EU Labour Migration since Enlargement

EU Labour Migration since Enlargement

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EU Labour Migration since Enlargement Trends, Impacts and Policies

Edited by Béla Galgóczi Janine Leschke Andrew Watt European Trade Union Institute, Belgium

© Béla Galgóczi, Janine Leschke and Andrew Watt 2009 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the publisher. Béla Galgóczi, Janine Leschke and Andrew Watt have asserted their moral right under the Copyright, Designs and Patents Act, 1988, to be identified as the editors of this work. Published by Ashgate Publishing Limited Ashgate Publishing Company Wey Court East Suite 420 Union Road 101 Cherry Street Farnham Burlington Surrey, GU9 7PT VT 05401-4405 England USA www.ashgate.com British Library Cataloguing in Publication Data EU labour migration since enlargement : trends, impacts and policies 1. Alien labor - European Union countries 2. Migrant labor - European Union countries I. Galgóczi, Béla II. Leschke, Janine III. Watt, Andrew 331.5'44'094-dc22 Library of Congress Cataloging-in-Publication Data Galgóczi, Béla. EU labour migration since enlargement : trends, impacts and policies / by Béla Galgóczi and Janine Leschke and Andrew Watt. p. cm. Includes index. ISBN 978-0-7546-7684-3 -- ISBN 978-0-7546-9362-8 (ebook) 1. Working class--European Union countries. 2. Migration, Internal--European Union countries. 3. Alien labor--European Union countries--Government policy. 4. European Union countries--Emigration and immigration. I. Leschke, Janine II. Watt, Andrew. III. Title. HD8380.5.W38 2009 331.6'2094--dc22  ISBN 978-0-7546-7684-3 eISBN 978-0-7546-9362-8

2008052664

EU Labour Migration since Enlargement

Contents List of Figures List of Tables and Boxes Notes on Contributors   1 Intra-EU Labour Migration – Flows and Policy Responses   Béla Galgóczi, Janine Leschke and Andrew Watt 2 The Dimensions and Effects of EU Labour Migration in the UK   Sonia McKay 3

EU Labour Migration: Government and Social Partner Policies in the UK   Jason Heyes

vii ix xiii 1

29

51

4 The Dimensions and Effects of EU Labour Migration in Sweden   69 Per Lundborg 5

EU Labour Migration: Government and Social Partner Policies in Sweden   Monika Arvidsson

6

The Dimensions and Effects of EU Labour Migration in Germany   Max Friedrich Steinhardt

101

7

EU Labour Migration: Government and Social Partner Policies in Germany   Simon Fellmer and Holger Kolb

127

8 The Dimensions and Effects of EU Labour Migration in Austria   Ewald Walterskirchen

149

87

EU Labour Migration since Enlargement

vi

9

EU Labour Migration: Government and Social Partner Policies in Austria   Günther Chaloupek and Johannes Peyrl

10 Dimensions and Effects of Labour Migration to EU Countries: The Case of Poland   Agnieszka Fihel and Marek Okólski 11

Labour Emigration: Government and Social Partner Policies in Poland   Robert Szewczyk and Joanna Unterschütz

12 Dimensions and Effects of Labour Migration to EU Countries: The Case of Hungary   Ágnes Hárs 13

Labour Emigration: Government and Social Partner Policies in Hungary   Szilvia Borbély

14 Dimensions and Effects of Labour Migration to EU Countries: The Case of Latvia   Pārsla Eglīte and Zaiga Krišjāne 15

Labour Emigration: Government and Social Partner Policies in Latvia   Aija Lulle

Index  

171

185

211

229

253

269

291

311

List of Figures 2.1 Number of applications for registration   2.2 Number of applications for NI numbers   2.3 Migration in-flow 2002–2005    2.4 Age of A8 workers registering with WRS, May 2004 to December 2007   2.5 Applications for child benefit from A8 nationals, UK   2.6 Geographical distribution of employers of registered workers   2.7 Intended length of stay of registered workers, January 2007–December 2007   4.1 Gross immigration and emigration and net immigration to Sweden from the EU-10 countries, 2000–2007   4.2 Immigration to Sweden from some new EU members, 2000–2007   4.3 Share of men in immigration to Sweden for four selected countries, 2000–2007   4.4 Residence permits, total and for work, EU-10 countries plus Malta and Cyprus, 2003–2007  

32 33 34 35 36 41 42 71 71 72 74

6.1 Net migration of foreigners to Germany, 2003–2006   6.2 Net migration of foreigners from the new member states, 2000–2006   6.3 Qualification structure of employed persons, 2006  

106

8.1 Foreign residents and employees in Austria   8.2 Development of population and migration in Austria  

150 153

9.1

106 119

Foreign nationals as a percentage of total dependent employment  172

10.1 The number of Polish residents residing abroad, by length of stay and quarter of year   10.2 Polish pre- and post-accession migrants, by group of destination countries (%)   10.3 The age structure of Polish pre- and post-accession migrants, by group of destination countries (%)   10.4 The educational structure of Polish pre- and post-accession migrants, by group of destination countries (%)  

190 192 194 197

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10.5 Polish pre- and post-accession migrants, by place of residence in Poland and group of destination countries (%)   10.6 Regions of the highest (dark grey), medium (light grey) and lowest (white) out-migration per 1,000 inhabitants, by group of destination countries   10.7 Socio-demographic profile of Polish pre- and post-accession migrants, selected features (%)   10.8 Socio-demographic profile of Polish post-accession migrants by group of destination countries, selected features (%)   10.9 Temporary migrants (aged 15+) from Poland (left scale) and unemployment rate (right scale) according to LFS, 1994–2007   10.10 Remittances (total) in Poland (right scale) and the Baltic States (left scale), 2000–2006 (million USD)   10.1a Poland by voivodships   12.1 GDP per capita (PPS, EU-27=100%)   12.2 Employment, unemployment and participation rate in Hungary, 1998–2007    12.3 Relations between wages of sending and of receiving countries, 2006 (PPS)   12.4 Total social benefit expenditure as a percentage of GDP   12.5 Social benefit total expenditure per inhabitant (PPS)   14.1 International migration by country groups according to official statistical data   14.2 Number of relatives working abroad after EU enlargement   14.3 The percentage of people in different age groups who have worked abroad   14.4 Time spent working abroad, by gender (%)  

198 199 201 201 204 206 210 241 241 242 244 245 270 274 276 279

List of Tables and Boxes 1.1 Key macroeconomic drivers in the three A8 sending countries compared to the EU-15, before and after enlargement   4.1 Immigration from the seven new EU member states with the lowest number of immigrants to Sweden in 2007 (number of persons)   4.2 The number of residence permits issued to relatives from the EU-10 and selected countries   4.3 Employment rates for immigrants from the EU-10 and selected countries arriving between May 2004 and November 2006 and for people born in Sweden (November 2006; parentheses show number of observations)    4.4 Working hours for immigrants from the EU-10 and selected countries arriving between May 2004 and November 2006 and for people born in Sweden (November 2006; aged 16–64; parentheses show observations)   4.5 Average age of immigrants, men and women, 2006 (observations in parentheses)    4.6 Distribution of workers born in Sweden, EU-10, Poland and Lithuania across nine industries, November 2006 (immigrants who arrived after accession May 2004)   4.7 Average monthly wages in SKR in November 2006 for immigrants from EU-10 and selected countries who arrived between May 2004 and November 2006 and for people born in Sweden (16–64 years of age; parentheses show number of observations)   4.8 Work permits for individual job seekers from the EU-10 between 1 May 2004 and 31 July 2007   5.1 6.1 6.2

LO’s demands for action and results  

Foreign population stock in Germany 2004–2007   Foreign population stock from the new member states in Germany, 2004–2007   6.3 Regional concentration, 2007   6.4 Age and gender composition of immigrants from the new member states, 2006  

10

72 75

76

77 77 78

80 82 93 104 108 109 111



EU Labour Migration since Enlargement

6.5 Socio-demographic characteristics of the foreign population stock from the new member states, 2007   6.6 Foreign students by region of origin, 2007   6.7 Programme workers in Germany, 2000–2006   6.8 Seasonal workers by country of origin, 2000–2006 (%)   6.9 Employment (liable to social security contributions) and marginal part-time workers, 2006   6.10 Unemployment rate, 2005–2007 (%)   6.11 Employees by economic sector and nationality, 2006   8.1 8.2 8.3 8.4 8.5

Foreign employees in Austria by nationality   Foreign employees in Austria by nationality and gender   Foreign employees in Austria by nationality and age group   Foreign employees in Austria by nationality and industry   Median income of employees in Austria in 2005 by nationality and gender   8.6 Foreign unemployment in Austria by nationality   8.7 Regional unemployment rate in Austria   10.1 The number of Polish citizens staying abroad for longer than two or three months by destination country (estimates, in ‘000)   10.2 Polish pre- and post-accession migrants by destination country (%)   10.3 The percentage of men among Polish pre- and post-accession migrants, by group of destination countries (%)   10.4 Mean and median age of Polish pre- and post-accession migrants by main groups of destinations and selected destination countries   10.5 The educational structure of Polish pre- and post-accession migrants by sex (%)   10.6 The main source of income of pre- and post-accession migrant households in Poland by group of destination countries (%)   12.1 Hungarian citizens in European countries (persons)   12.2 Migration intentions in the EU-25 and other countries, 1995–2005 (%)   12.3 Composition of target countries by type of gross and combined migration potential in 2002 (%)   12.4 Hungarian citizens in European countries prior to and after enlargement    12.5 Labour immigration from the EU-8 countries to the UK, 2004–2007 (approved applicants from the EU-8, %)   12.6 The ratio of women to men in the resident Hungarian emigrant population  

111 113 114 116 117 118 120 156 157 158 159 160 162 164 189 191 193 194 196 200 231 232 232 233 235 236

List of Tables and Boxes

xi

12.7 The rate of short- versus long-term migration potential, 1993–2006 (%)  

237

14.1 Migration in Latvia from 1951 to 2005 (‘000)   14.2 The education level of respondents who had and had not worked abroad (%)   14.3 Motivations for working abroad, by age   14.4 Reasons for choosing a specific country   14.5 The main employment changes in Latvia since joining the EU  

270 277 278 281 287

Boxes 5.1

Proposals of the LO working group (Landsorganisationen i Sverige 2008)    14.1 Comparison: Profile of Latvians in Ireland according to the Irish census   15.1 Overview of Policy Planning Documents and Initiatives on Migration  

95 283 297

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Notes on Contributors Monika Arvidsson, an economist, is employed at the Swedish Trade Union Confederation (LO) where she is responsible for analysis and policy-making in the fields of international macro-economics and migration. She is a member of the ETUC working group on migration and inclusion, of the Advisory Committee on free movement of workers to the European Commission, a deputy member of the Economic and Employment committee of the Social dialogue and of the ETUC Economic and Employment committee. She has been secretary of several working groups of LO affiliates formed to draw up a joint LO policy. Szilvia Borbély gained a Ph.D. in Economics at the Hungarian Academy of Sciences and a ‘dr. oec. in Scientia Oeconomiae Universalis’ at the University of Economics of Budapest. She is a senior expert and member of the Board of Economic and Social Research Institute of Trade Unions and senior expert of the National Confederation of Hungarian Trade Unions. She has published over 20 books and more than 100 articles, essays and papers on issues relating to the labour market, industrial relations, macro-and micro economics, gender issues. Some 30 of these publications have appeared in foreign languages. Günther K. Chaloupek, Dr. iur. University �������������������������������������������� of Vienna 1969, M.A. (economics) University of Kansas, Lawrence, Ks., USA, 1971, is director of the economic research department of the Austrian Chamber of Labour, a member of the Advisory Council for Economic and Social Affairs, and vice-president of the Government Debt Committee. He has published numerous articles (in German and in English) in journals and contributions to books in the field of history of economic theory. Pārsla Eglīte – Dr. geogr. and Dr. oec. (demogr.), a Corresponding Member of the Latvian Academy of Sciences and head of research projects at the Institute of Economics, Latvian Academy of Sciences. Her main research areas are social demography, long-term migration, and population policy. Simon Fellmer, Diplom-Ökonom, works at the Institute for Migration Research and Intercultural Studies of the University of Osnabrück for the nationwide scientific network “Rat für Migration” (Council for Migration). His research focuses on the development of national and of the common European migration policy with a focus on questions of labour migration.

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Agnieszka Fihel, a Ph.D. student in economic sciences, is a doctoral fellow at the Faculty of Economic Sciences and the Centre of Migration Research (CMR) at the University of Warsaw. At the CMR she has participated in research projects referring to contemporary demographic processes, such as migration movements in European perspective, spatial patterns of immigration in Poland and, last but not least, return migration to Poland. She has published mostly on international migration from the new EU member states. Béla Galgóczi graduated in electronic engineering and then in sociology and philosophy in Budapest, subsequently gaining a Ph.D. in Economics. He currently works as Senior Researcher at the European Trade Union Institute, Brussels, Belgium. His fields of research include capital and labour mobility in an enlarged Europe in the global environment with a view to labour market developments, industrial relations and collective bargaining. Dr Ágnes Hárs, Senior Research Fellow at the Kopint-Tárki Economic Research Institute in Budapest and associate member of the Migration and Refugee Research Centre of the Research Institute of  Ethnic and National Minorities at the Hungarian Academy of Sciences, member of the IMISCOE network, works extensively in the field of labour migration and is mainly involved in East-West migration, coordinating research projects of international comparative studies and national policy-supporting background papers. Dr Jason Heyes is Reader in Human Resource Management and Head of the International Management and Organisation group at Birmingham Business School, University of Birmingham, UK. He has conducted research on behalf of a variety of bodies, including trade unions, the Low Pay Commission (UK) and the International Labour Organisation. His main research interest is in the connections between employment relations, the labour market and public policy. His research has explored these issues in relation to vulnerable groups in the labour market, including young workers, homeworkers, migrant workers, those in undeclared employment and the low-paid. Holger Kolb, Dr. phil., is a researcher at the German Council of Experts on Migration and Integration. He previously worked as a researcher at the Institute for Migration Research and Intercultural Studies of the University of Osnabrück and as a post-doctoral fellow at the University of Münster. His main research interests are migration theory, migration policies for the highly skilled and demographic aspects of migration. Zaiga Krišjāne – Dr. geogr. head and professor of the Department of Human Geography of the University of Latvia Faculty of Geography and Earth Sciences. Her main research areas are population geography, urban geography, population mobility, and quality of life.

Notes on Contributors

xv

Janine Leschke, Ph.D., is a senior researcher at the European Trade Union Institute (ETUI). Her research focus is on interlinks between labour market and social policies. She is currently working on comparative projects on job quality, work-life balance and cross-border labour mobility. From 2000 to 2006 she worked in the employment and labour market policy unit of the Social Science Research Center Berlin (WZB). Aija Lulle, Mg.Sc. is a Ph.D. student in sociology and researcher at the Advanced Social and Political Research Institute, University of Latvia, and the Science and Technology Centre, Latvian Academy of Sciences. Her main research interests are migration policy and social reality, labour studies, transnational mobility and border studies. Her research experience has been obtained in extensive research on both the national and the international level. Per Lundborg is a professor of economics at the Swedish Institute for Social Research, Stockholm University. His current research is devoted to issues on migration, integration, and wage formation. For more information, see http:// www.sofi.su.se/. Sonia McKay joined the Working Lives Research Institute, London Metropolitan University in 2004 to head an ESF funded project on refugees and their labour market exclusion. She currently heads a number of research projects focusing on refugees and recent migrants, including a seven-partner Framework Six funded project on Undocumented Workers Transitions. Sonia’s background is as an employment law researcher and she had previously worked for more than 20 years at the Labour Research Department, the UK independent trade union research organisation. Marek Okólski, doctor of economic sciences, is Director of the Centre of Migration Research at the University of Warsaw. He is a Professor at the Faculty of Economic Sciences at the University of Warsaw, and a Professor at the Institute of Sociology, Warsaw School of Social Sciences and Humanities. His research area includes major social transformations and their impact upon population processes, globalization, demographic transition in Poland, migration theory, labour mobility, migration trends in Central and Eastern Europe, health crisis in the European communist states. He has served as a consultant or advisor to several of Poland’s government departments and to international organizations. Johannes Peyrl works for the Austrian Chamber of Labour. His main working areas are expertises, analytic work and publications on Austrian and European migration law, studies on proposed legislation, legal counselling in labour market and migration-related law. He is a member of various committees relating to migration law on the national and EU level, e.g. Advisory committee on free movement of workers of the European Commission, Committee on migration

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and asylum (ministry of the interior), Committee on foreign nationals (ministry of economics and labour). He is also a lecturer at the University of Applied Sciences in Vorarlberg. Max Friedrich Steinhardt, Diplom-Volkswirt, is a researcher at the Hamburg Institute of International Economics (HWWI) where he is part of the Migration Research Group. Currently he is a visiting fellow at the Centro Studi Luca D’Agliano (LDA) in Milan. At the HWWI he conducts research in the fields of immigration impact, migration policy, and labour market assimilation. Robert Szewczyk is an economist and international officer of the National Commission of NSZZ “Solidarnosc” trade union. His main areas of work are international economic relations (serves as representative in TUAC/OECD), social dialogue in multinational corporations (mainly focused on European Works Councils) and labour force migration on the European market, especially in the area of international trade union assistance for migrant workers. Joanna Unterschütz is a lawyer and international officer of the National Commission of NSZZ “Solidarnosc” trade union. Her main areas of work are the legal dimension of the labour market, workers’ rights and international labour standards. In her work she focuses on various legal aspects of labour force migration, including temporary work agencies, self-employment and posted workers. Ewald Walterskirchen, Ph.D., is a Senior Research Fellow at the Austrian Institute of Economic Research (WIFO). He conducts international comparative research in the field of macroeconomics and labour economics and has extensive experience in labour market and migration research in Austria. For many years he was vice-director and head of the macroeconomic unit of the WIFO. Andrew Watt is a senior researcher at the European Trade Union Institute (ETUI). His research focuses on European economic and labour market trends and policies, on which he has published widely. A particular interest is policy coordination and the interaction between wage setting and demand-side policies and its employment consequences in the context of EMU. He edits the ETUI’s European Economic and Employment Policy Brief and is the coordinator of the European Labour Network for Economic Policy (www.elnep.org).

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), 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  Cyprus and Malta also joined the EU in May 2004, but limitations on the free movement of labour do not apply to them and they are for the most part not considered in this analysis.



EU Labour Migration since Enlargement

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.

Intra-EU Labour Migration – Flows and Policy Responses



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



EU Labour Migration since Enlargement

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

Intra-EU Labour Migration – Flows and Policy Responses



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. 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  There is a rising awareness of such data problems and shortcomings, and some attempts are being made to improve the data situation as regards migrant workers. Eurostat, for instance, is currently working on an ad hoc module on the labour situation of migrants and their immediate descendants that will be implemented in the 2008 data collection (for more information see Hardarson 2006).



EU Labour Migration since Enlargement

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).

