katinka Barysch…and a Polish builder working in London.

  2. Although the complaint is valid, the resulting legislation, in typical Eurocrat style, does little to harm either the new EU countries and the countries that limit the free movement of workers from those countries.

    First the contention is that there wouldn’t be that many people who will use that right
    Second, the countries that limit that right AFAIK do it by using a quota system.

    If those two points are valid there will be no problem.

    The exception may be Germany, but given the unemployment levels there it is not without reason that they don’t want a big influx of workers into their labour market. It is unclear how Germany would benefit in the short term from that labour influx.

    And as for the following opinion:

    “Doubts are mounting about the benefits of joining; for many, Brussels now seems less a guarantor of stability than a faceless authority issueing regulations on how Poles should cook their kielbasa.”

    I don’t see how anyone that has looked at the EU can doubt that it benefits those that are joining.
    Even those countries that for all kinds of reasons choose not to join the EU (Switzerland, Norway) adhere to almost all the rules and regulations of the EU, because in the end they made the assesment that they would benefit from it.

    I think it is more a question of cold feet.
    Now that the day nears that they finally will become members of the EU they are thinking about all the negative things, about the things they will have to give up. It’s a bit like the East Germans romancing about the time before the reunification.

    The same effect is also present among the current members of the EU. It is as if they suddenly realise that there are real consequences. That the expansion of the EU will have a real impact in their countries.

    It is nothing to worry about. In the long run the expansion of the EU will benefit both the current members and those joining it.

  3. The sentence you quoted doesn’t really express an opinion; it’s simply a fact that doubts in these countries are mounting. Jiri Pehe wrote about this last year, here:
    http://www.pehe.cz/Clanky/2003/08-25-projectsyndicate.htm

    Whether these doubts are justified or not is another thing. To put it simply, I guess this is mainly a problem of bad PR.

    Another fact: A majority of all these countries have recently voted that despite any reservations, EU membership is a net benefit. So I’d say these feet aren’t all that cold. This in itself is pretty remarkable (and that’s an opinion) given that current EU countries have done so little to make the Union seem appealing.

    I’m basically a euro-phile (if that can be said of an Amerian) but I wish Western Europe would stop assuming that everybody’s so 100% ecstatic about the idea of joining their club.

  4. Dutch: “It is nothing to worry about. In the long run the expansion of the EU will benefit both the current members and those joining it.”

    There was and is a strong case for trade and market liberalisation in Europe as well as a qualified case for harmonisation of technical standards – I say “qualified” because some benighted character once had the “brilliant” idea about a decade back of harmonising the plugs for household electric appliances, which would have necessitated the rewiring of all offices, factories, shops and homes in Britain. And then there was that infelicitous proposal for a mandatory analogue standard for High Definition TV in Europe just before Digital TV was launched.

    That said, it is not stark, staringly obvious that we benefit from the Common Agricultural Policy, many of the imperatives in the Social Chapter or would benefit by signing up to join the Eurozone, especially seeing as how miserably the Eurozone economy has been performing lately and how the Belgian finance minister in 1996 commended European monetary union as a good way of preventing the encroachment of Anglo-Saxon values – for which we have much to thank those good, enlightened folk who came from what is now Germany and the Netherlands to settle in England in the 5th and 6th centuries.

    Nor is it obvious that we all would benefit if the drive towards European federalism finally succeeded in extinguishing the historic nation states of Europe. The Treaty of Westphalia in 1648 to bring to an end the Thirty Years War in Europe was a great idea.

    Viva variable geometry!

  5. The sentence you quoted doesn’t really express an opinion; it’s simply a fact that doubts in these countries are mounting. Jiri Pehe wrote about this last year, here:
    http://www.pehe.cz/Clanky/2003/08-25-projectsyndicate.htm

    I called it an opinion more because of the second part of the sentence (about how to cook). But it is indeed a fact that the enthousiasm of people is diminishing. Or doubts are mounting as the quote says.

    As to the article I would say – welcome back to reality. The last part of that reality is that it is neccesary to accept that the euro is not going to solve any monetary problems. The euro is not going to save anyone. Not even Germany or France.
    Or the Netherlands, which at this moment also has problems in keeping the 3% deficit limit.

    Many if not all reservations and doubts were already known when the new EU countries applied and voted for EU memberschip, so why is the enthousiasm waning after those decisions have been taken? That’s why I called it a case of cold feet. The benefits of the memberschip are already discounted and the negative aspects are highlighted for various reasons. But the decisions have been made so why stick with the negative? Why join the EU with a sense of disappointment?

    I’m basically a euro-phile (if that can be said of an Amerian) but I wish Western Europe would stop assuming that everybody’s so 100% ecstatic about the idea of joining their club.

    It is not that I think anyone in the new EU countries should be ecstatic, far from that.
    Even in the current EU countries not everyone is that ecstatic. But the deal is done. It is going to happen. And I see no reason whatsoever to present this as a negative event.

    I’m not a fan of objective and unbiased journalism, so I don’t expect anyone to stop writing about the negative aspects of the EU, in fact writing about it is important because hopefully it will cause improvement.

    But at the same time I want to stress again (and again) that the enlargement of the EU is a positive thing!

  6. “Many of the eastern countries, such as the Czech Republic, actually see more immigration than emigration, with workers from Ukraine and other countries further east moving there in search of higher wages and often working illegally.”

    This is a really interesting point Scott. I have been digging around trying to get info on this myself. These countries badly need to attract immigrants as their population problems are generally worse than the Western EU members. They also have much less accumulated wealth to see them through the mess. So immigration is vital, my only doubt is whether they will be able to attract it in sufficient quantities, and then this only moves the problem further east as Russia and the Ukraine lose vital working age population.

    “not Czech IT geeks in London”

    This raises a different question: is there really any reason for IT geeks, or others who can work over the internet to move at all these days. Isn’t the migration trend more likely to be down the skill ladder.

  7. Edward:

    On immigration into central Europe

    This is a really interesting point Scott. I have been digging around trying to get info on this myself. These countries badly need to attract immigrants as their population problems are generally worse than the Western EU members. They also have much less accumulated wealth to see them through the mess. So immigration is vital, my only doubt is whether they will be able to attract it in sufficient quantities, and then this only moves the problem further east as Russia and the Ukraine lose vital working age population.

    Migration Information is a good site to go for more information on international migration. The country profiles they have are particularly interesting.

    On the subject of whether the new member-states will be able to attract immigrants, I’m agnostic. I can easily see Slovenia, the former Czechoslovakia, and Hungary becoming immigration magnets–those countries have generally seen either net immigration or fairly balanced migration patterns, Slovenia has a pool of labour to draw upon elsewhere in the former Yugoslavia, and Hungary has millions of much poorer co-ethnics it could conceivably draw upon. I’m more skeptical about Poland and the Baltic States, given the relatively lower living standards, though apparently there’s up to a half-million immigrants working in Poland right now (Ukrainians, Belarusians, Vietnamese, Armenians). Romania and Bulgaria? Romania, just possibly, via Moldovan immigration, over the medium to long term.

    You’re quite right that this replacement migration in central Europe will only exacerbate the demographic problems of eastern (and southeastern?) Europe. Barring the imposition of an Iron Curtain at the Bug and Prut, though, there’s just too large a gap already for emigration westward to be contained.

    I’ve done a paper on Poland and its relationship with its eastern neighbours, focusing particularly on migration as representative on human relationships. Lemme see if there’s some sources–E-mail me.