Intra-EU Labour Migration – Flows and Policy Responses



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 EU15 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). Similarly, in its resolution on the transitional arrangements – adopted in April 2006 – the European Parliament explicitly called on the EU-15 countries to abolish the transitional arrangements given that there are no signs of strains from intra-EU labour mobility on the receiving-country labour markets, but also that the transitional arrangements may have contributed to higher levels of illicit work and bogus self-employment. At the same time, the European Parliament also called for a systematic monitoring of migration flows within the EU, standardized statistics and strict enforcement of labour law in order to guarantee equal treatment to all workers and prevent social dumping (O.J. 2006 [C 293 E/230]). The European Trade Union Confederation (ETUC), in its resolution ‘Towards Free Movement of Workers in an Enlarged European Union’ (adopted 5–6 December 2005), clearly voiced its opinion that transitional measures should not remain in place merely to ‘buy time’, and called on the Commission to carefully check the arguments and justifications of those member states that wanted to continue application of the transitional measures after the first phase. At the same time, the ETUC called for the European Commission to develop, together with other European actors, an EU-wide supportive legal framework with a set of minimum standards, establishment of clear principles of equal treatment in wages and working conditions applying to the place where the work is done, an obligation to respect the host country’s industrial relations system, and the setting



EU Labour Migration since Enlargement

up of mechanisms and instruments for cross-border monitoring and enforcement of working conditions and labour standards (ETUC 2005). BUSINESSEUROPE (formerly UNICE), the European-level employers’ federation, strongly supported measures to facilitate and improve labour mobility and asserted that free movement from the first day of accession should be the main rule. It has lately urged member states to step up their efforts to remove the remaining administrative and legal obstacles to the free movement of labour. At the same time, it has called for the completion at EU level of the modernization and simplification of coordination as regards social security schemes as a key priority (BUSINESSEUROPE 2007). 4. Migration Drivers and European Economic and Labour Market Differentials and Dynamics 4.1 Migration Drivers There is a voluminous literature that seeks to determine the factors driving – and also retarding – international labour migration (examples include Borjas 1989, 1995; Barro and Sala-i-Martin 1991; Layard et al. 1992). Studies typically regress migration flows on a set of possible explanatory factors in an attempt to estimate econometrically the most important factors and to assess the relative strength of their effects. We can summarize this literature with reference to Alvarez-Plata et al. (2003), who preface their pre-enlargement study of potential migration from central and eastern Europe by noting that ‘almost all models [of migration potential] discussed in the empirical literature explain migration by income and employment opportunities in the respective countries and a set of institutional variables which should capture different migration restrictions’ (Alvarez-Plata et al. 2003, ii), and ‘country-specific effects such as geography, language, culture, etc. have proven to be very important in the migration context’ (ibid.) At the macroeconomic level, then, access to the labour market and effective increases in earnings potential are the two key drivers or sets of factors. In a recent study of geographical mobility in the EU Bonin et al. (2008) discuss, in addition to such macroeconomic factors, important determinants at the microeconomic level, such as skill levels, age, marital status, housing and – both a micro and a macro factor – taxation issues and the portability of welfare entitlements. Along with other studies they note that there may be ‘network effects’ whereby the existence of prior migrants from a source country encourages additional migration from that source by reducing transaction costs, providing information and enhanced job opportunities, offering desired services, and so on. Such network effects can make forecasting migration flows difficult because as drivers of migration they are non-linear in nature. Small increases in factors such as income and labour market differentials initially lead to small increases in migration flows. But the resulting

Intra-EU Labour Migration – Flows and Policy Responses



creation of a stock of migrant labour in the destination country – the network effect – then magnifies the effect of the drivers, leading to much more substantial flows. The research presented here for seven EU countries allows us to test the relevance of some of these hypothesized drivers in the European context. In this way our choice of receiving countries with and without legal restrictions – ‘transitional measures’ – sheds light on the extent to which such measures have effectively restricted flows compared to what would be expected given the existence of other drivers, such as income and labour market differentials and geographical proximity. We now consider the orders of magnitude of the main macroeconomic drivers – wage and income differentials and relative labour market opportunities – in the context of the post-enlargement EU. 4.2 Economic and Labour Market Dynamics in the A8 and EU-15 Countries The diversity within the EU in terms of GDP per capita and wage levels grew enormously with eastern enlargement in 2004. GDP per capita levels measured at PPS ranged from 38.8 per cent (Latvia) to 73.6 per cent (Slovenia) of the EU-15 average in 2003, the year before accession. Due to high growth rates in the CEE countries the dynamic convergence of GDP per capita levels going on since the mid-1990s has continued and even accelerated after enlargement. In 2007, A8 countries had GDP per capita levels at PPS between 49.7 per cent (Poland) and 82.6 per cent (Slovenia) of the EU-15 average (Ameco 2008). However, the gap is much higher if the comparison is made on the basis of market exchange rates. Table 1.1 provides an overview of the relevant macroeconomic indicators of the A8 countries – covered by this publication – for the year before enlargement and for the latest available year. The wage gap between accession countries and the EU-15, an important migration driver, as we have seen, when calculated at market exchange rates was very wide prior to enlargement. Latvia, the poorest among the A8 countries, had an average wage level one eighth of the EU-15 average in 2003; it was statistics such as this that seemed to justify fears of mass migration if free movement of labour was permitted. However, this wage gap had been reduced to a ratio of 1 to 5.5 by 2007, with average wages in Poland and Hungary about one quarter and one third, respectively, of the EU-15 average (Table 1.1). This rapid convergence   Purchasing power standards: this corrects for differences in price levels between different countries when converting wage and income levels using exchange rates. Both wage differences measured at exchange rate parity and wage differences at PPS have a role with regard to migration potential. Wage differences at exchange rates are indicative of economic gains in case of remittances (where earnings are spent in or sent to the home country) or in case of cross-border commuting. PPS is relevant for wages spent in the country in which they are earned.

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between wages was due to the combined effect of high wage dynamics in A8 countries and the appreciation of their national currencies against the euro. Still, current wage gaps – even if much smaller – remain very substantial and continue to function as drivers of migration. Table 1.1  Key macroeconomic drivers in the three A8 sending countries compared to the EU-15, before and after enlargement GDP/capita, PPS Wages in EUR at % of EU15 exchange rate, % of EU15

Hungary Latvia Poland EU 15

Employment rate (%)

Unemployment rate (%)

2003

2007

2003

2007

2003

2007

2003

2007

56.7 38.8 43.8 100

58.6 52.9 49.7 100

29.0 12.9 21.5 100

31.1 18.2 25.4 100

57.0 61.8 51.2 64.3

57.3 68.3 57.0 67.0

5.9 10.5 17.9 7.9

7.4 6.0 9.6 7.0

Source: Ameco (2008), Eurostat (2008).

The labour market situation in receiving and sending countries is one of the most important economic factors behind migration decisions. Employment rates were low in most of the CEE countries throughout the transformation process. Preaccession data from 2003 show employment rates characteristically under 60 per cent for the population aged between 15 and 64 years for most A8 countries (Table 1.1). With regard to the sending countries in our case studies, employment rates ranged from 51.2 per cent in Poland to 61.4 per cent in Latvia, while the corresponding rate for the EU-15 was 64.5 per cent. The unemployment rate was particularly high in Poland (19.7 per cent), but also well above the EU-15 average in Latvia (10.5 per cent). Hungary was an exception, as in 2003 it had the lowest unemployment rate among A8 countries, at 5.9 per cent. By 2007, however, the situation had shifted substantially. The employment rate in Latvia had jumped by 6.5 percentage points over the EU-15 average (67.0 per cent) to 68.3 per cent. In the case of Poland the very low employment rate had increased substantially to 57.0 per cent, though it remained far below the EU-15 average. In Hungary, the relatively low rate did not change substantially. Unemployment had decreased in most countries. Poland showed the biggest improvement, with the unemployment rate falling by more than half to 9.6 per cent. In Latvia the rate fell by 4.5 percentage points to 6.0 per cent, while in Hungary it increased – from a low level – by 1.5 percentage points, to 7.4 per cent. At the same time, the EU-15 average was 7.2 per cent. Youth unemployment is a critical problem and can be considered as a separate ‘driver’ given the greater mobility of young people. Especially in Poland, its level

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– for the age group 15–24 – still stood at 21.4 per cent in 2007, although it had improved a lot compared to previous, very high levels. The labour market situation thus improved greatly in most of the acceding countries in the period 2003–2007. Especially in the case of Poland and Latvia the favourable changes on the labour market were to a large extent due to job creation at home in a context of rapid economic growth. The improvement of the unemployment rate is a robust phenomenon for all A8 countries (with the exception of Hungary). Tensions have remained also in this respect, however, as unemployment is unequally distributed by skill levels, in some cases by region, and overproportionately affects young people. Turning to the receiving countries, Germany, Austria and Sweden showed an increase in their employment rates between 2003 and 2007, and the UK maintained its employment rate at a high level. At the time of enlargement unemployment was rather lower than the EU-15 average in Sweden, Austria and the UK; however, in Germany it was substantially higher, at more than 10 per cent. Unemployment developments since enlargement have been mixed: in Germany it fell steadily from high levels whereas in Austria it rose in the initial period. The UK initially saw a continued improvement, followed by an increase, whereas the opposite was true in Sweden. It can be concluded on the basis of labour market trends that differences in overall labour market performance, initially substantial, have shown remarkable convergence between A8 and EU-15 countries. The labour market situation was thus initially an important driver, at least for certain countries – among our casestudy countries, especially Poland and Latvia – and for certain groups (especially young people), but its effect on migration has weakened over time. Of course, at least to some extent this reflects the equilibrating forces of the migration movements themselves. Summing up, if we were to ignore geographical, cultural and political factors, one can postulate, on the basis of these macroeconomic drivers alone, a number of hypotheses: a substantial but declining propensity to migrate from the new to the old member states; a higher outward migration propensity in Poland and Latvia than in Hungary; and a greater likelihood – based on unemployment rates, given relatively small national wage differentials – of migrants being attracted to the UK in the early years after enlargement than to the other three case-study countries.

 It is hard to establish a clear hypothesis distinguishing between these three, as unemployment levels and the direction of change send an ambiguous ‘message’ to potential migrants.

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5. Evaluating the Costs and Benefits of Different Types of Migration in Sending and Receiving Countries The political debate about the benefits of migration is, as we have seen, a controversial one. The imposition of transitional measures by most of the old EU member states in 2004 testifies to this. Standard economic theory sees migration – conceived as the freedom of the factor of production ‘labour’ to seek its highest reward anywhere without hindrance – as unambiguously good, raising the welfare of migrant workers themselves, but also aggregate welfare. However, there are a number of reasons to reject such a simplistic view. First, even if aggregate welfare effects are unambiguously positive, there are likely to be distributional effects. In particular, those supplying labour on receiving country labour markets – that is, in direct competition with immigrant labour – will tend to lose out, whereas users of immigrant labour (employers, service consumers) will benefit (vice versa in source countries). These distributional effects alone may be sufficient – in political terms – to explain the imposition of restrictions by potential receiving countries. Beyond such distributional effects, individual migration decisions – which can be assumed to be welfare-enhancing for the individuals making them – can be seen as having negative or positive ‘externalities’; that is, costs and benefits to actors other than the migrants themselves, in both sending and receiving countries (see, for example, Bonin et al. 2008). For example, sending countries can benefit from advantages from outward migration such as an inflow of remittances, improved domestic human capital from returned migrants, lower unemployment and, as a result of reduced labour supply, improved wages and working conditions. On the other hand, they may face costs due to a ‘brain drain’ – the loss of their ‘best’ workers – the loss of returns on public investment in education, and possibly human capital losses (if highly skilled workers perform more menial tasks abroad). One likely manifestation of all this is labour shortages in critical sectors or occupations and a drag on productivity growth. In receiving countries the additional labour supply will raise potential and actual output, may overcome labour shortages in specific sectors/skill groups, can reduce production costs and thus raise real incomes of consumers, and, by containing wage pressure, may permit more expansionary economic policies. On the other hand, immigration may increase pressure on persons already disadvantaged on the labour market, exacerbating trends to greater inequality, undermine working conditions and wages, and increase unemployment if displaced workers are not reabsorbed. These varied effects suggest strongly that it is the specific form taken by migration that is important in determining aggregate and distributional effects in any given case. In particular, the skill and age composition of the migrants themselves will be key, along with their former employment/unemployment status. Also decisive will be the state of the labour market in the receiving country and

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the actual tasks performed by migrants there (in the context of the skills they bring with them). Finally, impacts will vary substantially depending on the duration of migration. As a very simple normative framework for analysing the likely impact of migration, two extreme migration ‘ideal-types’ can be proposed that would seem likely to maximize the aggregate external benefits or costs of migration, depending on the respective ‘settings’. 1. Best-case migration: Aggregate effects will be most positive for both countries when: a worker leaves a country where his or her skills are in excess supply (is unemployed or working at low wages) and takes up work appropriate to those skills at a higher wage in a country with excess demand in that area, remits a proportion of the earned income, and subsequently returns to the source country with higher skills/productivity to a higherpaying job. 2. Worst-case migration: Aggregate effects are likely to be most negative where young employed workers with critical skills but low wages leave to take up unskilled – but higher-paying – work in high-unemployment, high-wage economies, adding to pressure on already disadvantaged groups of workers there, while suffering skill erosion themselves, locking them in to unproductive work. In any real-world situation we would expect migration flows to come between these extremes. They can therefore be used to frame the discussion of the findings from our national case studies, to which we now turn. 6. Findings of the Country Chapters In this section we present the main findings from the country chapters. We shall not discuss the different chapters consecutively, but rather seek to synthesize the results in such a way as to reveal the main trends, while avoiding tedious repetition of chapter references. First, we consider the economic drivers of migration and the nature of flows within Europe. We then turn to the effects of such migration on the labour markets of sending and receiving countries. The section concludes with an assessment of the policy measures taken in both sets of countries by governments and social partners. 6.1 The Nature, Direction and Drivers of Migration We can identify the following main findings – developed in more detail below – regarding migration drivers and the nature of flows:

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14

•

• • • •

Migration from new member states to certain countries, notably the UK (and Ireland, not studied here) was far greater than had been forecasted, although in most countries the impact of cross-border flows was less important than expected. The presence of transitional measures almost certainly had a considerable diversion effect on quantitative migration flows. Labour demand – employment opportunities – played a primary role in determining migration flows, alongside other factors, and interacts with the existence of transitional measures in a complex way. The different incidence of labour market restrictions also seems to have had qualitative impacts on migration flows and employment forms. While migrants reflect more or less the skill distribution characteristics of the respective sending country, in receiving countries they are overwhelmingly concentrated in low-skill and low-paid jobs, at least initially.

The relative impact of cross-border flows after enlargement was in most countries relatively less important than foreseen. For the EU-15 as a whole the increase in net migration flows was 0.2 percentage points between 2003 and 2005. In fact, the proportion of the working age population of EU-10 members states within the EU-15 was rather small in 2005, ranging from 0.1 per cent in France and the Netherlands to 1.4 per cent in Austria and 2.0 per cent in Ireland. The majority of countries did not see noticeable increases in these shares between 2003 and 2005 (European Commission 2006). Having said that, migration to certain countries – notably the UK (and Ireland) – was far greater than had been forecasted. The UK government massively underestimated the number of accession country workers who would look for work in the UK. A study commissioned by the UK Home Office (Dustmann et al. 2003) had predicted that flows into the UK would be relatively small, with net annual inflows of A8 migrants between 5,000 and 13,000 up to 2010. These assumptions were based largely on previous flows of A8 nationals to the UK. In fact, more than 700,000 A8 residents have applied for  Several studies estimated migration potential after enlargement using both econometric and survey methodology (for a critical review see Dustmann et al. 2003). Most of these studies estimated a potential migration flow of between 1 and 4 per cent of the total population of the EU-10 within one to two decades after EU-wide freedom of movement (Heinz et al. 2006). Taking into account migrants potentially returning home, the net migration flow estimated in these studies amounted to about 0.4 per cent of the total EU-15 population (Heinz et al. 2006).  These numbers are based on the European labour force survey data, which take into account net inflows and outflows and thus give a realistic picture of actual migrant numbers. Data refer to the first quarter of a given year for all countries except Ireland, where they refer to the second quarter.   For instance, the UK’s International Passenger Survey showed that, prior to enlargement, flows from non-EU Europe were very low and in 2001 negative in net terms (Sriskandarajah 2004).

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registration since enlargement in 2004 and a considerable additional number have taken up work without registering. The year 2005 may have seen the largest ever labour immigration recorded in the UK, most of it from eastern Europe. From these findings, and other evidence, it seems clear that the existence of differences in the transitory measures applied by EU-15 countries to A8 citizens has led to a diversion of migration flows after enlargement. Deviating from historical migration patterns and pre-enlargement labour flows, a geographical redirection took place towards countries that opened up their labour markets right after enlargement. This shift can be well documented by our findings for the largest A8 country, Poland. The geographical direction of Polish labour mobility fundamentally changed after EU enlargement. In the period 1999–2003 Germany was the major destination country for labour migration from Poland; almost one in three Polish migrants chose this country, while the share of the UK was below 10 per cent. In the period 2004–2006 the share of Germany fell to 18.9 per cent, while that of the UK jumped to 31.4 per cent and the UK became the principal destination country. The share of the three countries that did not maintain labour market restrictions after enlargement – Ireland, Sweden and the UK – grew from 12.1 per cent to 42.4 per cent of Polish migrants, whereas the share of other EEA destinations decreased from 62.6 per cent to 45.3 per cent. Although much smaller in absolute terms, similar shifts from Germany to the UK and Ireland as destination countries also occurred in the case of Latvian emigrants. Hungarians, with a low migration propensity in general, were less inclined to change their traditional migration destinations – Germany and Austria – in response to the abolition of access restrictions in other EU countries. Given the low weight of Hungary in aggregate A8 labour flows, however, this outcome does not modify the general picture, which is dominated by the destination-country shift on the part of Poles. Of course, we cannot know precisely what would have happened if Germany and other countries had also opened their labour markets, but such shifts between pre- and post-enlargement destination-country patterns are clearly due at least partly to the absence or presence of legal impediments. At the same time, the evidence from our studies of four receiving countries confirms the decisive role of employment opportunities in driving migration flows and that the mere existence or absence of formal transitional measures is not a good guide as regards the order of magnitude of migration flows. Both the UK and Sweden opened up their labour markets fully from day one. But migration flows substantially exceeded expectations in the former, while remaining rather limited in the latter. While linguistic and other factors undoubtedly also played a role, the fact that up to that point the UK had enjoyed ten years of uninterrupted economic expansion, and at the time of enlargement was in a veritable – and, as it turned out, unsustainable – boom was clearly a major factor. From around 5 per cent in both countries at the start of the decade the (standardized Eurostat) unemployment rate in the UK declined further to 4.7 per cent and 4.8 per cent in 2004 and 2005,

16

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respectively, whereas in Sweden unemployment rose sharply from 5.3 per cent in 2004 to 7.4 per cent in 2005, before falling back to the previous level in 2007. In contrast, wage levels – at the bottom of the labour market – are not substantially different in the two countries and any such differences, given the large East–West gaps, are unlikely to have been a decisive factor for those choosing between these destination countries. Confirmation that cultural or linguistic factors were unlikely to have been what held back A8/A2 migrants from going to Sweden is provided by the fact that Norway, culturally and linguistically very similar to Sweden, but with a booming labour market – and also high wages – attracted a disproportionately large number of such migrants. While the UK (and Ireland) attracted large numbers of migrants post-2004, inflows into Austria and Germany, countries with complex transitional measures, substantially exceeded those into Sweden in terms of the relative additional labour supply. It is true that, in Germany at least, unemployment was high and initially rising. Germany also saw the second most sluggish employment growth of the EU15 countries between 2003 and 2006. However, the two countries’ geographical position, relatively high wage levels and also cultural and linguistic factors constitute important pull factors. These attracted eastern European migrants before enlargement and thus may well have given rise to network effects. Labour demand and earnings opportunities are of course not the only reasons for migration. The sending-country chapters discuss a whole range of individual motivations (push factors). Some are clearly labour-market related, such as dissatisfaction with working conditions and labour relations in the home country. But ‘push’ factors can be broader, including dissatisfaction with social and living standards more generally. Conversely, social welfare provisions, linked to residence, can act as a magnet encouraging potential migrants to stay. This seems to have been the case in Hungary, which did not see substantial outward migration, even if a considerable wage gap in relation to EU-15 countries remained and economic prospects have not been promising in the last couple of years either. Massive wage increases between 2002 and 2006, accompanied by sustained social welfare benefits, might have acted as retarding factors. Welfare spending in Hungary, although lower than in EU-15 countries, is among the highest among the new member states when measured as a percentage of GDP. In this regard family allowances and support for home ownership in particular are high by international comparison. In Hungary the majority of the population are home owners and, given the substantial price differences within the country and the limited liquidity of the housing market in certain regions, even internal mobility within national borders is limited. We have some evidence for the quantitatively most important sending country, Poland, that freer access to the formal labour market permitted by a number of countries after enlargement has also led to qualitative shifts over time in the characteristics of migrant workers. This is apparent in terms of the skills mix of Polish emigrants. First, there was an increase by about 5 percentage points in the share of graduates amongst pre- compared with post-accession Polish migrants.

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17

Moreover, after accession 27 per cent of Polish migrants to the UK and Ireland had a university degree, whereas the same share for Polish migrants to other EU and EEA destinations was only 12 per cent. Regarding the age structure the picture is somewhat fragmented. Looking at the evidence from various country chapters we see that Polish migrants to the UK and Ireland are on average younger than those to Germany. It is not clear how generalisable this finding is, but information on smaller A8 countries shows that their immigrants to Germany are younger than those from Poland and Hungary, although there are fewer of them. There are thus some tentative indications that an absence of transitional measures may have helped countries attract younger and more highly skilled workers. However, more comparative research and data over a longer period would be necessary to corroborate this thesis. In particular, the observed differences may reflect other factors, notably differences in labour demand. It seems plausible that restrictive labour market access – due to transitional measures – would also result in qualitative changes in migration patterns, such as a higher incidence of seasonal work, posted workers and bogus self-employment. Due to severe data limitations in this regard we cannot present any conclusive findings on this point. Problems with posted workers and bogus self-employment were reported not only in Germany and Austria but also in Sweden and the UK, where no formal restrictions on labour market access exist. Here too, further research would be necessary to support this hypothesis. Of particular concern in terms of a normative assessment of the aggregate impact of intra-EU migration is the type of work performed by workers from the accession countries, in terms of their professional characteristics. Accessioncountry migrants tend to be young; in many cases they are well qualified. Our sending-country analyses suggest that, on the whole, skill levels are at least as high, if not higher than those of the sending-country labour force as a whole. However, a consistent finding emerging from our studies is that the great majority of A8/2 workers on receiving-country labour markets perform routine manual work requiring little training and skills; they are correspondingly on the lowest pay scale or the minimum wage, but this is still attractive given that a considerable proportion of earnings may be spent in the country of origin. In many cases they are overqualified for the work they do, and/or are working in an entirely different sector from that implied by their previous professional and educational background. The survey of Latvian workers in Ireland did show, however, that, after an adjustment period in which language and other broad skills can be improved and job information ‘on the ground’ accessed, some migrants do manage subsequently to shift to employment closer to their qualifications.

 There are hardly any reliable data on bogus self-employment and posted workers. Data on seasonal workers are usually recorded in countries where they have access to the labour market through a specific programme (Germany, for instance) whereas they do not appear as a specific category in data sources of countries without access restrictions.

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6.2 Labour Market Impacts in Sending Countries The substantial loss of working age population is well documented in the case of Poland, where outward labour migration in the post-accession periods represented 2.8 per cent of the total resident population and 4 per cent of the working age population – defined as 15–59 years of age – and has led to deep social and economic changes. The 2004 EU enlargement was the most important emigration stimulus in Poland’s contemporary history. The number of Polish nationals temporarily residing in other EU countries increased within three years from under 1 million to more than 2 million. In the case of Latvia the effect of post-accession labour migration on the loss of population could not be reported precisely, but survey-based estimates indicate that it was very substantial; one feature of this country is that such migration to EU countries came after a quantitatively more important exodus of ethnic Russians in the early 1990s, following Latvia’s independence. Thus the post-accession outflow exacerbated an already serious demographic shock. In Hungary, however, no such ‘enlargement effect’ emerged: outward migration flows remained relatively low and, moreover, were counterbalanced by inward migration from countries to the East. Given the high share of young age groups in the case of Polish and Latvian migrants after enlargement, the impact of a ‘youth drain’ induced by the liberalization of labour market access by a number of EU-15 countries is of major concern, particularly if such migration proves to be long-term. As noted in the previous section, in receiving countries migrants of all skill levels largely perform routine, rather unskilled tasks, leading to doubts concerning the often posited beneficial effects of mobility on the human capital of (returning) migrants. In Latvia returned migrants have not subsequently outperformed those who had remained in the country, according to surveys, although this may reflect the fact that successful migrants have remained abroad. In Section 4.2 we showed that the general labour market situation, very unfavourable prior to enlargement, has improved in most A8 countries. The improvement was particularly strong in the countries experiencing the highest relative labour outflows (Poland, Latvia and Lithuania, the latter not covered by our research). On the face of it, this might indicate a considerable unemploymentreducing effect of outward migration. However, domestic job creation due to economic growth had been an important phenomenon in two of the sending countries involved in our research. In Poland 1.6 million jobs were created between 2003 and 2007 – an increase of 12.5 per cent – broadly in the period when mass outward migration took place. Latvia also witnessed an increase of employment – 9.5 per cent – at the time of massive outward migration. In Hungary there was no job creation but no substantial outward migration either. The unemployment–migration link in sending countries is clearly complex. To some extent outward migration undoubtedly had a partial effect – in the context of high unemployment – of reducing surplus supply on the labour market.

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However, our studies provide mixed findings regarding the propensity to emigrate on the part of the unemployed or those from high unemployment regions. The coincidence of substantial emigration and high job creation at home with large falls in unemployment indicate that as time went on labour emigration from many sending countries increasingly led to structural tensions and skills shortages on their labour markets. In Latvia, soon after its accession to the EU the previously high level of unemployment was replaced by labour shortages in various professions. Employers have been forced to raise salaries at a dynamic pace often surpassing productivity increases and rapidly increasing unit labour costs. Dynamic wage increases were also reported in Poland, which had witnessed prolonged wage moderation in the first half of the 2000s. Discussions also took place on the role of minimum wages in limiting emigration (see also Wallusch 2008). At the same time, the so-called ‘sending’ countries are also experiencing inward migration. This is most apparent in the case of Hungary, where inward migration from Romania and, to a lesser extent, from Slovakia has counterbalanced – limited – outward migration in qualitative terms, although structural labour market mismatches have caused problems, especially on regional labour markets. Exact information on inward migration to Poland and Latvia was not available, but there was anecdotal evidence of inward migrants taking low-skill jobs and filling labour market bottlenecks in both countries, but also of controversial social debates, especially in Latvia. Remittances have had a positive effect of the economic situation in sending countries, at both macroeconomic and microeconomic level. These have a balancing effect on external finances, create additional consumer demand and contribute to investment activity in the SME sector. In Poland, remittances in 2007 were 60 per cent higher than in 2003, while in Latvia remittances were nearly three times the level of 2003, suggesting a considerable economic impulse from this source. Still, data coverage here remains limited. 6.3 Labour Market Impacts in Receiving Countries One of the key questions in the economics literature on migration, and central to the debate about the justification of measures to restrict immigration, is, of course, the impact on native workers’ pay, conditions and employment opportunities. The evidence reviewed in our four chapters on the dimensions and impacts of migration in the receiving countries is, overall, not supportive of the claim that the inflow of labour from the A8 and A2 countries has seriously depressed the wages or harmed the employment opportunities of substantial numbers of domestic workers. Of course, we can never be entirely sure what would have been the situation in the absence of immigration flows (counterfactual). But most of the econometric and case studies discussed in the relevant chapters of this book seem to point to rather small effects. As regards employment, the rise in labour supply appears largely to have been matched by higher aggregate output and labour demand. While we lack a

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counterfactual, the overall unemployment trend in three receiving countries – Austria, Germany and Sweden – is inconsistent with the idea of post-accession immigration pushing up unemployment: it rose slowly until 2005 and subsequently fell. However, the unemployment trend in the UK, the country with the largest relative influx, does appear at first sight consistent with the idea of unemploymentcreating immigration: the jobless rate bottomed out in 2004 and has been slowly but inexorably rising ever since. Intra-EU migration may have played some part in this, as employment continued to grow quite strongly until 2007. In the context of a generally strong labour market, then, there may have been some displacement effects among relatively disadvantaged ‘domestic’ workers, which, some studies suggest, may in particular mean previous non-European migrant and ethnic minority workers. In terms of wage impacts there is mixed evidence, with some sectoral studies suggesting an effect – larger wage declines or smaller wage rises in sectors in which immigrants are concentrated – but others not. Overall, our studies suggest the key importance of wage-setting institutions, especially at the bottom of the labour market. In the UK the existence of an effectively enforced national minimum wage sets a floor in the labour market – at least for legal migrants in the official economy – and prevents already low ‘native’ wages being forced down further. Moreover, during the post-enlargement period the national minimum wage has been raised more quickly than the rate of growth of median wages. A corollary of this is that the national minimum wage is in many sectors at the same time also the wage ceiling for migrants, who overwhelmingly perform relatively unskilled jobs. In Sweden and Austria the widespread coverage of collective agreements makes it difficult, except in very small enterprises, for migrants to work below the going rate. Nevertheless, reports from Sweden and the UK suggest that in some instances migrants were being paid less than native workers, although it is hard to tell how widespread a phenomenon this is. A number of studies indicate that, to the extent that existing workers are coming under competitive pressure from A8 and A2 immigrant workers it is primarily former immigrant communities that are affected. Such wage floors apply only to dependent wage-earners, however. Perhaps for this reason the activities of ‘posted’ workers and new member state ‘service providers’ have proved controversial in many countries and have led to instances of serious social and industrial conflict, notably in the Scandinavian countries and also Ireland. As we noted earlier, this has led to a series of rulings by the European Court of Justice in an attempt to determine what industrial relations and labour legislation applies to such companies and their workers. As already noted it seems plausible that such employment forms are likely to substitute for regular employment in the context of transitional measures restricting labour market access. Our results for the most part focus on dependent workers, however, and so we were not able to corroborate this supposition. The one country in our sample lacking an effective wage floor for dependent workers, especially in the context of high unemployment, is Germany: there is no

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minimum wage and collectively agreed wage rates are increasingly being undercut or simply ignored (Schulten and Watt 2007). Here actual cases of and fears about wage undercutting led to intense, top-level political debate about extensions of the posted workers’ directive and sectoral and even national minimum wages. Turning to the employment and working conditions of the migrant workers themselves, our studies provide a mixed picture. There is no evidence to suggest that, as a group, migrant workers from the accession countries have formed an exploited sub-class on western European labour markets, although they are certainly concentrated in low-skill and low-pay employment. Clearly, some groups of workers, particularly the low-skilled and those lacking language skills, are vulnerable: examples of migrants working long hours, facing arbitrary and seemingly excessive deductions in pay, and so on, are provided, but it is not possible to quantify such conditions. Trade unions appear to have had some, but generally only limited success in recruiting migrant workers as members. It would be surprising if unskilled workers lacking language skills, uncertain about their rights and lacking trade union protection were not suffering worse pay and conditions than ‘native’ workers. To prevent this, statutory rules and standards must be effectively enforced and at a reasonably high level. Migrants tend to be highly concentrated sectorally. In all countries hotels and catering and construction tend to be favoured sectors; in some countries personal services and also manufacturing recruit relatively large numbers of migrants. Especially in the UK, it seems that in regional terms, by contrast, CEE migrants are less concentrated than previous waves of immigrant workers. This may reflect greater cultural affinities with the native population and/or the more temporary nature of recent migration, which lessens the importance of local networks. 6.4 Government and Social Partner Policies The type of measures adopted by governments and social partners, their extent and the interaction between social partners and governments in setting and implementing policies in this area all vary considerably between the countries studied in this volume. The first important distinction is of course between sending and receiving countries. While governments and social partners in receiving countries had to deal with issues such as integration of the new migrants, protection of their working conditions and wages, and upholding the working conditions and wages of indigenous workers, governments and social partners in sending countries with large emigration flows were dealing with a very different set of issues: the most important are linked to rising skills deficits or bottlenecks in certain sectors, which resulted in strategies such as retraining of existing workers, recruitment of migrant workers from neighbouring countries – for example, Romania and Bulgaria – and initiatives to convince emigrant workers to return home. With regard to the type of measures adopted in receiving countries the imposition of transitional measures was clearly the most important. Against the background of the adoption of transitional measures, governments in Germany and Austria had

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to negotiate and implement various exceptions for certain sectors and occupational groups – mostly high-skill professions or, conversely, areas with unattractive pay and conditions and difficulties in recruiting domestic workers – in order to react to emerging skill deficits and ensure a continued supply of seasonal labour. They also had to react – by way of tighter controls – to an increase in irregular migration (bogus self-employment, illegal work and the like) which was used to circumvent the transitional measures in place and resulted in a loss of social contribution and tax revenues. (Such phenomena and corresponding policy initiatives were also found in the countries with free labour market access, however.) In both Germany and Austria – in contrast to the UK and Sweden – trade unions and to some extent also employers’ organizations were in favour of the transitional measures. Trade unions – at least in Germany – were also eager to influence the migration agenda by lobbying the government on certain issues and laws, instituting some cross-border cooperation (both sometimes in unison with the employers) and by informing migrant workers about their rights. It should be noted that although both Germany and Austria argued that transitional measures would allow them to gradually adapt to free movement of labour, neither of the two countries has developed a general policy framework with regard to the obligatory lifting of transitional measures (at the latest) by 2011. The UK and Sweden – together with Ireland – lifted restrictions on the free movement of labour fully upon the accession of the A8 countries. Here the extent of inflows of migrant workers was the decisive determinant of the type and extent of actions taken by governments and social partners. As a reaction to the sheer number of migrant workers – which far surpassed that initially predicted – the UK government, in close consultation with the social partners, put into place a number of services for migrant workers but also strengthened the control mechanisms in order to prevent illegal employment and exploitation of migrant workers. Indeed, ‘social partnership’ is not a concept often used in the UK, but dealing with postaccession migration was one area in which governments, unions and employers did engage in formal and ongoing consultations and sought to find common solutions. Trade unions in all four countries, sometimes in close cooperation with partner organizations in sending countries – especially with Poland – and in other cases in cooperation with employers, are actively setting up advisory services (going beyond working conditions) and training measures (primarily language training) for migrant workers and thereby also trying to win migrant workers as new members. In areas of Germany and Austria bordering on A8 countries a number of regional cooperation initiatives – especially Interregional Trade Union Councils – have been established to promote the exchange of information and provide a mechanism for promoting regional integration. Sweden, not being faced with large migration inflows, reacted more slowly and less comprehensively. In accordance with the Swedish model of industrial relations the government was much less active in these initiatives than in the UK. The main trade union confederations put forward a number of proposals on how to make sure that the working conditions of

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migrants are in line with collective agreements and on how to prevent bogus selfemployment, in short to ensure an ‘orderly’ labour market. Only a few of those have led to legislative action, however. At the beginning of the post-enlargement period, the awareness of governments and social partners in sending countries regarding the challenges caused by outward migration was rather low. This was due not only to a consensus that freedom of movement of labour within the EU should be a general right, but also to the expectation that outward migration would improve the labour market situation, which was characterized by comparatively high unemployment. Subsequently, the reactions of governments and social partners in the countries looked at here differed considerably depending on the importance of migration and the extent of emerging bottlenecks in some sectors. A general feature is that the debate on the right to free movement has, although to differing extents, given way to one on a potential brain drain due in particular to the migration of relatively young and educated groups. As we have shown, outflows of workers and corresponding impacts on the local labour market following EU accession were very large in Poland and Latvia, while Hungary saw much smaller outflows. Accordingly, policy reactions by both government and social partners were considerably more pronounced in Poland than in Hungary. In Latvia outflows were also considerable, and came on top of earlier emigration by ethnic Russians, but government activities amounted to little more than programmatic statements. In contrast, civil society groups have been fairly active. But the relationship between the pressure on the authorities to act and the number of concrete policy initiatives is not always simple. In light of emerging bottlenecks in some sectors, in Poland – and to a much more limited degree in Hungary – besides initiatives to maintain cultural and linguistic links, the government put in place a number of measures to attract emigrant workers back home. They include improvements in tax regulations to prevent those returning home from being penalized for doing so, and incentive programmes geared to specific groups of emigrant workers. Latvia has debated initiatives in similar areas, but to little concrete effect. Furthermore, immigration from neighbouring countries is also being facilitated, although this is controversial. For social partners in sending countries, migration is not a focal topic for policy action, but rather a background condition against which other policies are set. Nevertheless, in some instances trade unions from sending countries have cooperated with their partner organizations in receiving countries in order to try to improve the labour market situation of workers abroad. They have played a role in a number of cross-border industrial disputes that have made the news, such as the Latvian union confederation in the Irish Ferries dispute. In Hungary trade union activities for the most part comprise programmes dealing with migration in border regions. Unions have in some instances also been involved in reviewing current migration policies. With regard to the increased numbers of immigrants – in Poland in particular this is a new phenomenon – the trade unions in the sending countries looked at here do not yet have a general strategy and also do not see

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it as uncontroversial; in Latvia the Trade Union Confederation came out against the application of free movement of workers on the accession of Bulgaria and Romania and instead suggested quotas for highly qualified workers or those with specific qualifications lacking in the domestic labour market. One of their lines of argument was that inflows of unqualified labour may cause severe social and ethnic problems. As to employers, besides calling for the easing of restrictions on inward migration, in light of emerging labour shortages they have been under pressure to improve working conditions and wages to retain their workers and attract new ones. As the Latvian example shows, employers are not always in favour of steps to promote return migration because they fear that returning migrants’ wage demands might be excessive. 7. Outlook The chapters of this book provide a wealth of information and analysis on migration and labour market developments in key sending and receiving countries in the enlarged European Union for the post-2004 period. In this Introduction we have sought to synthesize these results and identify similarities, differences and contrasts. Looking forward, what lessons can we draw? How can intra-EU labour mobility experience since 2004 be evaluated and what are the questions we will need to address in coming years? First, we should note that there are several key questions that could not be addressed in this book. For example, it is still too early to determine how long migrants on average will stay in the receiving country, and whether this pattern will differ from the migration flows Europe experienced after the accession of the Southern European countries. It is nowadays considerably cheaper and easier to travel between home and destination country, which may well promote ‘circular’ and shorter-term migration. In light of the ongoing economic convergence, not to mention the impact of the economic crisis, there are signs of return migration, also promoted by sending countries trying to attract emigrants back to the local labour market. Both point towards a situation in which, on average, a shorter length of stay can be expected. However, we also know that statements of intent on arrival or in response to surveys are unreliable guides to future behaviour. As communities and families come to be built abroad, many will stay in their new ‘home’, creating networks that can serve as a basis for continued – and more permanent – immigration. We still know too little about politically sensitive phenomena such as the extent and characteristics of posted workers, bogus self-employment and, of course, illegal and undocumented work among migrant workers. Overall, we were able to draw a relatively favourable picture of the impacts of greater labour mobility across an enlarged Europe. Many of the fears expressed prior to enlargement have not materialized. The approach of encouraging opening

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while permitting countries to impose continued limitations on freedom of movement for a transitional period appears to have been fundamentally sound. At the same time, numerous problems were identified, on which both researchers and policymakers should focus their attention. Referring back to our ideal-types of ‘most beneficial’ and ‘most negative’ forms of migration we see a mixed picture. Labour flows have largely been from high unemployment to lower unemployment countries and from low paid to better paid work. Remittances have promoted development and many migrant workers have returned after a period of time abroad with additional experiences and skills, not least languages. Although subject to methodological difficulties, we have found little evidence of substantial, broad-based negative effects on competing domestic workers in receiving countries. At the same time, we have seen substantial evidence of a brain drain and a ‘youth drain’, with emerging skills bottlenecks damaging the development prospects of the new member states but also promoting return migration. The most serious blight, however, clearly relates to the sorts of work performed by most migrants in receiving countries. While migration from the new member states clearly consists of much more than ‘surgeons picking mushrooms’ and ‘teachers plastering walls’, the evident serious mismatch between immigrant workers’ skills and the jobs they actually perform in the receiving countries strongly suggests that naïve views about labour flows and ‘factor equalisation’ are not adequate to the real world and that migrant flows do need to be channelled if welfare gains are to be maximized. In this regard it will be interesting to see whether, over time, migrant workers will be more successful in gaining employment closer to their initial skill profiles and/or gaining additional knowledge and qualifications. Equally important will be the extent to which sending countries will succeed in re-attracting migrant workers to the home labour market and whether returning migrants will be able to make use of their work experience abroad. Similarly, an important topic to address in future research will be how so-called ‘sending’ countries’ governments and social partners will deal with immigration, which for many is a new phenomenon Another key question is how the final lifting of the transitional measures in 2011 and in 2014 will affect migration flows. Will we see a redirection of flows towards Germany and Austria, for instance, which have many important ‘pull’ factors and have already, despite the transitional measures in place, attracted large numbers of workers from new member states? We have shown that labour demand and wage differentials – as mediated by current exchange rates – are key migration drivers. It can therefore be expected that changing economic and labour market outcomes in the countries looked at here, and in the new and old member states more generally, will affect migration outcomes substantially. There has been impressive economic convergence across the enlarged EU in recent years, and labour flows have played a part. In the uncertain economic environment we now face it remains to be seen whether this will continue: both new and old member states have been hit hard, but to varying

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extents. Issues of accession to the euro area are bound to arise, which will have knock-on effects on economic developments and prospects and thus also on labour mobility. Looking further into the future, how will EU countries behave in future accession rounds? There is a long list of potential new members. Will existing member states adopt transitional measures primarily with a view to the current assessment of their respective economic and labour market situations? What lessons will they draw from the 2004 and 2007 enlargements? We hope that this publication, as part of an ongoing research agenda, will contribute to forthcoming debates on these issues. References Alvarez-Plata, P., H. Brückner, and B. Siliverstovs (2003), ‘Potential Migration from Central and Eastern Europe into the EU-15 – An Update’. Report for the European Commission DG Employment and Social Affairs (Berlin: DIW). AMECO (2008), Annual Macroeconomic Database, DG Economic and Financial Affairs, European Commission. Barro, R., and X. Sala-I-Martin (1991), ‘Convergence across States and Regions’, Brooking Papers on Economic Activity, 1, 107–82. Bonin, H. et al. (2008), ‘Geographic Mobility in the European Union: Optimising Its Economic and Social Benefits’, IZA Research Report No. 19 (July). Borjas, G.J. (1989), ‘Economic Theory and International Migration’, International Migration Review 23 (3), 457–85. Borjas, G.J. (1995), ‘The Economic Benefits from Immigration’, Journal of Economic Perspectives 9 (2), 3–22. BUSINESSEUROPE (November 2007) ‘Remove All Hurdles to Movement of Workers, Goods, Services and Capital’, in: Briefing: Integrate the European Market [website], CSO (2008), Information on the Scale and Directions of Emigration from Poland in 2004–2007, Central Statistical Office, Warsaw, Poland. Dustmann, C., M. Casanova, M. Feritg, I. Preston and C. Schmidt (2003), The Impact of EU Enlargement on Migration Flows, Home Office Report 25/03. ETUC (2005), ‘Towards Free Movement of Workers in an Enlarged European Union’, Resolution adopted by the ETUC Executive Committee at their meeting held in Brussels on 5–6 December 2005. EURES (The European Job Mobility Portal) (n.d.), ‘Free Movement: Information on the Transitional Rules Governing the Free Movement of Workers from, to and between the New Member States’ [website],

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European Commission (2005), The Community Provisions on Social Security. Your Rights When Moving within the European Union, Update 2004, Luxembourg: Office for Official Publications of the European Communities [website], European Commission (2006), Communication from the Commission to the council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions: Report on the Functioning of the Transitional Arrangements set out in the 2003 Accession Treaty (period 1 May 2004–30 April 2006), Com(2006) 48 final, Brussels 8 February 2006. European Commission (2008), Enlargement – Transitional Provisions on Free Movement of Workers homepage [website], European Commission (various years), European General Guides. Factsheet on the Transitional Arrangements Relating to Enlargement [website], European Commission (n.d.), Guide for National Administrations – The Transitional Arrangements for the Free Movement of Workers from the New Member States following Enlargement of the European Union on 1 May 2004 [website], Eurostat (2008), Labour Force Survey. Online database. Hardarson, O. (2006), ‘The 2008 Ad Hoc Module of the EU-LFS: Describing and Analysing Migrants, Opportunities and Limitations’, Joint UNECE/Eurostat Work Session on Migration Statistics organised in collaboration with UNFPA, Edinburgh, Scotland, 20–22 November 2006, Working Paper 12 [website], Heinz, F., and M. Ward-Warmedinger (2006), ‘Cross-border Labour Mobility within an Enlarged EU’, Occasional Paper Series, No. 52, European Central Bank. Kvist, J. (2004), ‘Does EU Enlargement Lead to a Race to the Bottom? Strategic Interaction among EU Member States in Social Policy’, Journal of European Social Policy 14 (3), 301–18. Layard, R., O. Blanchard, R. Dornbush and P. Krugman (1992), East–West Migration: The Alternatives (Cambridge, MA–London: MIT Press). Schulten, T., and A. Watt (2007) ‘European Minimum Wage Policy – A Concrete Project for a Social Europe’, European Economic and Employment Policy Brief, 2/2007 (Brussels: ETUI) [website], Sriskandarajah, D. (2004), ‘EU Enlargement and Labour Migration: An ippr FactFile’ (London: Institute for Public Policy Research). Wallusch, J. (2008), ‘Poland: Minimum Wage, Employment and Labour Migration’, in D. Vaughan-Whitehead (ed.), The Minimum Wage Revisited in the Enlarged EU (Geneva: International Labour Office).

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Legislation Council Regulation (EEC) No. 1612/68) of 15 October 1968 on the Free Movement of Workers within the Community. Office of the High Commissioner for Human Rights (OHCHR) (1990), International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families; adopted by General Assembly resolution 45/158 of 18 December 1990 (Geneva: United Nations). Transitional Arrangements Restricting the Free Movement of Workers on EU Labour Markets: European Parliament Resolution on the Transitional Arrangements Restricting the Free Movement of Workers on EU Labour Markets (2006/2036(INI)), Official Journal of the European Union (O.J.), C 293 E/230.

Chapter 2

The Dimensions and Effects of EU Labour Migration in the UK Sonia McKay

1. Introduction: The Historical Context of Migration into the UK The UK has been a country of immigration for more than a century. The expansion of British colonialism in the eighteenth and nineteenth centuries, with the annexation of countries in the Caribbean, South East Asia and Africa as a product of imperial expansion, inevitably created the conditions for future chains of migration. Originally these were from the UK to the ‘colonies’, but in the twentieth century – and particularly from the end of the Second World War – they increasingly ran from former colonies to the UK. Immigration also had a ‘pre-colonial’ phase, with movements of people from Italy, Poland and Russia to the UK from the final years of the nineteenth century and the early years of the twentieth. Layered throughout these migratory movements has been migration from Ireland, Britain’s oldest colony, together with specific phases of migration resulting from persecution – for example, the migration of Jewish peoples from Central and Eastern Europe and of Huguenots from France. Thus, immigration is not new. However, previous phases can generally be characterized as migration for settlement. With the exception of Irish immigrants who often engaged in circular migration, most migrants to the UK came with a longer-term plan, if not to settle, at least to reside for a long period of time. In the twenty-first century this characterization of migration has altered. Recently arrived migrants – in particular those arriving since May 2004 from the A8 countries – have arrived expressing an intention to return to their countries of origin after a relatively short stay in the UK. Whether this will actually be the case is difficult to assess at present. The Availability of Statistical Data on A8 Migration In the UK there is no standard definition of the term ‘migrant’ worker. Robinson (2002) notes that the terms ‘migrant’ and ‘migrant worker’ can be defined in many ways, depending on the data source being used. The International Passenger Survey (IPS) defines a migrant as ‘a person who has resided abroad for a year or more, and who states on arrival the intention to stay in the UK for a year or more’. The Labour Force Survey (LFS) defines a ‘foreign’ worker as ‘someone

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who works but has foreign citizenship’ and a ‘foreign-born’ worker as ‘anyone born outside of the UK, including British citizens’. The LFS definition does not differentiate between those who have been in the UK for many years and those who arrived recently. Furthermore, it is based on a self-definition. In contrast, Bell, Jarman and Lefebvre (2004) define a migrant as ‘an individual who arrives in the host country either with a job to go to or with the intention of finding one’ and make no specific reference to country of origin. With a focus on recent migration, McKay and Winkelmann-Gleed (2006) refine Bell et al. (2004) as follows: Those who have come to the UK within the last five years specifically to find or take up work, whether intending to remain permanently or temporarily and whether documented or undocumented.

The aim in using this definition is to capture recent migration and thus to exclude from the definition those ‘migrants’ who are long-term, permanent residents, regardless of their immigration status and nationality. Both the IPS and LFS definitions used to extrapolate the data are problematic. The IPS, by defining as migrants only those who at entry intend to stay for a year or more, misses out many migrants who make their decisions on length of stay after arrival. The IPS is also problematic as it is a voluntary sample survey of passengers at selected air, sea and Channel Tunnel ports, providing estimates of both emigration from the UK as well as immigration to the UK. The method of data collection means that it can provide no more than a general picture of migration into the UK. The LFS focuses on private addresses, which means that it is likely to miss those migrants in various forms of collective accommodation, particularly in those cases where individuals are working outside the law and are therefore unwilling to provide information to the survey. THESIM (2006) notes that the UK government has accepted that the LFS is not a reliable data source for annual migratory flows. Consequently, the fact that there is no foolproof official definition of migrant workers, together with the limited methods of data collection, means that the existing datasets are recognized as unreliable. This was demonstrated following an outcry in late October 2007, when the government had to twice revise published data which were shown to be significant underestimates (see ‘Smith apologises for foreign workers error’, The Guardian, 30 October 2007). It then resulted in a detailed statement from the Statistics Commission making it clear that the problems in calculating the numbers are partly due to the fact that there are different technical definitions of ‘foreign’, with the Department for Work and Pensions using a definition based on nationality for the Labour Force Survey, while the Office for National Statistics relies on whether people say they were born overseas. The Commission then calculated that, between 1997 and 2007, there had been a total increase in employment of about 2.1 million, more than half of which was accounted for by foreign/migrant workers (Statistics Commission 2007). These figures were significantly higher than previous published data, which

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had suggested that around 1 million new workers had joined the UK labour force in that period. All of this points to a difficulty in presenting comprehensive and statistically robust data on recent migration, yet much of the comparative data used in migration studies relies on these datasets. The annual report to the OECD draws data together based on the International Passenger Survey, work permit applications, asylum grants and the Labour Force Survey to produce a ‘picture of international migration into the UK’ (Salt 2006). Further complicating the statistics is the fact that the numbers of undocumented workers are generally not known. In relation to A8 nationals there is also the Worker Registration Scheme (WRS). A8 nationals wishing to work in the UK are required to register under the scheme (for details see Heyes in this volume). The data collected by WRS measure flows of migrants only and not stocks. There is no enforcement mechanism or sanctions against those who do not register and since registration requires the payment of a relatively large fee there are valid reasons why some A8 workers choose not to register. However, it does offer some important insights into recent migration to the UK, and the data are referred to extensively in this chapter. 2. An Analysis of Recent Migration to the UK As already mentioned, migration has been a constant element in the construction of the UK’s labour force over more than a century. However, in this chapter we shall focus on recent migration from A8 and A2 countries, primarily that which has occurred since May 2004: as Salt and Millar (2006) note, it is likely that 2005 recorded the largest ever entry of foreign workers to the UK. The data indicate that there has been a dramatic increase in migration to the UK. In the mid to late 1990s around 30,000 migrants a year came to the UK for employment purposes. Since 2004 migration from A8 countries has averaged at around 200,000 persons a year. Government ministers, who were originally advised that 13,000 East Europeans would come to the UK per year, were caught by surprise at the vast numbers that travelled to Britain after the EU expanded in May 2004: 125,880 moved to the UK in the nine months to the end of 2004, followed by 204,970 in 2005. The number climbed to record levels in 2006 before a fall in 2007. The vast majority of the incomers were from Poland (505,300), followed by 77,000 each from Lithuania and Slovakia. Much smaller numbers have come from the Czech Republic, Hungary, Latvia, Estonia and Slovenia. The most recent WRS report, published in March 2008 (Home Office 2008) shows that some 845,000 A8 workers had made registration applications, almost all – 812,000 – of which had been approved. However, what is not known is how many A8 nationals there are in the UK who have not registered. Where research has looked at the issue it has found that substantial proportions of A8 nationals have not registered. Anderson et al. (2006) found that around a third of their

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sample should have registered under the scheme; however, a sizeable proportion (at least 10 per cent) of them had not done so. They note: Significant numbers of workers who fell within the rubric of the scheme did not register when they needed to, in some cases because they had not received information about it. Some workers considered registration as unnecessary or unfair given their plans for a temporary stay in the UK.

In our research for the UK Health and Safety Executive, we similarly found that many A8 workers had not registered, in part due to the fee that they are required to pay (McKay et al. 2006). Figure 2.1 provides the available data on the number of applications for registration from A8 nationals.



 



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Figure 2.1  Number of applications for registration For migrants from Bulgaria and Rumania, following accession on 1 January 2007, there is a separate registration scheme. Bulgarian and Romanian workers can enter the UK only as self-employed workers or under the existing seasonal scheme. The Home Office (2007b) report shows that a total of 1,115 applications for A2 worker cards were received in the first quarter of 2007, 815 of which were approved and 190 refused. A further 2,425 applications were approved for work under the seasonal agricultural workers scheme. Another way of calculating the number of recent migrants is through applications for National Insurance numbers. The total number of NINo registrations to overseas nationals in 2006/2007 was 713,000, an increase of 51,000 (8 per cent) on

The Dimensions and Effects of EU Labour Migration in the UK

33

2005/2006. Registrations to A8 nationals increased from 277,000 to 321,000 (16 per cent) between 2005/2006 and 2006/2007, with Poland the largest contributor; 223,000 NINo registrations were made to Poles in 2006/2007 (69 per cent of all registrations to A8 accession nationals). The number of applications for NI numbers is detailed in Figure 2.2. It demonstrates that in the two years after May 2004 there was a very large increase in National Insurance number allocations.

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Figure 2.2  Number of applications for NI numbers 2.1 The Countries of Origin of Migrants to the UK Immigration to the UK comes from all parts of the world. However, the primary migration routes are from EU countries, the rest of Europe, Africa and South East Asia. Salt (2006) provides a detailed study of migration to the UK since 2002, which takes account of A8 migration since 2004. Taking his statistical data on inflow and country of origin, Figure 2.3 shows that the numbers arriving in the UK rose between 2002 and 2004, with the figures for 2005 representing a 28.5 per cent increase over 2002. The figure also demonstrates that the increases are not even for all countries of origin. While those for EU-15 countries remained stable or even declined, those for EU-25 countries increased disproportionately in 2004 and 2005. Specifically, migration from A8 countries has risen substantially. In the two-year periods 1997–98, 1999–2000 and 2001–2002 migration from A8 countries did not register in the top ten of countries of origin. In 2003–2004 Poland moved into tenth position. In 2005–2006 it moved further up into second position (International Passenger Survey data). In 2004 A8 country migrants represented 11.3 per cent of total inward non-British citizens and in 2005 they grew to represent 17 per cent.

EU Labour Migration since Enlargement

34

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Figure 2.3  Migration in-flow 2002–2005 2.2 The Demographic Characteristics of A8 Migrants Migrants from A8 countries are generally younger than the host population, are just as likely to be female as male and tend not to be accompanied by family members on first arrival. They do not follow the settlement patterns of previous generations of migrants to the UK in that their migration at least initially is perceived as shortterm. Recent migration to the UK has mainly been from young A8 workers. Salt (2006) shows that in 2005 net gains were mainly among young people in the ‘15–24’ age group. The latest Accession Monitoring Report covering A8 nationals (Home Office 2008) shows that of those who applied between May 2004 and March 2008, 82 per cent of registered workers were aged 18–34 (see Figure 2.4). In terms of gender Salt (2006) suggests that overall gender differences are not very significant in relation to recent migration, although there may be significant fluctuations year on year. For example, for A8 migrants the net gain in 2004 was predominantly female, with Kofmann et al. (2005), analysing the LFS and IPS data on migration by gender, finding that for Central and East European countries female migrants represented an overall majority, at 56.2 per cent of all migrants entering in 2004. However, in 2005 there were more male A8 migrants than female, with a 65.3 per cent A8 male inflow (Salt 2006). The Accession Monitoring Report (Home Office 2008) shows that the male to female ratio for those A8 nationals who applied between May 2004 and March 2008 was 57:43, declining marginally in the latest quarter to 56:44.

The Dimensions and Effects of EU Labour Migration in the UK

35



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Figure 2.4 Age of A8 workers registering with WRS, May 2004 to December 2007 There are no data on employment rates that separate out A8 or A2 nationals from the rest of the migrant population. The data that do exist show that in London, within the total migrant population, employment rates are far lower for women (56 per cent) than men (75 per cent) (Spence 2005). However, these are also related to the presence of dependent children. Female migrants without children have employment rates (70 per cent) that are fairly close to those of male migrants without children (73 per cent). For migrants with children, on the other hand, employment rates for women are 44 per cent compared with 77 per cent for men. For UK nationals, employment rates for men are 79 per cent and for women 70.5 per cent (National Statistics, Labour Force Survey, March 2008). Again in relation to migrant workers overall, McIlwaine et al. (2006) report a pronounced gender division in relation to the kind of work that migrant workers do. Generally, migrant women worked in ‘semi-private’ spaces such as hotels, as chambermaids (58.5 per cent of hotel workers are female), and in the case of care work, in the houses of clients (81.5 per cent of workers), whilst men worked in ‘semi-public’ spaces such as office cleaning (70 per cent of workers being men) or on the London Underground (64 per cent of all workers). Sectors such as construction comprised, perhaps unsurprisingly, an all-male migrant workforce. While family reunification represents an important migration flow into the UK it has become relevant only more recently in relation to A8 nationals, who are more likely to arrive as unaccompanied adults. The latest Accession Monitoring Report (Home Office 2008) shows that the proportion of A8 workers registering between May 2004 and March 2008 who had dependants aged under 17 living with them in the UK when applying was just 7 per cent, reflecting the overall age composition

EU Labour Migration since Enlargement

36

of the A8 migrant inflow. Figure 2.5 shows that over the 47 months between May 2004 and March 2008, in relation to A8 nationals, just 153,689 applications for child benefit were made. In the same period there were 861,715 applications for NINos from A8 nationals, confirming that more than 80 per cent of applicants were not accompanied by dependants.

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Figure 2.5  Applications for child benefit from A8 nationals, UK 2.3 The Sectors, Occupations and Skills of A8 Migrants A8 migrants arriving in the UK have a similar occupational and sectoral profile to that of other migrants to the UK. However, they are more likely to work in agriculture and in food processing than are migrants from non-EU-27 countries. The Accession Monitoring Report (Home Office 2008) shows that the top five sectors for A8 registered workers who applied between May 2004 and March 2008 were administration, business and management (39 per cent), hospitality and catering (19 per cent), agriculture (10 per cent), manufacturing (7 per cent) and food, fish and meat processing (5 per cent). In relation to their occupations, the Report shows that the largest group of workers registered with the WRS is in ‘general occupations’ (27 per cent) classified as ‘process operatives (other factory workers)’. This is followed by warehouse operatives (8 per cent) and packers (6 per cent). One study of A8 workers found that between July 2004 and September 2005 the occupations most frequently entered by workers from A8 states were: process operatives, kitchen and catering assistants, packing, warehouse operatives, waiting/ waitressing, cleaners/domestic staff and farm workers (Dench et al. 2006).

The Dimensions and Effects of EU Labour Migration in the UK

37

In relation to employer practices Dench et al. (2006) found that the Workers’ Registration Scheme was rarely mentioned by employers in relation to higher skilled, non-manual and professional employment and was primarily identified with low skilled, low paid work. Anderson et al. (2006) similarly found that there was a significant mismatch between the jobs that A8 nationals were doing and their qualifications and skills. A study primarily of A8 national employment in the construction sector (Dainty et al. 2007) also found that ‘the prevalence of migrant workers in the projects examined was much greater than the official statistics suggest. In some cases virtually all of the general labour and most of the trades’ workers were migrants’. There are little data specifically on the skill levels of A8 nationals, as the WRS data look only at the jobs that individuals are doing in the UK, rather than the jobs that they are qualified to do. In relation to the East of England, and focusing mainly on Portuguese and Polish workers, McKay and Winkelmann-Gleed (2005) found that ‘most migrant workers are working in the region at below their skill level even though the skills they possess can be in areas where there are major skill shortages’. Lucio et al. (2007), exploring the role of trade unions in the recognition of skills and qualifications, found that migrants were rarely employed in ways that allow their skills to be effectively utilized or developed. A8 nationals are predominantly found in low waged and low skilled work and, as is the case with other economic migrants to the UK, they can be characterized as working at below their level of skills and qualifications. 2.4 The Terms and Conditions of A8 Migrants There are few robust data that provide an analysis of the earnings of A8 and A2 nationals. However, a recent review of the available data (Jayaweera and Anderson 2008) found widespread evidence of recent migrants getting less than the national minimum wage and that the likelihood of getting paid less was greater for younger migrants, for those from A8 and A2 countries, for those with lower levels of English proficiency and for those in more ‘migrant dense’ sectors such as hospitality, agriculture and construction. This confirms other data which suggest that migrant workers generally earn less than local workers and that those from high-income countries tend to earn more than those from low-income countries. A8 nationals are more likely to be found in low paying sectors and occupations. According to the Accession Monitoring Reports more than two in five registered A8 nationals – between 2004 and 2008 – worked in the hotel and catering sector, agriculture, manufacturing and food processing: all are low paying sectors. The Low Pay Commission (2008, 94) analysis of WRS applications suggests that workers from A8 countries work mainly in low paying sectors. There are some regional data on pay. French and Möhrke (2007), in a review for the Low Pay Commission focusing on recent migration mainly from the A8 countries into the North Staffs area, found that the vast majority of migrant workers surveyed and interviewed were paid just at or slightly above the National

EU Labour Migration since Enlargement

38

Minimum Wage. McKay et al. (2006) similarly found that the National Minimum Wage generally represented the maximum wage for migrant workers working in elementary occupations, where again A8 workers formed the largest group of migrant workers surveyed. Gibbons et al. (2007) found that in the poultry sector agency workers, the majority of whom were A8 migrant workers, were almost always at most being paid the National Minimum Wage. Green et al. (2007) found that, in relation to the West Midlands, Polish workers were most likely, of all migrant groups, to get less than the national minimum, with 37 per cent of those surveyed in that category. There were very few examples of workers earning in excess of this rate and some examples of workers in practice earning less, through high levels of deductions for accommodation or transport. A report by the Citizens Advice Bureaux (CAB 2004) notes high levels of exploitative working conditions among migrant workers. It describes these as encompassing exceptionally long working hours, excessive deductions in pay, failure to provide copies of employment contracts, uncertainty about employment status and the identity of the employer and the widespread use of summary dismissal and instant eviction. A consultation document issued by the UK government confirms this overall description, stating that ‘new migrants have been found to be particularly vulnerable to exploitation by unscrupulous employers’. Similarly, a case study report prepared for the TUC on Polish and Lithuanian workers shows that: • • • •

over half said that they had encountered problems at work in the UK either in the past or currently; nearly a quarter reported having no written contract, a figure which rose to nearly a third amongst agency workers; over a quarter had problems with payment, including not being paid for hours worked, discrepancies between pay and payslips, unauthorized deductions, and errors in pay calculation; and ten times as many migrants as indigenous workers were paid less than the National Minimum Wage (Anderson et al. 2007).

Those employed through international employment agencies are more likely than directly employed workers ‘to be underpaid or have more deducted from pay to cover accommodation and other services’ (DTI 2007). Evans et al. (2005) also found that in London migrant workers’ conditions of employment were extremely poor. Over half the respondents surveyed worked unsociable hours – the early, late or nightshift – with two fifths working overtime in an effort to increase their earnings. Three quarters of those working overtime were paid the same rate as for their other work. The situation is not considered to be any better outside London. French and Möhrke (2007) found high levels of exploitation of A8 migrant workers in their North Staffs research, including overcharging for accommodation and discriminatory treatment, ‘notably through the allocation of additional or harder

The Dimensions and Effects of EU Labour Migration in the UK

39

work to migrant workers’. McKay and Winkelmann-Gleed (2005) similarly found that migrant workers in the East of England – mainly Portuguese and Polish – were working very long hours. In relation to health and safety, McKay et al. (2006) found that migrants, including A8 nationals, were more likely to be working in sectors or occupations where there are existing health and safety concerns and that it is their status as new workers that may place them at added risk, due to: • • • • • • •

their relatively short periods of work in the UK; their limited knowledge of the UK’s health and safety system; different experiences of health and safety regimes in countries of origin; motivations in coming to the UK, particularly where these are premised on earning as much as possible in the shortest possible time; inability to communicate effectively with other workers and with supervisors, particularly in relation to their understanding of risk; access to limited health and safety training and difficulties in understanding what is being offered, where proficiency in English is limited; and the failure of employers to check on their skills for work and on their language skills.

The research also found that employment relationships and unclear responsibilities for health and safety, in particular where workers are supplied by recruitment agencies or labour providers or are self-employed, together with a lack of knowledge of health and safety rights and how to raise them – including knowledge of the channels through which they can be represented – all contributed to migrants being at greater risk. 2.5 The Employment Status of A8 Migrant Workers Where migrant workers have a legal right to work and are directly employed by the end-user employer their employment status is that of employee, and the employment relationship they have with the employer is the standard contract of employment. However, A8 migrants are more likely than native workers to be utilized as temporary labour, filling in for peaks in production and moving from job to job and are thus less likely to be on standard contracts of employment. This means that they may be excluded from important employment protection rights. Among A8 workers who registered in the twelve months to March 2008, 53 per cent were in temporary employment and 43 per cent in permanent employment – 4 per cent did not provide this information – and the proportions in temporary employment appear to be rising. Home Office (2008) shows that the proportion of A8 registered workers employed on a temporary or permanent basis varied considerably between sectors. Between April 2007 and March 2008, 75 per cent of A8 registered workers who applied to work in agriculture and 79 per cent in administration, business and management indicated that they had a temporary

40

EU Labour Migration since Enlargement

employment contract. In hospitality and catering and in manufacturing the pattern was reversed, with 77 per cent and 64 per cent, respectively, of registered A8 nationals indicating permanent employment. There is increasing evidence of migrant workers accessing work through employment agencies and in such cases the worker’s employment status is often unclear. The UK Court of Appeal has ruled, in the case of James v London Borough of Greenwich [2008] EWCA Civ 35 N2/2007/0368, that whether an agency worker is an employee of the end user should be decided under the Common Law and this leads neither to regarding all agency workers as self-employed temporary workers nor to assuming that all agency workers are employees. With regard to unemployment rates, only sparse data are available in relation to A8 migration. One recent survey (European Foundation 2007) covering all EU25 nationals found that they had a slightly lower unemployment rate (4.9 per cent) compared to that of British nationals (5.1 per cent). Existing surveys – mainly qualitative and often based on small sample sizes – suggest that A8 migrants have a low level of unemployment. These findings are borne out by the most recent Worker Accession Report (March 2008). This shows that between May 2004 and March 2008 there were just 8,899 applications for Income Support (social benefit), 15,495 for income-based Jobseeker’s Allowance (unemployment benefit) and 456 for State Pension Credit. However, with a total number of 812,000 applications for registration approved, only 0.3 per cent of those registered have applied for any tax-funded income-related benefits. It should be noted that A8 nationals cannot apply for unemployment-linked benefits in the first 12 months of their stay. 2.6 Regional Data on A8 Migration Regionally, London and the South East are host to the largest numbers of migrant workers. In 2000, London was home to 47 per cent of migrant workers (520,000) of foreign-born origin, and the rest of the South East had a further 20 per cent of all migrant workers in the UK. More than two thirds of foreign national workers were in this corner of England (compared with only 42 per cent of British workers). Since 2004 the rural east of England has been a growing destination for A8 migrant workers in the agricultural, hospitality and food sectors (McKay and WinkelmannGleed 2005; Dench et al. 2006). The Accession Monitoring Report (Home Office 2008) shows that between May 2004 and March 2008 the largest proportion of A8 nationals (15 per cent) registered in the East of England, with the second highest proportion in the Midlands (13 per cent). The trend for A8 nationals not to select London as a first destination of migration continues, with just 10 per cent of all workers registering in 2007/2008 located in London (compared to 20 per cent in 2004). Given the dominance of London as a destination for previous generations of migrants, with two million of its inhabitants (29 per cent) born outside the UK (Spence 2005), the migration of A8 nationals to other UK destinations since 2004 represents an important shift in the geography of inward migration to the UK. Figure 2.6 shows the geographical distribution of employers of A8 registered

The Dimensions and Effects of EU Labour Migration in the UK

41

workers. While the data suggest that A8 migrants are relatively evenly distributed through most of the regions of England and Wales, the differing sizes of the native populations within the regions means that A8 registered worker concentrations are greater in some smaller populated regions such as the East of England and the North East than in larger populated regions such as London.







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Figure 2.6  Geographical distribution of employers of registered workers Other recent regional studies confirm that the diversity traditionally ascribed to large metropolitan conurbations such as London is now being replicated in parts of the UK that have not previously witnessed large-scale migration. A report covering the South West of England found that the nationalities of migrant workers coming into the South West Region are also in line with the national trends, with A8 nationals being the fastest growing migrant group. Polish workers now constitute the largest group of entrants to the Region, while the number of migrants from India, South Africa and Portugal, the largest national groups in previous years, has grown very little, in contrast to the rapid increase of A8 nationals (Bryant et al. 2006).

2.7 The Migration Intentions of A8 Migrants In relation to A8 migration since May 2004, there is little robust statistical information indicating short- or long-term intentions in relation to migration for the whole period since May 2004. The worker registration data have more recently

EU Labour Migration since Enlargement

42

begun to provide some information on migration intentions on arrival. Figure 2.7 provides the Accession Monitoring Report data on return intentions. This shows that 60 per cent of registered workers indicated on their application form, in the twelve months ending December 2007, that they intended to stay in the UK for less than three months. However, this figure can be advanced only tentatively. Barrell et al. (2007) note large discrepancies between the flow estimates of migrants into the UK and the stock estimates, suggesting that ‘NMS migration to Ireland and the UK has been very much of a temporary nature, with relatively short stays before return’. Other research on motivations and intentions in relation to migration shows that short-term migration intentions more often turn into longterm migration decisions. However, in relation to A8 migrants there may be some differences and there is some evidence that workers are returning home or moving on to third countries. One study (Pollard et al. 2008) suggested that about half of the people who moved to Britain from the countries that joined the European Union on 1 May 2004 have already left the UK. McKay and Winkelmann-Gleed (2005) found that while some migrants had come with the aim of long-term settlement, many of the A8 migrant workers in the East of England saw their period of work as an interlude and intended to return to their country of origin or to move to a third country at some stage in the mid-term future. There is also some evidence of A8 migration being circular, with migrants returning frequently to their country of origin. One study by the Commission for Rural Communities (2007) found that many migrant workers work a shift pattern and regularly return home for visits.

  







  





  

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The Dimensions and Effects of EU Labour Migration in the UK

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3. The Impact of A8 Migration on UK Labour Markets Recent studies for the Home Office (summarized in Wright and McKay 2007) have examined the labour market outcomes and impacts of migrants in the UK. This followed the publication in 2001 of an influential report (Glover et al. 2001) that identified the positive economic and social impacts of migration, including the suggestion that migrants create new businesses and jobs, fill labour market gaps and improve productivity. In the first attempt at analysing the impact of migration on local labour markets (Dustman et al. 2003), the authors suggest that, if anything, wages seem to be positively affected by migration inflows, although they warn that the statistical reliability of such estimates is sometimes weak. However, contrary evidence was provided in a Bank of England report (2006) which noted that the UK industries with the highest proportion of recent migrants – agriculture, distribution and hotels and restaurants – were also those where pay fell most sharply in 2005 (ibid., 21). An analysis of the net fiscal contribution to public finances of migrants – there is no study covering only those from the accession countries – by the think tank IPPR (Sriskandarajah et al. 2005) found that their contribution was greater than for the UK-born population, and that their contribution is growing. In relation to A8 nationals, there is conflicting evidence about their impact on local labour markets. Barrell et al. (2007), looking at the macroeconomic impacts of EU enlargement, note that the UK had seen strong migration from the new member states even prior to 2004, tracing the increases back a decade. They calculate that migration to the UK has had some impact on GDP and on productivity – output in the UK is two thirds of one per cent higher than it would otherwise be without A8 migration – but that in general it has not had a major impact on raising the rate of unemployment. Employers generally argue that A8 migrants are filling ‘hard to fill’ vacancies, either because there is no local labour or the skill match is not appropriate. Employers also perceive migrants as ‘good workers’ who are quick to learn (Anderson et al. 2006). Similarly Dench et al. (2006) found that employers sometimes preferred A8 migrants to domestic (UK) workers, particularly in the agriculture, hotels and catering and low skill parts of the administration, business and management sectors. Employers of low skilled workers reported that labour shortages were a primary reason for recruiting foreign workers as often the conditions, pay, hours or nature of the work were unfavourable to local workers and migrants ‘were more amenable to these conditions’. Employers cited advantages of migrant workers in terms of their general attitude and work ethic. McKay and WinkelmannGleed (2005) found this to be the case in relation to the East of England, where unemployment levels are particularly low. Recent evidence suggests that in some regions with relatively high unemployment rates, migrant labour may have a substitution effect. The research also found some evidence of the substitution of earlier groups of migrants – in this case Portuguese workers – by later groups of

44

EU Labour Migration since Enlargement

A8 migrants and of a perception of a substitution of refugee labour by A8 labour (French 2007). One sector in which there are consistent claims of pay rates being reduced as a consequence of the presence of migrant labour is construction. Here the trade union UCATT, in its evidence to the House of Lords Committee on migration (UCATT 2007), states that so far it has not come across hard evidence that employing migrant workers leads to a decrease in the pay of British workers. It notes that the notion that ‘employing migrant workers drives indigenous workers out of work is only anecdotal and has not been proved for the construction sector’. However, evidence collected by UCATT officials on various construction sites shows that in relation to A8 workers ‘migrant workers are often paid less than their indigenous colleagues for the same type of work’. Furthermore, a report produced for the Low Pay Commission found that there was little evidence of substitution between groups of workers; the Low Pay Commission also notes in its 2008 report that in general, migrants have not displaced UK nationals in the workplace. Coats (2008) also suggests that, to the extent to which there is competition, new migrants are competing with earlier waves of migrants, not with indigenous workers. Local and regional government organizations in areas that have experienced large increases in migrant workers argue that there is a pressing need for the government to provide additional resources to meet the new challenges of migration, including the provision of educational and health services (Smith and Montague 2007). Some of the claims for additional funding revolve around the way the government has calculated the numbers of recent migrants. By underestimating their number, the government has been able to allocate fewer resources to local services (Bentham 2007). An economic study on employment, wages and labour market performance (Coats 2008) addresses the issue of labour substitution and of the impact of migration on wages. Coats finds that the existence of a National Minimum Wage, that in recent years has increased at a faster rate than both average earnings and consumer prices, has limited the scope for the exploitation of migrant labour, and that, by protecting the most vulnerable, it has prevented the driving down of wages. Testing this thesis in relation to two sectors – construction and hospitality – where there has been popular concern over the impact of migration on pay, Coats finds that in both sectors migration has not been a significant factor driving wage developments. He argues that it may be the absence of an effective national minimum wage that results in the detection of a more significant impact on wages in other countries, such as the USA. Coats also suggests that many of the supposed economic concerns about migration are not economic at all and have far more to do with questions of culture and integration. The Informal Sector in the UK Our analysis has focussed on documented migration, even if the statistical bases are far from perfect. Of course any full analysis would also need to reflect on illegal and undocumented migrant workers where, obviously, the data situation is

The Dimensions and Effects of EU Labour Migration in the UK

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much more difficult. The literature generally agrees that the UK informal economy covers work involving the paid production or sale of goods or services that is unregistered or hidden from the state for tax and employment law purposes, but are legal activities otherwise (Ram et al. 2004; Wright and McKay 2007). The main sectors in which undocumented migrants work are construction, agriculture, textiles, hotels and restaurants, cleaning, care work and domestic work, which are also sectors in which there are high levels of undeclared work. In a study aiming to measure the size of the informal economy in the inner London Borough of Haringey (Community Links 2006), 23 per cent of the sample had been involved in the informal economy in the last year, of whom 27 per cent were from Western Europe and had no restrictions on working in the UK. A Eurobarometer (2007) survey of undeclared labour found that, for the UK, some 7 per cent of persons declared having acquired services in the previous 12 months which they believed were the product of undeclared work, while 5 per cent gave a similar answer in relation to the purchase of goods. This was slightly lower than the EU averages of 9 per cent and 6 per cent, respectively. The only government figures on the number of unauthorized migrants in the UK ranged from a lowest figure of 310,000 (0.5 per cent of the UK population) to 570,000 at the highest (1 per cent), with a midpoint of 430,000 (0.7 per cent) (Woodbridge 2005). These figures do not take account of changes since the 2001 Census, however, and exclude categories such as students working more hours than their visa permits (Wright and McKay 2007). A8 nationals, given that they have an unrestricted right to enter the UK and to seek work (provided they are registered), while no longer undocumented, may still be working in the informal sector for tax evasion purposes, whether or not at the employer’s behest. For A2 nationals, given the restrictions on the sectors in which they can legally work, the informal sector may provide more opportunities for work as employers may be more willing to employ workers without tax and national insurance payments, although there are no published studies with regard to this. 4. Conclusions The opening up of A8 migration has had a significant impact on the UK economy. Although there are contradictory opinions on the benefits of this migration, in the four years following accession the economy has been acknowledged as generally strong and this, in part, is attributed to the arrival of large numbers of migrant workers ready to work in ‘hard to fill’ jobs, for which they are often overqualified. At the same time, as this chapter has demonstrated, it is difficult to provide accurate data on recent migration to the UK. What is clear from the available data is that overall the demographic characteristics of A8 migrants are not significantly different from those of other migrants to the UK. However, they are somewhat

46

EU Labour Migration since Enlargement

younger than migrants in general and are less likely to be accompanied by family dependants. Family reunification migration is also less evident in relation to A8 migrants. Their employment terms in relation to earnings, holidays, working time and work benefits, such as sickness, pensions and so on, are generally poor. A8 nationals commonly work in the same sectors and occupations as other recent migrants and under the same terms and conditions and there is no compelling evidence of their ability to move beyond this type of employment into jobs with better terms and conditions. Thus A8 nationals are more likely to be working in temporary jobs than local workers and are therefore in the same kind of precarious employment as other non-EU migrants. They are, however, less likely to be unemployed than both the host workforce and other non-EU migrants, suggesting a greater imperative for them to accept precarious work, particularly in circumstances where they have no entitlement to state welfare support. There is some limited evidence that A8 migration has had some, but probably minimal, impact on unemployment levels, while there is some, but patchy, evidence of wage competition and perhaps a displacement, especially of existing ‘migrant’ (for example, black ethnic minority workers). At this point it is difficult to assess the future for A8 migration to the UK; however, it does appear that individuals at least arrive with an intention of remaining for fairly short periods. This contrasts with the migration patterns of non-EU work permit holders, where there is more evidence of an intention to stay long-term. The most recent data report suggests that around one in four permit holders apply for permanent right to remain (Home Office 2006). However, the current political climate is generally seen as hostile to large-scale migration and government policies that tighten migration rules and limit rights of entry, particularly to migrants from traditional countries of origin, encourage a political debate that is disparaging of the societal benefits of migration at the same time as legislation closes routes to unskilled work, other than to EU nationals. References Anderson, B., M. Ruhs, B. Rogaly and S. Spencer (2006), Fair Enough? Central and East European Migrants in Low Wage Jobs in the UK [website], Anderson, B., N. Clark and V. Parutis (2007), ‘New EU members? Migrant Workers’ Challenges and Opportunities to UK Trades Unions: A Polish and Lithuanian Case Study’, London: TUC. Bank of England (2006), Inflation Report (February). Barrell, R., J. FitzGerald and R. Riley (2007), ‘EU Enlargement and Migration: Assessing the Macroeconomic Impact’, NIESR Discussion Paper No. 292 (March).

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Bell, S., S. Gibbons and S. McKay (2007), Agency Labour in the Poultry Sector, Report prepared for the Ethical Trading Initiative. Bell, K., N. Jarman and T. Lefebvre (2004), Migrant Workers in Northern Ireland, Institute for Conflict Research. Bentham, M. (2007), ‘Capital Has £100m Funding Shortfall’, London Evening Standard (31 October). Bryant, L., J. Beer, R. Southern, J. Screeton and A. Inman (2006), A Study of Migrant Workers Employed within the Food and Drink Sector of the South West of England, Social Research & Regeneration Unit, University of Plymouth. CAB (2004), ‘Nowhere to Turn: CAB Evidence on the Exploitation of Migrant Workers’, Citizens Advice Bureaux. Coats, D. (2008), ‘Migration Myths: Employment, Wages and Labour Market Performance’, The Work Foundation, London. Commission for Rural Communities (2007), A8 Migrant Workers in Rural Areas, Briefing Paper. Community Links (2006), ‘Measuring the London Borough of Hackney’s Informal Economy’, London: Community Links. Dainty, A.R.J., A.G. Gibb, P. Bust and C.I. Goodier (2007), Safety: Report for the Institution of Civil Engineers, Loughborough University. Dench, S., J. Hurstfield, D. Hill and K. Ackroyd (2006), Employers’ Use of Migrant Labour, Home Office Online Report, 04/06. DTI (2007), ‘National Minimum Wage and Employment Agency Standards Enforcement’, consultation document. Dustmann, C., F. Fabbri, I. Preston and J. Wadsworth (2003), The Local Labour Market Effects of Immigration in the UK (2003), Home Office Online Report 06/03. Eurobarometer (2007), Undeclared Work in the European Union, Directorate General Employment, Social Affairs and Equal Opportunities. European Foundation (2007), Employment and Working Conditions of Migrant Workers, European Foundation for Living and Working Conditions, Dublin. Evans, Y., J. Herbert, K. Datta, J. May, C. McIlwaine and J. Wills (2005), Making the City Work: Low-Pay Employment in London, Queen Mary University. French, S. (2007), Submission of Evidence to the House of Lords Economic Affairs Committee on the Economic Impact of Immigration, Centre for Industrial Relations, Keele University. French, S., and J. Möhrke (2007), The Impact of ‘New Arrivals’ upon the North Staffordshire Labour Market, Research report for the Low Pay Commission. Glover, S., C. Gott, A. Loizillon, J. Portes, R. Price, S. Spencer, V. Srinivasan and C. Willis (2001), ‘Migration: An Economic and Social Analysis’, Home Office RDS Occasional Paper No. 67. Green, A., D. Owen and P. Jones (2007), The Economic Impact of Migrant Workers in the West Midlands, West Midlands Regional Observatory. Home Office (2006a), ‘UK Government Reveals New Immigration Points System’, Home Office Press Release (7 March) [website],
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com/news/2006_03_07/uk/government_reveals_immigration_points_system. htm> Home Office (2006b), Control of Immigration Statistics, United Kingdom 2006, CM7197. Home Office (2007a), The Accession (Immigration and Worker Registration) (Amendment) Regulations (April) [website], Home Office (2007b), Bulgarian and Romanian Accession Statistics (January– March). Home Office (2007c), Accession Monitoring Report, May 2004 –September 2007 [website], Home Office (2007d), Accession Monitoring Report, May 2004 –December 2007 [website], Home Office (2008), Accession Monitoring Report, May 2004 –March 2008 [website], Jayaweera, H., and B. Anderson (2008), Migrant Workers and Vulnerable Employment: A Review of Existing Data, Compas, Report for the TUC Commission on Vulnerable Employment, London. Kofman, E., P. Raghuram and M. Merefield (2005), ‘Gendered Migrations: Towards Gender Sensitive Policies in the UK’, Asylum and Migration Working Paper 6, London: ippr. Low Pay Commission (2008), National Minimum Wage Report, London: Low Pay Commission. Lucio, M., R. Perrett, J. McBride and S. Craig (2007), ‘Migrant Workers in the Labour Market: The Role of Unions in the Recognition of Skills and Qualifications’, TUC, Research Paper No. 7. McIlwaine, K., C. Datta, Y. Evans, J. Herbert, J. May and J. Wills (2005), Gender and Ethnic Identities among Low-Paid Migrant Workers in London, Queen Mary University, London. McKay, S., and A. Winkelmann-Gleed (2005), Migrant Workers in the East of England, East of England Development Agency. McKay, S., D. Chopra and M. Craw (2006), ‘Migrant Workers in England and Wales: An Assessment of Migrant Worker Health and Safety Risks’, Health and Safety Executive, RR502. National Statistics (2007b), National Insurance Number Allocations to Overseas Nationals Entering the UK, 2006-07, Department for Work and Pensions [website], Pollard, N., M. Latorre and D. Sriskandarajah (2008), ‘Floodgates or Turnstiles? Post-EU Enlargement Migration Flows to (and from) the UK’, London: ippr.

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Ram, M., P. Edwards and T. Jones (2004), Informal Employment, Small Firms and the National Minimum Wage, Report prepared for the Low Pay Commission. Robinson, V. (2002), ‘Migrant Workers in the UK’, Labour Market Trends (September). Salt, J. (2006), International Migration and the United Kingdom, Report of the United Kingdom SOPEMI correspondent to the OECD. Salt, J., and J. Millar (2006), ‘Foreign Labour in the United Kingdom: Current Patterns and Trends’, Labour Market Trends (October), 335–55. Smith, D., and B. Montague (2007), ‘Do Migrants Break Us or Make Us’?, Sunday Times (4 November). Spence, L. (2005), ‘Country of Birth and Labour Market Outcomes in London’, DMAG Briefing 2005/1. Sriskandarajah et al. 2005 Paying Their Way: The Fiscal Contribution of Immigrants in the UK, London, ippr. Statistics Commission (2007), Foreign Workers in the UK – Briefing Note (December) [website], THESIM (2006), ‘Towards Harmonised European Statistics on International Migration’, University of Louvain. UCATT (2007), Consultation Response to the House of Lords Economic Affairs Committee Inquiry on the Economic Impact of Immigration on the UK Economy. Woodbridge, J. (205), Sizing the Unauthorised (Illegal) Migrant Population in the United Kingdom in 2001, Home Office Online Report 29/05. Wright, T., and S. McKay (2007), United Kingdom Country Report, Undocumented Worker Transitions FP6 project [website], List of Abbreviations DMAG Data Management and Analysis Group GLA Gangmasters Licensing Authority IPS International Passenger Survey LFS Labour Force Survey NIN0 National Insurance Numbers SAWS Seasonal Agricultural Workers Scheme TUC Trades Union Congress WRS Worker Registration Scheme

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Chapter 3

EU Labour Migration: Government and Social Partner Policies in the UK Jason Heyes

1. Introduction The scale of migration, the extent and nature of its economic and social costs and benefits, the rights of migrants (including asylum seekers) and the extent to which the government should – and is able to – monitor and control immigration have long been highly controversial issues in the UK. The accession of the A8 and A2 EU member states – and the consequent increase in the number of migrants entering the UK – has encouraged an intensification of debates relating to these matters. Over the past four years migrant workers from Central and Eastern Europe have been the focus of attention for those groups in British society that are hostile to immigration. Many newspapers have claimed that new migrants are a threat to ‘British jobs’ and responsible for increases in the number of crimes committed and pressure on public services and housing. Similar claims have been made, albeit in less sensationalist language, by the Conservative Party, the main political opposition. The government has responded by emphasizing the economic and social benefits of migration, while simultaneously restricting the labour market access of Romanian and Bulgarian workers and the benefit entitlements of all migrant workers from the A8 and A2 countries. It has also attempted to demonstrate that the development of its migration policies is informed by the opinions of employers, trade unions and other representative bodies. The object of this chapter is to provide an overview and assessment of the government’s policies in respect of migrant workers from the A8 and A2 countries. It also explores the policies and practices of employers and trade unions, and the extent and content of social dialogue relating to migration policy. The chapter draws on three sources of information: first, secondary sources, including published research, government reports and web-based materials; second, interviews with representatives of the British Chambers of Commerce (BCC), the Association of Labour Providers (ALP), the Gangmasters Licensing Authority (GLA), the Trades Union Congress (TUC) and a number of individual trade unions (the GMB, UNITE, USDAW and UCATT); and third, data collected as part of an ongoing research project that is investigating efforts by trade unions to support the education and training needs of migrant workers (Heyes 2008).

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2. Attitudes to Labour Mobility at the Time of Enlargement The UK was one of only three countries – the others being Ireland and Sweden – to grant nationals from the A8 countries full access to the labour market following EU enlargement in May 2004. The government has consistently maintained that migration is beneficial to the UK in that it allows employers access to skills that would otherwise be absent or in short supply and contributes to economic growth. However, despite allowing A8 workers to enter the UK to work, the government requires them to register their employment within one month of starting a job. It also chose to maintain entry restrictions in respect of Romanian and Bulgarian workers following the 2006 accession of these countries. The government has presented these measures as examples of its so-called ‘managed’ approach to migration, which is aimed at providing ‘rational and credible legal routes for men and women who want to live and work in the UK’ (Home Office 2002, 38). The government’s decision to allow A8 citizens access to the UK labour market received the support of employers, whose main representative organizations had argued prior to accession that such a policy would provide firms with a larger pool of workers from which to recruit and thereby enable them to fill vacancies and deal with skill shortages. Both the Confederation of British Industry (CBI) and the British Chambers of Commerce (BCC) continue to support the governments’ key migration policies, including the continuation of restrictions relating to workers from Bulgaria and Romania. Both organizations have argued, however, that migration should not be regarded as a long-term solution to entrenched problems relating to the UK’s education and training system and were also critical of the government’s 2007 proposal – since implemented – to give employers increased responsibility for preventing illegal working. The trade union movement also supported the government’s decision to grant A8 nationals free access to the UK labour market. Its support stems from its commitment – as articulated by the Trades Union Congress (TUC) – to the principle that all EU workers should have freedom of movement, and for this reason it has opposed the ongoing restrictions on Romanian and Bulgarian workers. It has further argued that the restrictions have served to drive workers into the informal economy and made them vulnerable to exploitation by unscrupulous employers. The TUC has called on the government to adopt a ‘rights based’ approach to the issue of migrant workers’ employment, in which migrant workers – including those working illegally – and indigenous workers would be given equal rights and greater efforts would be made to ensure that rights are enforced. According to the TUC, such an approach would prevent extreme exploitation of migrants while simultaneously removing incentives for employers to compete through undercutting based on a dilution of terms and conditions of employment. The belief shared by government, employers and trade unions concerning the benefits of migration was articulated in a tripartite statement of intent issued in

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2005 by the Home Office, the CBI and the TUC. The statement expressed a shared commitment to ensuring that ‘the contribution made by workers from overseas is both recognized and enhanced to the full’ and listed a series of measures to be undertaken and supported by the three parties. The government undertook to ‘consult employers and trade unions about migration policies’, ‘protect the legal rights of migrant workers’, provide support for English tuition and ‘keep bureaucracy to a minimum in its dealings with employers about migrant workers’. The TUC pledged to provide migrants with information concerning their rights, help affiliated unions to organize migrant workers and protect them and promote equal pay and conditions. The CBI, for its part, made a commitment to promote the case for ‘legal and managed’ migration, assist businesses and workers in making the transition from the ‘illegal economy to the legal economy’, promote ‘integration and diversity’ and ‘work with CBI members and Government to encourage the provision of English language teaching for those who need it’. Despite broad agreement on the part of the government, employers and unions that migration is beneficial to the UK economy, the presence of large numbers of migrant workers and the government’s migration policies continue to be highly controversial. Some British newspapers have campaigned against migrant workers, arguing that they are directly responsible for social problems relating to crime and housing and are displacing British workers. There is some evidence that these messages have had an effect on the rhetoric of government ministers, including the Prime Minister, Gordon Brown, whose speech to the September 2007 Labour Party conference included a commitment to creating ‘British jobs for British workers’. The political controversy has been further fuelled by errors made by the government in predicting the number of accession country workers who would come to the UK after 2004 – the number was massively underestimated – and a perception that the government does not know precisely how many migrants are currently living and working in the UK. The government’s difficulties were exacerbated following the revelation in 2007 that the Home Office had greatly underestimated the number of migrant workers entering the UK since 1997. In April 2008 the government faced further criticism following the publication of a report by the House of Lords Committee on Economic Affairs, which took issue with a number of the government’s claims concerning the benefits of migration. Section 3 looks at the government’s ‘managed migration’ policies in more detail.

  , accessed 9������������ July 2008.

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3. Government Policies and Practices 3.1 Government Policy in Respect of Migration by Non-EEA Nationals The UK’s migration system is complex and has been subject to a number of changes in recent years, some of which have been connected to the accession of the A8 and A2 countries. With regard to non-EU workers, the government has experimented with new programmes for both the more and the less highly skilled. In 2002 the government introduced a Highly Skilled Workers Programme (HSWP), which permitted skilled workers to come to the UK in order to pursue work or self-employment opportunities without having already received an offer of employment. The government is currently in the process of implementing a new ‘Points-Based System’ (PBS), which has been developed in an attempt to simplify the migration system. The PBS is intended to ‘admit people selectively in order to maximize the economic benefit of migration’ and it is intended that it will facilitate the filling of mainly skilled jobs (Home Office 2005, cited in Dench et al. 2006, 5). In order to enter or remain in the UK for purposes of work or study, most individuals – other than those from EEA countries or Switzerland – will require a certificate of sponsorship from a licensed sponsor (for example, an employer) and will also be required to meet points-based assessment criteria. Points are awarded based on qualifications, experience of the UK, English language ability, previous earnings and financial situation. The PBS system is based on a five-tier framework, which encompasses ‘highly skilled workers’ (Tier 1), ‘skilled workers with a job offer to fill gaps in the United Kingdom labour force’ (Tier 2), ‘limited numbers of low skilled workers needed to fill temporary labour shortages’ (Tier 3), students (Tier 4) and ‘youth mobility and temporary workers’ (Tier 5). Tier 1, which has replaced the HSWP, is intended to enable highly skilled workers to enter or remain in the United Kingdom to look for work or self-employment opportunities and is the only tier for which sponsorship is not required. Applications under Tiers 2 and 5 are scheduled to start in autumn 2008 and those for Tier 4 in spring 2009. Tier 3 is currently suspended. New penalties have also been introduced for those who employ illegal migrant workers. Under the Immigration, Asylum and Nationality Act 2006, employers who have employed illegal migrant workers since 29 February 2008 can be fined up to £10,000 per illegal worker. 3.2 Policy in Respect of A8 and A2 Nationals As noted, the UK was one of three EU-15 member states to allow A8 nationals full labour market access from 2004. However, unlike Sweden and Ireland, the UK government introduced a Worker Registration Scheme (WRS) that places obligations upon both migrant workers and their employers. A8 workers who wish to work in the UK are required to apply for a registration certificate upon taking up employment. Those who fail to apply for a registration certificate within one

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month of commencing a job are deemed to be illegally employed. However, an employed worker who does not register commits no offence: it is the employer alone who risks incurring a penalty (see below). In order to register, workers must complete an application form and pay a registration fee, which is currently £90 (approximately €114). Workers who have been employed for 12 months with no more than 30 days’ break are not required to continue their registration and have the right to continue to live and work in the UK. However, workers who change employer within the 12-month qualifying period are required to apply for a new certificate and pay a further £90 fee. Furthermore, workers who are out of work for more than 30 days are deemed to be no longer registered and are required to begin a further 12-month registration period. Employers are expected to provide workers with a letter confirming the date on which employment commenced, as this is required when applying for registration. They are also expected to retain a copy of workers’ completed application forms and registration certificates. Employers who fail to retain a copy of the application form or continue to employ a worker who does not apply for registration within a month of taking up employment may be deemed to have committed a criminal offence and may be liable to a fine of up to £5,000 (approximately €6,355). The number of A8 migrant workers who entered the UK following the 2004 expansion of the EU far exceeded official estimates and gave rise to criticism of the government’s stance on migration. A fear that the accession of the A2 in 2006 would lead to a further larger-than-anticipated inflow of migrant workers, alongside evidence of increasing unemployment, led the government to maintain restrictions on Bulgarian and Romanian workers’ access to the UK labour market. Skilled workers who wish to work in the UK are required to make an application under the Points-Based Scheme. The only routes to employment available to unskilled workers from the A2 countries are the Seasonal Agricultural Worker Scheme (SAWS) and the ‘Sector-Based Scheme’ (SBS). SAWS, which was introduced in the immediate post-war years to assist farmers during peak seasons while allowing participants to learn about the UK and the English language, enables farmers and growers to employ a fixed quota of migrant workers each year. The scheme is currently restricted to Bulgarian and Romanian nationals and participants are allowed to work in the UK for a fixed period of time, which can be up to six months. The SBS, which was introduced in 2003, allows employers in the food processing sector to recruit migrant workers to fill low skilled jobs for a maximum period of 12 months. Employers are required to demonstrate that they are unable to fill posts by recruiting from the indigenous workforce and must apply for a work permit for each SBS employee. Like SAWS, the scheme is currently open only to citizens of Romania and Bulgaria. As in the case of employers of A8 workers, the government has introduced financial penalties for those who employ Bulgarian or Romanian workers who have not been granted authorization to work.

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3.3 Problems and Limitations of Migration Policy in Respect of A8 and A2 Nationals The government’s migration policies in respect of workers from the A8 and A2 EU member states have proved controversial in a number of respects. The purpose, value and consequences of the WRS have been questioned by both trade unions and employers. As Anderson et al. (2006, 96) note, the WRS was not intended to limit A8 nationals’ access to the labour market but to limit their access to certain welfare benefits and services. The rationale for the restriction was the government’s desire to avoid accusations from the media and the political opposition that it was allowing migrants to engage in ‘benefit tourism’. Migrant workers from the A8 countries can access child benefit, housing benefit and tax credits once they start work in the UK, but only if they register with the WRS and remain in employment throughout the 12-month registration period. Workers who lose their job during this period also lose their entitlement to receive benefits. Furthermore, A8 workers are not entitled to claim means-tested or contribution-based unemployment benefit until they have completed a 12-month period of employment. The government has argued that the WRS provides valuable information about the number of A8 nationals working in the UK and their occupations. However, the information generated by the WRS is limited in a number of respects: first, departures are not registered and the figures therefore potentially include workers who have returned to their countries of origin (Anderson et al. 2007, 5); second, some workers fail to register (Anderson et al. 2006, 99–101); and third, self-employed migrant workers from the A8 countries do not need to register under the WRS. Moreover, trade unions and organizations that represent temporary employment agencies have argued that the WRS registration fee and the bureaucracy associated with the WRS have created disincentives for workers to register and are driving many into the informal economy. It has been alleged that the restrictions relating to A2 workers are having a similar effect. While Romanian and Bulgarian workers are free to enter the UK to work on a self-employed basis, it is likely that many of those who enter the UK as ‘self-employed’ are in fact employees working for ‘rogue employers’ (TUC 2008, 53), a problem that is particularly in evidence in the construction sector. Further problems have been highlighted by the TUC’s Commission on Vulnerable Employment (CoVE), which was launched in 2007 with a remit to collect evidence and make policy recommendations in respect of vulnerable workers. In a recent report (TUC 2008), the CoVE provided examples of abuses of the WRS scheme by firms and agencies and the difficulties encountered by workers who do not register.

 ����������������������������������������������������������������������������������� The reason the self-employed are not obliged to register under the WRS is that the UK is bound by European law concerning the treatment of self-employed workers.

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4. Employer Policies and Practices As already noted, employer organizations have broadly supported the government’s policies in respect of migrant workers from the A8 and A2 EU member states. They have also welcomed the new Points-Based System of migration, a policy development on which they were closely consulted. During 2006 and 2007, a number of employers and representative organizations, including the CBI, the British Hospitality Association, the Confederation of Small Businesses, Ernst and Young, IBM, the Recruitment and Employment Confederation and TESCO, were represented on an ‘Employer Taskforce’ which discussed the development of various aspects of the PBS. The CBI (2005, 2007) has argued that increases in the number of individual migration schemes over time have resulted in an excessively complex system that discourages some firms from hiring migrant workers. It has expressed the hope that the PBS will result in a simpler system that employers will find easier to understand. However, it has also expressed concern at the extent to which the government has sought to increase the responsibilities of employers. Under the PBS, employers will be required to undertake a number of duties, including maintaining a record of the migrants they employ and informing the authorities if they fail to turn up for work. These responsibilities relate to the government’s strategy to prevent illegal working. The 1996 Asylum and Immigration Act introduced a requirement that employers check that prospective employees have a right to work in the UK. The 2006 Prevention of Illegal Working – Immigration, Asylum and Nationality Act introduced the further requirement that employers periodically check the status of those workers whose right to work is time-limited. Employer organizations argue that their members face a number of potential difficulties in this respect. Not all employers have the capacity to easily conduct periodic checks on time-limited workers and may not be able to spot forged documents. They may also run the risk of committing unlawful discrimination if they either refuse to consider hiring workers whom they suspect of not being British, or check the documents of all prospective employees who appear not to be British while failing to check the documents of those who appear to be so. Such behaviour is likely to result in employers treating black and minority ethnic (BME) British workers differently to white British workers. The government’s advice is that employers should avoid this risk by checking the documents of all prospective employees. However, the costs to businesses of doing so may be substantial. A number of studies have suggested that employers often fail to carry out checks and are reluctant to act as ‘enforcers’ of government policies. Ruhs and Anderson et al. (2006, 26) found that employers were reluctant to check workers’ documents because of ‘the time, complexity and a sense that “It is not really our job”’. Similarly, Dench et al. (2006, 50) found that employers were critical of the administrative burden associated with the WRS. Furthermore, employers who  ����������������������������������������������������������������������������� .

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used agency workers were often uncertain whether the WRS requirements were being observed and tended to leave the checking of documents to agencies (Dench et al. 2006, 50). However, it is likely that such checks are often not performed. Agencies and other labour providers have claimed that the requirement to verify workers’ status imposes a cost on their business, that the process of arranging for workers to be issued with a national insurance (NI) number is too protracted, and that support and advice from government (for example, advice on how to spot false papers) is insufficient (Precision Prospecting 2004). Employer organizations such as the CBI are opposed to illegal working on the grounds that it creates a basis for unfair competition and leaves workers vulnerable to abuse (CBI 2005, 10). However, the CBI has argued that employers can be expected to bear the burden associated with additional checks only if adequate support is made available. The government has produced a code of practice for employers, which provides advice on avoiding unlawful discrimination. It has also introduced a telephone advice helpline. However, according to a British Chambers of Commerce representative, the hotline is underfunded and the organization’s members have found that lines are often busy (Interviews). Furthermore, the CBI’s members have reported that the advice they have received via the helpline has been inconsistent (CBI 2007), which is a concern given that acting on advice received does not constitute a defence against civil penalties. The CBI has therefore called on the government to improve the amount, clarity and consistency of the advice that is made available to employers and to ensure that employers are given an opportunity to obtain written confirmation of the advice they receive. It has also called on the government to ensure that detection and enforcement activities are focused on ‘rogue’ employers and to adopt a ‘yellow card’ approach (that is, additional support rather than penalties for a first offence). Furthermore, in 2008 it successfully lobbied the government to opt out of the proposed EU Directive on Sanctions for Employers Using Illegal Workers. The CBI had argued that the Directive would have been ‘damaging and bureaucratic for companies trying to deal with illegal working in a responsible way’. A8 and A2 nationals who work in the UK are entitled to most of the same employment rights as British workers. However, a number of studies have highlighted a variety of abuses by firms and employment agencies. These have included inadequate, unsafe and overcrowded accommodation, underpayment, unlawful deductions from wages, excessively long hours of work, failures on the part of employers to provide wage slips, contracts of employment or information about employment rights, and even violent treatment of migrant workers (Anderson et al. 2007; Dench et al. 2006, 63–4; Fitzgerald 2006). Some of the difficulties encountered by migrant workers reflect, or are compounded by, language barriers. Clearly those migrant workers whose understanding of English is poor are at a disadvantage when it comes to understanding their employment rights or taking action in defence of them. Workers who lack a basic understanding  ����������������������������������������������������� .

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of English also face increased risk of accident or death at work. As McHugh and McConnell (2007) note, health and safety considerations do not provide automatic justification for refusing to employ workers who lack an adequate command of English, and British employers have a duty to take care that arrangements are made to ensure that employees with limited English are able to understand health and safety procedures. However, it appears that relatively few employers provide English language classes for their migrant workers, despite language barriers and lack of proficiency in English being the most commonly identified disadvantages of migrant workers cited by employers (Dench et al. 2006, 33; TUC 2008). The government has responded to these concerns in a number of ways. Every month since November 2004, HMRC has carried out checks on 15 employers of migrant workers. The firms are selected on the basis of a risk assessment and information derived from the WRS. Twenty-eight per cent of the organizations investigated up to 2008 were found to be failing to comply with legal obligations relating to the national minimum wage (NMW) (Low Pay Commission 2008: 116). The government has also announced plans to strengthen the Employment Agency Standards Inspectorate, which is part of the Department for Business, Enterprise and Regulatory Reform (BERR) and responsible for carrying out routine inspections of agencies and investigating complaints about agency conduct. In 2007 the secretary of state for BERR announced that the number of inspectors employed by the Employment Agency Standards Inspectorate would be doubled, although it should be noted that this only represents an increase from 12 to 24. In 2006 the government created a Gangmasters Licensing Authority (GLA) to issue licences to labour suppliers in the agricultural, shellfish and food processing and packaging sectors. The GLA is a non-departmental government body under the Department for Environment, Food and Rural Affairs (DEFRA). All labour suppliers operating in these sectors, from established employment agencies to individual ‘gangmasters’, are now required to apply for a license. Successful applicants have to satisfy a number of licensing standards, examples of which include having appropriate systems for the collection of tax and national insurance (social security) contributions, paying wages that are no lower than the NMW, employing only those who are legally entitled to work in the UK, no ‘bonded debt’ and adherence to health and safety requirements. Greater regulation of labour providers has been welcomed by unions and also by organizations representing labour providers, although criticisms have also been made. The Association of Labour Providers (ALP), which is a lobbying organization for ‘gangmasters’ operating mainly in the food industry, has called on the government to do more to tackle tax evasion by those customers of labour providers that operate in the informal economy. It has also argued that current restrictions on the ability of migrant workers to work legally in the UK are

 ������������������������������������������������������������������������������ As set out in the Approved Code of Practice associated with the Management of Health and Safety at Work Regulations 1999.

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driving many into undeclared employment and leaving them vulnerable to abuse. The scope, responsibilities and enforcement capacity of the GLA have also been questioned. Numerous sectors and occupations, including warehousing, cleaning, hospitality and catering, health care, office workers, factory work and transport are not covered by the GLA. A further difficulty is that agencies may subcontract labour further down the supply chain, which means that workers will not necessarily know who has employed them. 5. Trade Union Policies and Practices The Trades Union Congress (TUC) and its affiliated unions have produced a considerable amount of information, advice and guidance for migrant workers, which has been made available in various formats. The TUC has, for example, produced a booklet entitled Working in the UK: Your Rights, which is available in seven languages. It has also developed a website to support Polish migrant workers. The website, which is run by the TUC in partnership with the Citizens Advice Bureau (CAB) and Solidarność, provides information about employment rights, housing, health care and other issues relating to working and living in the UK. Similar initiatives have been taken by a number of individual unions. The general union UNITE, for example, has established a Migrant Workers’ Legal Helpline, which is a free – to the union’s migrant members – telephone service that provides advice on issues such as visas, rights of entry, passports, work permits and benefits. There have also been a small number of high-profile cases of unions pursuing grievances on behalf of workers. Trade unions face particular difficulties in attempting to recruit and organize migrant workers (McKay 2006) and evidence from the 2002 Labour Force Survey suggests that workers born outside Britain are less likely to join unions than British-born workers (Hardy and Clark 2005, 7). It also appears that workers from Eastern Europe are the least likely to be in a union (op. cit.; TUC 2003). However, while membership levels may be low, there is evidence that many migrant workers are interested in joining a trade union (Anderson et al. 2007, 22). It is also clear that a number of unions are making considerable efforts to recruit and represent migrant workers. Many unions now provide information in a variety of languages. The recruitment leaflet of the shopworkers’ union USDAW, for example, is available in 35 different languages and other unions have similarly translated their membership forms and key advice and guidance literature. Unions have also introduced new courses for shop stewards, learning representatives and health and safety representatives to make them aware of the specific concerns and needs of migrant workers and encourage them to engage with migrants.  � , accessed 11 July 2008.  �������������������������� The website’s address is .

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In attempting to connect with migrant workers, unions have been led to consider new or less traditional approaches to organizing (Fitzgerald 2006). One such approach has been to link organizing to the provision of educational services (Heyes 2008). This is not a ‘new strategy’ as such, for a number of unions have previously sought to recruit new members from the indigenous workforce by facilitating access to education and training (Munro and Rainbird 2000). However, the education and training needs of migrant workers often differ from those of indigenous workers. A notable area of union support in this context has been training in English for Speakers of Other Languages (ESOL). Several unions have sought to facilitate access to English classes and in a number of cases this has involved engagement with employers and community groups. The TUC, through its education and training support service (Unionlearn), has supported many of these initiatives and has provided financial support via the Union Learning Fund. As Unionlearn has emphasized in its training materials for Union Learning Representatives, ESOL is a ‘union issue’ given that migrant workers who are unable to understand and communicate in English may be more likely to encounter discrimination at work and become a focus for racist attitudes. Furthermore, those who benefit as a result of a union’s efforts to facilitate access to ESOL may be more likely to develop a positive view of the union and take an active part in it. The potential importance of unions as facilitators of English language tuition has increased as a result of changes to the government’s policy in respect of the funding of ESOL. In October 2006 the government announced that the existing universal entitlement to free ESOL training up to level 2 was to be ended and that free English training would in future be restricted to those receiving meanstested benefits and tax credits. The unions opposed the reforms and issued a press statement10 that called upon the government to do more to make employers meet the cost of training employees. The government has so far chosen not to place additional obligations on employers and has instead focused its attention on developing new qualifications. The Department for Innovation, Universities and Skills has, in conjunction with the Learning and Skills Council, the Qualifications and Curriculum Authority and the National Association for Teaching English and Other Community Languages, developed a suite of employment-focused ‘ESOL for Work’ qualifications that are tailored to meet employers’ requirements and, it is assumed, will therefore encourage them to contribute to the cost of provision. Alongside this development, the National Centre for Languages (CiLT), which is the UK’s recognized standard setting body for language and intercultural skills,

 The Union Learning Fund (ULF) was established by the Labour government in 1998. The fund is administered by Unionlearn, which was established in 2006 within the TUC with financial support from the government.  Access to ESOL remains free of charge in Scotland. 10 � .

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EU Labour Migration since Enlargement

has engaged in consultations designed to inform the development of new National Occupational Standards for working effectively with people from different countries or cultures. The government’s policy in respect of financial support for ESOL learners has disadvantaged low income earners, many of whom now face an additional financial barrier to education. This has, however, presented trade unions with an opportunity to bridge the gap and several unions have become centrally involved in facilitating access to ESOL tuition and supporting learners at the workplace and outside. With financial support from the Union Learning Fund, the General Municipal and Boiler Makers’ Union (GMB) has established a Learning Centre in Southampton. The GMB has arranged for a local further education college to provide ESOL classes at the Learning Centre and, at the time of writing, between 600 and 700 migrant workers have taken classes. A similar initiative has been taken by the South West region of the Community union, which has led a project that has enabled over 100 migrants working in and around the town of Yeovil to access free ESOL classes. Both the GMB and Community have attempted to link the provision of education services to their organizing activities (see Heyes 2008). While neither regional union has made union membership a condition of receiving ESOL, the classes have provided union officials with an opportunity to meet migrant workers, discuss the issues that confront them at work and point out the benefits of membership. In addition to providing advice and guidance on work-related matters, the unions have provided migrant workers with support and advice in respect of problems outside work, including issues relating to pensions, housing and benefits. Both unions have employed Polish liaison workers and project workers and this has proved important in terms of establishing trust and credibility, which in turn has assisted recruitment efforts. By early 2008, 26 migrant workers had joined Community as a result of the South West region’s ESOL support. The GMB, whose Learning Centre has come to be regarded by migrant workers as a general advice and support centre, has been even more successful: approximately 90 per cent of those who have taken classes have joined the union as a consequence. Both unions have created union branches composed entirely of migrant workers. The branches have been established with the aim of facilitating the integration of migrant workers into the unions by developing their self-confidence, knowledge, skills and collective identity. Other unions have taken similar steps to link education and organizing activities. The shopworkers’ union USDAW, for example, has, through the efforts of its Union Learning Representatives,11 shop stewards and health and safety representatives, helped migrant workers develop their English language and basic skills and has experienced membership growth as a result (Usdaw n.d.). The construction union UCATT provides a further example. In 2002 the union, with support from the ULF, opened a learning centre at Canary Wharf, London. The centre, which is run by 11  Union Learning Representatives (ULRs) promote learning at the workplace. Their role has statutory support.

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UCATT and supported by a college of further education, provides ESOL support for migrant workers. The TUC is itself offering free training for Polish workers employed in cleaning, security and building service occupations in London. The Vulnerable Workers Project (VWP), which is funded by the Department for Business and Enterprise (BERR), is providing free courses for workers on ‘rights at work, trade union membership, building links with community groups, and providing advice to other workers and community members’. Community unionism is in a relatively embryonic state in the UK, and as Wills and Simms note initiatives have been ‘rather ad hoc’ (Wills and Simms 2004, 69). However, a number of trade unions have recognized that engaging with migrant community groups may be the most practical way of accessing migrant workers and developing trust. Unions have therefore attempted to build links with local representative bodies and have visited venues where migrant workers congregate, including cafés and churches. In some cases links have developed as a result of initiatives taken by regional or local union officials, although there are examples of union head offices attempting to develop a coordinated national strategy. UNITE, for example, has also established a Migrant Worker Support Unit to assess the needs of the union’s migrant members. MSWU has been operating in the union’s eight regions since 2007 and, in addition to providing training for union representatives, it has sought to develop networks to support migrant workers via cooperation with NGOs and community groups. In supporting migrant workers, some unions have also cooperated with employers in providing information and assistance or access to ESOL provision (CBI, TUC and DIUS 2007; Fitzgerald 2007). Community’s South West region, for example, has taken the relatively unusual step of developing a relationship with Smart Group, an employment agency operating in the South of England. Many of the company’s temporary workers have taken the ESOL courses provided through a project administered by Community, Smart Group and the WEA. The agency has benefited by being able to supply workers who have a better understanding of English than the migrant workers supplied by its competitors. In return, the agency provides its temporary workers with access to the union and information about Community, including membership application forms. Cross-border migration has provided a context for the development of new links between British and European trade unions. The TUC and national trade unions in the UK have attempted to build support for migrants by cooperating with trade unions in ‘sending countries’, especially Poland. In conjunction with the TUC, USDAW, for example, has worked with a Polish trade union official, who has helped the union organize Polish workers in the North West of England. Links with the Polish trade union Solidarność have been established at some sites. The construction sector union UCATT has similarly worked with a national organizer from Solidarność and this has been an important element in the success of its recruitment efforts in the North East of England (Fitzgerald 2006).

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EU Labour Migration since Enlargement

6. Social Dialogue The absence of well-entrenched social dialogue is a commonly-noted feature of British industrial relations (for example, Hyman 2000). However, compared to most other economic and social policy issues, consultation and social dialogue in respect of migration and the related issue of illegal working are relatively extensive. Unions and employer bodies provide the majority of representatives to the GLA’s board, which makes recommendations on fees and licensing standards. Employers and unions were also represented on an ‘Employer Taskforce’ created by the Home Office as a means of obtaining views on the development and implementation of the new points-based migration measures.12 Until recently the principal ongoing forum for discussing issues relating to migration policy has been the Illegal Working Group (IWG), which was created under the auspices of the Home Office in 2002. The group, which is chaired by the Minister of State for Citizenship, Immigration and Nationality (Home Office) has met approximately three times a year since it was established. It includes representatives from, among others, the British Chambers of Commerce, the CBI, the TUC, the Association of Labour Providers, the Health and Safety Executive, the Commission for Racial Equality, the National Farmers’ Union and the retailer J. Sainsbury’s. The IWG’s remit is to consider measures to tackle illegal migrant working and the issues discussed by the group have included the GLA, the Workers’ Registration Scheme and the restrictions on Romanian and Bulgarian citizens. The purpose of the IWG is to enable the government to judge how policies will be received by different sections of society. It is not empowered to make policy recommendations; however, to the extent that the IWG enables the government to demonstrate its commitment to consulting a variety of interest groups,13 its existence may also help reduce the government’s vulnerability to attacks by its political opponents and the right-wing press, which typically presents migration in a negative light. Such considerations might also account for the recent creation by the government of a Migration Impacts Forum (MIF) to examine the impact of migration on British society and suggest areas for government research. The MIF is co-chaired by a Home Office minister and a Local Government minister and its membership is composed of representatives from local government, health, education, the police and criminal justice system, the voluntary sector, as well as the CBI and TUC. The MIF’s job is to collect and reflect on evidence relating to 12 ������������������������������������������������������������������������ Trade union representation was restricted to the TUC – the remaining 25 organizations that participated were government ministries, employers or employer organizations. 13 ��������������������������������������������������������������������������������� The strength of the government’s commitment in this regard is questionable. Some members of the IWG have claimed that decisions relating to issues such as the WRS have been taken without proper consultation or a robust justification: .

Government and Social Partner Policies in the UK

65

the impact of migration on issues such as housing, employment, education, health and social care, crime and disorder and community cohesion. Unlike the IWG, the MIF has been asked to develop recommendations, in particular on the issue of whether to retain the current restrictions on migration to the UK from Bulgaria and Romania. Following the deliberations of the MIF’s October 2007 meeting, at which concerns were raised about pressure on local authorities resulting from migration, the government decided to maintain the restrictions. This decision was supported by the CBI, which had claimed during the MIF’s meeting that employers’ demand for labour had reduced since the accession of the A8 countries. However, the MIF’s deliberations were arguably not the most important consideration for the government, for at the time the decision to maintain restrictions was made, the government faced mounting criticism of its ability to measure and control migration and had been obliged to revise upward its estimate of the number of migrants living in the UK. A further body, the Migration Advisory Commission (MAC), has also been established as a non-departmental public body. The role of the MAC, which is composed of five economists and two ex-officio members, is to provide information on skills gaps that might be filled via migration and the criteria for the government’s points-based migration system. Its initial task has been to identify a list of skilled occupations where shortages might be addressed by recruiting migrants from outside the EEA. A stakeholder group, composed of national-level employer and employee representatives, is due to be established to inform the work of the MAC. 7. Conclusions Despite evidence suggesting that the flow of migrants from the A8 economies has passed its peak and is subsiding (Pollard et al. 2008), the economic and social costs and benefits of migration and the appropriateness of specific migration policies continue to be debated frequently by politicians, the media, academics and other commentators and organizations within British society. In attempting to quell controversy and challenge political and media opposition to current migration policy, the government has consulted employers, trade unions and other civil society organizations to an extent that has rarely been witnessed in respect of other policy issues and has thereby sought to create the impression that policies are being developed with sufficient regard to the interests of all sections of British society. The government has also attempted to defuse controversy by seeking to demonstrate that its policies are ‘evidence-based’. However, its ability to establish the credibility of evidence-based policy making in respect of migration has been hampered by the limitations of its own evidence-gathering capabilities. The scale of migration has proved to be the single most controversial aspect of the government’s migration policy, not only because flows from the accession countries have been far greater than the government predicted, but also because

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EU Labour Migration since Enlargement

the government has been unable to measure accurately the number of migrants entering and leaving the UK and has been forced to revise its estimates. Employer organizations and trade unions have tended to echo the government in emphasizing the economic and social benefits of migration and have supported many of the government’s migration policies. However, employers continue to express concern about the extent to which they are expected to act as ‘enforcers’ of government policies and the perceived inadequacy of the support that is available to them in this regard. Trade unions, on the other hand, continue to call for employment rights protection to be extended to undocumented workers, restrictions on Romanian and Bulgarian workers to be lifted and the Workers Registration Scheme to be abandoned. The government reviewed the WRS in 2006 and decided to retain it, arguing that it continued to provide important information about the number of migrants working in the UK. However, under European law all EU-15 member states will be required to permit workers from the A8 countries to migrate freely by 2011, which means that the government will be unable to retain the WRS beyond that time. It is possible that the government will abandon the WRS before 2011, given that the European Commission will require those EU-15 member states that wish to retain ‘transitional arrangements’ beyond 2009 to demonstrate that an end to restrictions would result in labour market disruption. At the time of writing it is unclear whether the government will choose to make a case for retention of the WRS beyond 2009. In theory, the government will be able to maintain restrictions on Bulgarian and Romanian workers until 2014. Despite concerns that the restrictions are leading migrant workers from the A2 countries to enter the informal economy and bogus self-employment, worsening economic conditions, the absence of calls by employers for an end to the restrictions and the concern of the government to avoid being seen as ‘soft’ on the issue of migration mean that the prospects for an early end to the transitional arrangements are currently poor. A general election is due to be held in the UK by mid-2010. The Conservative Party has stated that if it were to win the election, it would extend the restrictions that apply in respect of Romanian and Bulgarian nationals to the citizens of all future accession countries. The current Labour government, by contrast, has said that it would continue to review policy on a case-by-case basis. Either way, it is likely that migration will remain a highly controversial and contested policy issue. References Anderson, B. et al. (2006), Fair Enough? Central and East European Migrants in Low-Wage Employment in the UK. Centre on Migration, Policy and Society, University of Oxford. Anderson, B. et al. (2007), New EU Members? Migrant Workers’ Challenges and Opportunities to UK Trade Unions: A Polish and Lithuanian Case Study (London: TUC).

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British Chamber of Commerce (2007), Migration: Plugging the Gap (London: BCC). Confederation of British Industry (2005), Selective Admission: Making Migration Work for Britain – CBI Official Response [website], , accessed 11 July 2008. Confederation of British Industry (2007), CBI Response: Prevention of Illegal Working- Immigration, Asylum & Nationality Act 2006 [website], , accessed 10 July 2008. CBI, TUC and the Department for Innovation, Universities and Skills (2007), English Language at Work: Work-Based English for Speakers of Other Languages (London: DIUS). Dench, S. et al. (2006), Employers’ Use of Migrant Labour: Main Report (London: Home Office). Fitzgerald, I. (2006), Organising Migrant Workers in Construction: Evidence from the North East of England (London: TUC). Fitzgerald, I. (2007), A Moving Target: The Informational Needs of Polish Migrant Workers in Yorkshire and the Humber (Northumbria: Northumbria University). Hardy, J., and C. Clark (2005), ‘EU Enlargement, Workers and Migration: Implications for Trade Unions in the UK and Poland’. Paper given at the Global Unions Research Network International Workshop on ‘Trade Unions, Globalization and Development – Strengthening Rights and Capabilities of Workers’, Novo Hamborgo, Brazil, January 2005 [website], , accessed 18 April 2008. Heyes, J. (2008), ‘Recruiting and Organising Migrant Workers through Education: A Comparison of Community and the GMB’. Paper presented at the British Universities Industrial Relations Association conference, University of West of England, 25–27 June 2008. Hyman, R. (2000), Social Dialogue in Western Europe: ‘The State of the Art’. InFocus Programme on Strengthening Social Dialogue, Paper 1 (Geneva: ILO). Low Pay Commission (2008), National Minimum Wage: Low Pay Commission Report 2008 (London: The Stationery Office). McHugh, E., and A. McConnell (2007), ‘Balancing Act: Safety versus Discrimination’, People Management (15 November) (London: CIPD). McKay, S. (2006), ‘Unions and Migrants’, Union Ideas Network [website], Munro, A., and H. Rainbird (2000), ‘The New Unionism and the New Bargaining Agenda: UNISON – Employer Partnerships on Workplace Learning in Britain’, British Journal of Industrial Relations 38:2, 223–40.

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Pollard, N. et al. (2008), Floodgates or Turnstiles? Post-EU Enlargement Migration Flows to (and from) the UK (London: Institute for Public Policy Research). Precision Prospecting (2004), The Business Process Applicable to All Parties Using and Supplying Temporary Labour Covered by the Gangmasters (Licensing) Act 2004. Special Report for IBM on Demand Business/DEFRA. Ruhs, M., and B. Anderson (2006), Semi-Compliance in the Migrant Labour Market. Centre on Migration, Policy and Society, Working Paper No. 30 (Oxford: University of Oxford). TUC (2003), The Economics of Migration: Managing the Impacts (London: TUC). TUC (2008), Hard Work, Hidden Lives: The Short Report of the Commission on Vulnerable Employment (London: TUC). Unionlearn (n.d.), ESOL: Skills for Life Series for Union Learning Reps (London: Unionlearn). Usdaw (n.d.), Agency and Migrant Workers (Manchester: Usdaw). Wills, J., and M. Simms (2004), ‘Building Reciprocal Community Unionism in the UK’, Capital & Class 82, 59–84.

Chapter 4

The Dimensions and Effects of EU Labour Migration in Sweden Per Lundborg

1. Introduction The historic enlargement of the EU by eight new members from Central and Eastern Europe in May 2004 and by another two in 2007 marked the end of a divided Europe. EU membership changed the lives of millions of people in the new member states as the 15 ‘old’ members (EU-15) opened up, at different rates, their labour markets for immigrants from the ten new Central and East European members (EU-10). In this context, the Nordic countries, with Sweden as the largest single labour market, represent an attractive, nearby, free immigration area for low wage regions, especially the Baltic countries and Poland. While workers in the new member states foresee opportunities for a better working life, many workers in the old member states fear lowered wages, lowered employment opportunities and a slowdown in the improvement of working conditions as a result of free immigration. To avoid such ‘labour market imbalances’, many EU-15 countries demanded transitional rules. Sweden was the only country that opened up its borders unconditionally and in all respects on Day One. The favourable Swedish attitude towards free immigration rested in turn on the maintenance of collective agreements, which was considered to be a guarantee against downward wage pressure. Moreover, by the early 2000s Sweden had amassed long and favourable experience as a net immigration country, dating back to the 1930s. Furthermore, an agreement on free labour mobility between the Nordic countries – Denmark, Iceland, Finland, Norway and Sweden – was signed in 1954 and, in general, the social partners in Sweden consider it to have been a success. There are similarities between the 1954 agreement and the recent EU enlargement. Among other things, the agreement implied that Sweden open its labour market for immigration from Finland which, in those days, had a considerably lower GDP per capita than Sweden. The previous positive experiences of free immigration from low wage countries such as Finland were probably also a factor that contributed to the favourable stance on opening up the labour market. At the very least, these experiences could not be used as arguments for imposing transitional rules in Sweden.   The UK and Ireland imposed some restrictions in terms of access to welfare benefits.

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In this chapter we document Sweden’s experiences so far with opening up the labour market to free immigration from the new member states. Has the open door policy led to major inflows of workers? From which countries have immigrant workers come and do the neighbouring low wage countries such as the Baltic states and Poland dominate, as many expected? To which sectors have the first immigrants gone and what is their employment rate? We shall provide a description of the characteristics of the new immigrants. Bearing in mind the short period for which we have data, we provide only a provisional assessment of the impact of migration on Sweden’s labour market. However, it is a fact well established in the migration literature that short-term effects of immigration differ greatly from the long-term effects, and we are unable to draw conclusions about the latter. 2. Migration into Sweden 2.1 Recorded Immigrants The basic measure of the extent of migration in Sweden is the number of immigrants registered by Statistics Sweden. To be counted as an immigrant the person must have declared an intention of staying in Sweden for at least 12 months. (Similarly, to be counted as an emigrant, the person must have declared an intention of staying abroad for at least 12 months.) Figure 4.1 shows total immigration, emigration and net immigration from the ten Central and East European countries that entered the EU in 2004 and 2007. We note a strong increase, particularly in 2006 and 2007, of total immigration and since emigration is modest, net immigration has increased at a fast pace as well. While the net immigration from these countries before enlargement hovered at around 2,000 persons per year, immigration in 2007 exceeded 12,000 persons. The entry of Bulgaria and Romania in 2007 added to overall immigration in that year. The conclusion is that while immigration has increased at impressive rates the actual number of immigrants must still be considered low given the size of the Swedish labour market (some 4.2 million workers) and the fact that the increase is from a low level. In Figure 4.2, we show immigration from the new member states that supplied the largest number of immigrants to Sweden, and for comparison in Table 4.1 we show the number of immigrants in 2007 from the remaining new EU member states.

The Dimensions and Effects of EU Labour Migration in Sweden

71

 

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Figure 4.1  Gross immigration and emigration and net immigration to Sweden from the EU-10 countries, 2000–2007 Source: Statistics Sweden.

 

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Figure 4.2  Immigration to Sweden from some new EU members, 2000–2007 Source: Statistics Sweden.

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72

Table 4.1  Immigration from the seven new EU member states with the lowest number of immigrants to Sweden in 2007 (number of persons) Cyprus

Estonia

Latvia

Slovakia

Slovenia

Czech Rep.

Hungary

90

471

377

162

73

250

852

Source: Statistics Sweden.

Figure 4.2 reveals strong domination on the part of immigrants from Poland, which in 2007 accounted for more than half of total immigration to Sweden. The increase in immigration from the Baltic states is unexpectedly modest, with the exception of immigration from Lithuania in 2005 and 2006. Noteworthy too is the strong increase in immigration from Romania and Bulgaria in 2007, the year they joined the EU. Immigration from the remaining countries is very limited, as shown in Table 4.1. Due to limitations in the granting of work permits, not much of the preenlargement immigration was labour immigration, but rather in the nature of family reunification. As a result, we should expect that the share of men was low before free immigration came into effect and that it increased afterwards. Figure 4.3 shows the share of men from the most important immigration countries, namely Poland, Lithuania, Bulgaria and Romania.  

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Figure 4.3  Share of men in immigration to Sweden for four selected countries, 2000–2007 Source: Statistics Sweden.

The Dimensions and Effects of EU Labour Migration in Sweden

73

While the share of males from Poland was around 40 per cent before 2003, it increased to 56 per cent in 2007. In 2003, the share of males in immigration from Lithuania was 31 per cent, but by 2007 it had increased to 55 per cent. Similarly, we see drastic increases in the share of males from Bulgaria and Romania since these countries became EU members in 2007: between 2006 and 2007 the share of men in immigration from Romania increased from 41 to 57 per cent, while the increase in the share of Bulgarian men was from 42 to 63 per cent. The figures suggest that an increasing share of the new immigration is for work purposes, an issue that we shall return to later on. 2.2 Mobility of Services The above-mentioned figures concern only individual immigrants coming for work or for other reasons, but exclude all workers migrating as part of the free mobility of services. There are several reasons why data on labour mobility in the form of services are lacking. The EU rules limit access to the registration of foreign firms in the service sector and their employees. Moreover, as foreign services companies act in markets in which firms may appear on a short-term basis and there may be highly complex chains of subcontractors it is hard to estimate the extent of service mobility. The receiving countries register foreign service providers differently and if data exist at all they probably underestimate the extent of immigration. Therefore, as in most other EU countries the extent of service mobility has received only limited attention in Sweden and little is known about how much it has grown. This lack of knowledge is particularly surprising considering the strong focus on the Laval/Vaxholm case in Sweden. The Swedish trade union confederation LO, however, has estimated that in 2006 around 20,000 workers from the EU-10 area were working in the construction sector within the framework of service migration, which by far exceeds the number of registered individual wage earners. In construction, and probably also in part of the manufacturing sector, the number of foreign workers who have come into Sweden as service workers exceed the number of individual immigrants (TemaNord 2008). The free mobility of services from low wage countries and the perceived wage threat from it is a new phenomenon in the old EU countries, including Sweden. The lack of experience in handling extensive service mobility, together with the restrictions that the principles of the internal market impose, put the authorities and social partners in countries such as Sweden in a new situation. Sweden, together with Denmark, has relied on the trade unions to negotiate wage agreements with

 In Norway, the number of workers who have immigrated within the framework of services mobility has increased tenfold since 2004: in 2006 there were 15,000 workers, which had increased to 21,000 by October 2007. Moreover, these figures are probably too low since far from all employers report the use of foreign firms (TemaNord 2008).

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foreign service companies, but ensuring compliance has been a major challenge, as the Laval/Vaxholm case illustrates (see also Arvidsson in this volume). 2.3 Residence Permits and Short-Term Immigration Official immigration statistics include immigrants intending to stay at least a year in Sweden. In order to get a fuller picture that also includes migration of a shortterm nature we may consider residence permits, which are issued to immigrants intending to stay more than three months rather than a full year. We focus here on statistics from the Swedish Migration Board that, besides including migrants staying more than three months, also report the reasons for granting residence permits. We are particularly interested in how many immigrants come to Sweden as employees and how many arrive for other reasons. The number of residence permits offered to employees increased for Poles and Lithuanians, as well as Bulgarians and Romanians in the relevant years of accession, but since then the number has been fairly stable. For Polish immigrants, the number of permits for employees has varied between 3,000 and 4,000 and for Lithuanians it fell between 2004 and 2007. The issuing of residence permits for other groups than employees increased by the same or at even higher rates than for employees.  

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 See http://www.migrationsverket.se.

The Dimensions and Effects of EU Labour Migration in Sweden

75

The rising share of immigration for other reasons than work holds also for permits given to all EU-12 countries (that is, the EU-10 plus Cyprus and Malta; figures excluding these two countries are not available, but their quantitative impact is negligible). Figure 4.4 shows for the accession countries the total number of residence permits, the number issued for employees and the number issued for all workers (employees, employers and consultants between 2003 and 2007). We see that the work-related permits have been fairly stable, at around 6,000 between 2004 and 2007, but that there was a drop in 2007 despite the accession of two new members that year. The total number of residence permits has increased at a faster pace. The difference between employees and ‘all workers’ in Figure 4.4 is that the latter includes employers and consultants. The remaining group includes students, relatives and people that received a permit after having shown ‘sufficient means of support’, that is, people who arrived for other reasons than work. Though many of these may join the workforce at a later stage and become employees the increase in the number of permits given for reasons other than work is still surprisingly large. It is also of interest to consider the number of relatives, as many people who enter as employees also bring family members with them. This means that the employment rate among the new immigrants need not increase to the expected extent, as indicated by Figure 4.4 and Table 4.2, which reveals that the number of residence permits offered to immigrants’ relatives has increased dramatically. Table 4.2  The number of residence permits issued to relatives from the EU-10 and selected countries  

2003

2004

2005

2006

2007

EU-10 Poland Lithuania Bulgaria and Romania

414 201 33 231

1 694 1 038 193 303

2 120 1 498 252 350

2 888 2 159 294 339

2 623 2 077 178 418

Source: Swedish Migration Board.

Using a register database constructed by the Swedish Institute for European Policy Studies (SIEPS) Gerdes and Wadensjö (2008) discuss the employment rates of immigrants from the new member states. Data include workers born in any of the new member states and who arrived in Sweden after accession. Table 4.3 reports the employment rates by gender for immigrants after accession from selected

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76

countries, the EU-10 and for people born in Sweden. It shows that the employment rate in (November) 2006 was considerably lower among the EU-10 citizens (45.4 per cent) than among Swedish citizens (75.2 per cent). There is a large difference between immigrant men and women: the employment rate for men from the EU10 is 57.6 per cent and for women only 33.6 per cent. We noted above that a large share of residence permits had been given to persons as ‘relatives’. For instance, in 2006 5,718 resident permits were given to employees from the EU-10, while as many as 2,888 were given to ‘relatives’ (Table 4.2). In 2007 the figures were 4,297 and 2,623, respectively. The low female employment rates suggest that many women join their husbands who have got a job in Sweden and are not part of the labour force when they arrive. However, in due course, possibly after some training or education, they are very likely to join the labour force so that the employment rate may rise with time spent in the country. From Table 4.3, we also see that there are differences in employment rates among the immigration countries and between men and women. Polish and Lithuanian men have considerably higher employment rates than men from Estonia and Latvia, while the employment rate among Lithuanian women is higher than among women from the other countries. Table 4.3  Employment rates for immigrants from the EU-10 and selected countries arriving between May 2004 and November 2006 and for people born in Sweden (November 2006; parentheses show number of observations)  

Men

Women

Total

Estonia Latvia Lithuania Poland EU-10 Sweden

44.5 (391) 43.82 (251) 60.17 (801) 61.01 (5 483) 57.6 (7 769) 76.4 (1 852 508)

35.2 (664) 32.53 (458) 39.56 (824) 33.51 (5 022) 33.6 (8 001) 73.9 (1 793 934)

38.7 (1 055) 36.5 (709) 49.7 (1 625) 47.9 (10 505) 45.4 (15 770) 75.2 (3 646 442)

Source: Gerdes and Wadensjö (2008).

The employment rates seem surprisingly low and to get a more adequate picture of the overall labour supply we should also consider the number of working hours. Table 4.4 shows the average number of working hours in a month for the same group of countries as presented in Table 4.3.

The Dimensions and Effects of EU Labour Migration in Sweden

77

Table 4.4  Working hours for immigrants from the EU-10 and selected countries arriving between May 2004 and November 2006 and for people born in Sweden (November 2006; aged 16–64; parentheses show observations)  

Men

Women

Total

Estonia Latvia Lithuania Poland EU-10 Sweden

126.7 (22) 139.8 (16) 159.1 (50) 147.8 (395) 146.3 (588) 138.7 (667 521)

117.2 (65) 108.3 (58) 109.4 (89) 118.4 (488) 117.2 (846) 117.9 (887 904)

119.6 (87) 115.1 (74) 127.3 (139) 131.6 (883) 129.2 (1 434) 126.8 (1 555 425)

Source: Gerdes and Wadensjö (2008).

While the new immigrants’ employment rates are lower than the natives’ rates, on average they work more hours. The difference between Swedish-born women and immigrant women is very small (and slightly lower for immigrants), whereas there is a clear difference for men – immigrants from the EU-10 work on average 146 hours and natives 139. There are also differences across countries. Lithuanian men work the highest number of hours – 159 – per month. Polish men too work more than the EU-10 average. As we shall see below, Lithuanians are overrepresented in agriculture, forestry, and so on, and Poles in construction – that is, in sectors in which working hours are less strongly regulated than elsewhere. The effects of immigration on labour supply are therefore somewhat greater than the employment rate figures may suggest. Another interesting variable is the educational level of the new immigrants, but information is too sparse to present any data. For instance, for the EU-10 we lack education information for 43 per cent of the observations, implying that we cannot rely on the available data. Table 4.5  Average age of immigrants, men and women, 2006 (observations in parentheses)  

Men

Women

Estonia Latvia Lithuania Poland EU-10 Sweden

32 (391) 30 (251) 31 (801) 34 (5 483) 34 (7 769) 40 (1 852 508)

30 (664) 30 (458) 30 (824) 32 (5 022) 32 (8 001) 40 (1 793 934)

Source: Gerdes and Wadensjö (2008).

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Table 4.5 shows the average age of immigrants from selected countries. Clearly, the average age is considerably lower among EU-10 immigrants than among Swedes. For men, the differential is six years and for women eight. Immigrants from the Baltic countries are younger than the average. Men are on average two years older than women. In terms of the effect on labour supply, this implies a slight rejuvenation of the overall labour force. To get a view of the sectors in which the new immigrants are active, Table 4.6 shows the distribution of people in November 2006 who had immigrated between May 2004 and November 2006 and who were born in Poland, Lithuania and the EU-10 across nine different industries. We compare the distributions of immigrant workers to the average for Swedish-born workers. We first note that the distributions between native Swedes and EU-10 immigrants differ a great deal: EU-10 citizens are strongly overrepresented in construction and agriculture, forestry and fishing and somewhat overrepresented in financial services. Citizens from the EU-10 are strongly underrepresented in education and public administration. Polish workers, who strongly dominate among the EU-10 immigrant workers, add to the high share of workers in construction – 23 per cent of Poles are employed there. Apart from construction, the Poles do not differ much in terms of sectors of employment from the EU-10 averages. Concerning Lithuanians, we find that in 2006 they were highly overrepresented in agriculture, forestry and fishing and are found less frequently than other EU-10 citizens in construction, trade and communication, financial services and health care. Table 4.6  Distribution of workers born in Sweden, EU-10, Poland and Lithuania across nine industries, November 2006 (immigrants who arrived after accession May 2004) Sector

Sweden

EU-10

Poland

Lithuania

2 16 1 6 19 14 11 16 7 6 1

7 14 0 19 15 19 3 11 9 1 2

6 14 0 23 15 20 2 10 8 0 1

20 16 0 13 12 17 4 7 8 1 2

Agriculture, forestry, etc. Manufacturing and mining Public utilities Construction Trade and communication Financial services Education Health care Personal and cultural services Public administration Not classified Source: Gerdes and Wadensjö (2008).

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2.4 Effects on the Welfare State Whether immigrants would make demands on the Swedish welfare state at an unacceptable level was one of the questions debated prior to the Swedish decision to open its borders without transitional regulations. Is there any evidence that immigrants have been attracted to Sweden by the welfare system and have claimed, for example, social assistance, unemployment and sickness benefits at rates significantly higher than natives or other immigrants? International studies on welfare states as pull factors for immigration have not yielded unambiguous results. Borjas and Lynette (1996) showed that if extended welfare programmes are included in the analysis the differences between immigrants and natives become fairly large in terms of utilization and that immigrants’ networks may direct immigrants to US states offering generous benefits. Borjas (1999) found evidence that welfare receiving immigrants tend to cluster in US states that are generous in terms of benefits and that interstate differences in benefits pull the immigrant population more than the native population. The empirical evidence is relatively weak, however, and the results may be consistent with a number of other hypotheses. Passel and Zimmermann (2001) on the US, and Pedersen, Pytlikova and Smith (2004) on international migration do not find similar support for the welfare state as a pull factor. Lundborg (1991) found some support for the hypothesis that unemployment benefits affect Nordic migration flows. Social welfare claims are naturally determined by the character of immigration; that is, whether it is refugee immigration or labour immigration. From this perspective we should not expect immigrants from the new member states, who are primarily employment-driven, to use the welfare state at high rates. Nevertheless, a generous welfare state may attract immigrants as, like natives, they face the risk of becoming sick or unemployed. Gerdes and Wadensjö (2008) document the utilization of the Swedish welfare system by immigrants born in the EU-10 countries. Their figures show that immigrants from the new EU member states are, on average, overrepresented as regards social assistance, but underrepresented in respect of most other income transfer programmes when compared to immigrants from the old member states and to native Swedes. However, a deeper analysis is required if firm conclusions are to be drawn about the extent to which transfer programmes might have attracted immigrants. 3. Labour Market Effects in Sweden: Some Circumstantial Evidence Only a few years have passed since the accession of the new member states and with the inevitable lag in the production of reliable large-scale statistics no studies on the labour market effects have yet been carried out. Thus, there is still no information on the effects on natives’ wages or possible crowding-out effects of the new immigration. However, given the low number of immigrants to the

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Swedish labour market and the surprisingly low employment rates the effects so far are likely to be negligible. This conclusion holds at least for the aggregate level. While the overall number of work permits from the new EU countries from May 2004 to July 2007 did not exceed 17,000 (see Section 4), 4.2 million workers are employed in the Swedish labour market. In this perspective labour immigration from the new member states is very small. Even if we consider that the stock of immigrants increases strongly over a number of years, the aggregate effects can be expected to be small. If the wages of the new immigrants were considerably lower than those of natives, one might suspect that there would be an adverse effect on natives’ wages. For this reason in Table 4.7 we show the wages of immigrants from the most important emigration countries and from the EU-10, and compare them to the wages of people born in Sweden. Table 4.7  Average monthly wages in SKR in November 2006 for immigrants from EU-10 and selected countries who arrived between May 2004 and November 2006 and for people born in Sweden (16–64 years of age; parentheses show number of observations)  

Men

Women

Total

Estonia Latvia Lithuania Poland EU-10 Sweden

32 133 (22) 29 567 (16) 22 828 (50) 27 753 (395) 28 269 (588) 28 333 (667 521)

23 014 (65) 19 999 (58) 21 257 (89) 23 597 (488) 23 818 (846) 22 217 (887 904)

25 320 (87) 22 068 (74) 21 822 (139) 25 452 (883) 25 641 (1 434) 24 844 (1 555 425)

Source: Gerdes and Wadensjö (2008).

First of all, we see that the total average EU-10 monthly wage actually exceeds the wage of Swedish citizens. This may suggest that there has not been downward pressure on aggregate Swedish wages. As for Swedish-born workers, there are large differences between men and women, particularly for Estonians and Latvians, while the difference is surprisingly small for Lithuanians. It could be the case that both men and women from Lithuania go into agriculture where wages are relatively low. While we can quite safely conclude that the aggregate effects are small or even negligible, we cannot exclude the possibility that for single worker categories in certain regions there may be identifiable wage or crowding-out effects. For instance,   One might find some effects on aggregate immigration into Norway.

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the relatively large inflow of Lithuanians into agriculture and forestry might have had some effects, particularly if the immigrants have clustered in specific regions in Sweden. We have no possibility to investigate the issue, however. It should be clear, however, that free immigration from neighbouring low wage countries in general puts Sweden, like all EU-15 countries, in a considerably better macroeconomic position. Wage and price inflation can be avoided at businesscycle peaks. The possibilities for avoiding large swings in economic activity have increased for Sweden and the other immigration countries, making it easier for the central banks to contain inflation and for the government to maintain a balanced budget. 4. EU-10 Immigration to the Nordic Countries The Relative Attraction of the Nordic Countries To put the new immigration into Sweden in its proper perspective it is interesting to compare the flows to Sweden with those to the other Nordic countries. We shall here consider the number of work permits issued. The number of work permits issued by the authorities in the Nordic countries to citizens from the new member states differs a great deal across the receiving countries. Table 4.8 shows the number of new work permits issued from 1 May 2004 to 31 July 2007. To get an idea of the relative quantities of permits, the final column shows the labour force of the countries in question. Although these data are incomplete, and differ slightly in terms of definitions, they still can be expected to give a reasonably correct picture of the relative migration flows so far from the EU-10 countries to the Nordic countries. Sweden registers work permits for immigrants who stay for at least three months. Reports are available that suggest that the number of workers from Poland who stay for less than three months is considerably larger, however (Kaczmarczyk and Okolski 2007). In general, it appears that the opening up of Sweden’s borders to free immigration on Day One has not had a major effect on the level of immigration as measured by work permits. By comparison, Norway imposed more restrictions on immigration than did Sweden but labour flows to Norway have been considerably larger. This is primarily because the demand for labour in Norway has far exceeded that in Sweden; wages are also higher in Norway.

  For instance, Swedish data do not include work below three months’ duration. Data for Denmark include renewals that, according to the Udlänningsservice (foreigners’ service), could represent approximately 20 per cent of the total figure.  Norway opened its labour market for immigration as a European Economic Area member.

4 923 2 764 (+844) 19 301 (+17 902) 4 805 (+2 133)

2 633

34 426 (+20 879)

2 169

25 719 (+4 352)

All year

1 May–31 Dec

2 097 515 (+666)2 16 975 (+3 558) 3 963 (+128)

2005

2004

51 324 (+27 295)

-

10 353 6 004 (+1 496) 29 275 (+25 510) 5 692 (+289)3

All year

2006

39 7774 (+23 366)

6 273 (Jan 1–Sep 30)

2 440

10 367 3 091 (+1 136) 23 879 (+22 230)

1 Jan–31 July

2007

151 246 (75 892)

-

27 740 12 374 (+4 142) 89 430 (+69 200) 16 900 (+2 550)

1 May 2004–31 July 2007

TOTAL

13 226

2 630

4 586

2 430

175

2 905

Labour force 2006 (‘000)

Note: 1 Danish figures include estimated (approximately 20%) renewals. 2 Parentheses show renewals. 3 January to April. 4 Excluding Finland. Source: TemaNord (2008). Labour force statistics from OECD main economic indicators, December 2007.

TOTAL

Finland

Sweden

Norway

Iceland

Denmark1

   

Table 4.8  Work permits for individual job seekers from the EU-10 between 1 May 2004 and 31 July 2007

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In total, around 150,000 work permits were issued by the Nordic countries between May 2004 and August 2007. While the number of work permits issued by Sweden, Finland and Denmark have been relatively few, the numbers issued by Norway and Iceland have by far exceeded the expected levels. Norway issued almost half the total number of permits, which, given the relatively small size of its labour market, is a very large share. In comparative terms, however, Iceland issued the largest number of work permits to EU-10 immigrants, while Finland and Sweden issued the lowest. The implied structure of immigration – that is, heavy inflows to Norway, fairly large flows into Denmark and only modest inflows to Sweden and Finland – largely reflects the fact that the countries were in different economic phases of the business cycle during these first years of open labour markets. Norway would not have been in a position to issue up to 90,000 work permits and almost 70,000 renewals unless the business cycle had been peaking. The unemployment rate in Norway is currently 2.6 per cent, which means that the domestic labour force is more or less fully employed, implying that many vacancies are being offered to foreign workers. In Sweden, in contrast, the unemployment rate is currently 6.1 per cent, which implies considerably lower inflows; 17,000 work permits were issued during the period. In Denmark, the unemployment rate is higher than in Norway, but lower than in Sweden, at 3.7 per cent. Accordingly we find labour inflows to Denmark lower than those to Norway and higher than those to Sweden. Finland has the highest unemployment rate and the lowest labour inflows of the Nordic countries. We should note that the Finnish data are of low quality, however. The labour inflows to Iceland, on the other hand, have been remarkably high given the size of the country and its remote geographical position. Moreover, with an unemployment rate of around 5 per cent one might have expected lower inflows, although until the recent financial market turmoil the country was enjoying an economic boom. Thus, a large number of vacancies combined with high wages made Norway an attractive immigration country for citizens of the new EU member states. As already mentioned, given the relatively small Norwegian labour market immigration was dramatic. Not much is known about which sectors receive individual labour immigrants in the other Nordic countries. It is clear, however, that the majority of EU-10 immigrants work in a limited number of sectors, including construction, cleaning, agriculture and some individual manufacturing sectors. Most immigrants have taken on low paid, low skilled jobs. Norwegian data show that in 2007 24 per cent of work permits were issued to workers in construction, 22 per cent to agriculture and 12 per cent to manufacturing. Seventeen per cent were issued to temporary work agencies that most probably hired workers for the construction sector. The fact that immigration to Norway is driven by the peaking economy could explain the high figures for construction workers. In Denmark, agricultural firms have hired the largest number of EU-10 immigrants, while construction firms hire slightly fewer. In 2007, however, more workers were hired in construction than

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in agriculture. Also, service sector employment has increased in recent years, including temporary work agencies, the transport sector and to some extent hotels and restaurants. The bulk of the immigration to the Nordic countries is of a short-term nature, but there now seems to be a trend towards longer stays. An investigation of immigrants to Oslo showed that most immigrants expected to stay for several years and hence that a clear majority could not be classified as shortterm immigrants (Friberg and Tyldum 2007). The finding that immigration rates vary strongly with the business cycle is in line with experiences from the creation of the free Nordic labour market in 1954 that also involved free labour mobility across countries with different real wage levels. Given the large real wage differentials between Sweden and Finland at that time one might have expected large inflows of labour into Sweden. However, not much happened initially in terms of total labour immigration from Finland. The opening up of integrated labour markets passed almost unnoticed in the immigration statistics. Things changed in the mid 1960s, however. In 1965 Sweden received a total of 50,000 immigrants – including family members – which coincided with the first major business peak after the creation of the common Nordic labour market. Unemployment in Sweden was down to 1.5 per cent and many vacancies remained that could only be filled by immigrant labour. In the years that followed, economic activity cooled off and gross immigration returned to normal levels, at around 25,000 persons. In 1969 and 1970 Sweden again experienced a business peak. In these years, Sweden received total gross immigration of 65,000 and 78,000 persons, respectively, of which about half came from Finland. In 1972 and 1973 the business cycle returned to normal and gross immigration returned to 30,000 persons. Many returned to Finland and for some years Sweden even experienced net emigration. Towards the end of the 1980s the Swedish economy again experienced a business peak. However, by then the Finnish economy had been growing at a higher rate than the Swedish economy and the real wage differences between the countries were not large enough to support major migration flows. This meant that Swedish firms could no longer attract Finnish workers to fill so many vacancies. The result was an overheated economy, and wage inflation and price inflation in Sweden that paved the way for the deep recession of the early 1990s. With EU enlargement, Sweden’s situation is very similar to that of the 1960s and 1970s. Along with the other ‘old’ member states Sweden has access to a large potential labour supply willing to cross borders – temporarily or more permanently – to work.

 Immigration policy was already fairly liberal before 1954. Between 1947 and 1964, total gross immigration varied from 19,000 to 31,000 persons, of whom about half were immigrants from Finland. These aggregate figures were almost unaffected when the countries opened up, leaving no traces in the statistics.

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5. Conclusions Our examination of immigration to the different Nordic countries has uncovered huge differences. In line with previous experiences, these differences primarily reflect the fact that countries are in different phases of the business cycle. Thus, while labour demand in Sweden was modest in the first years after accession, many immigrants decided to go to Norway or to other EU-15 countries. Whether we look at total immigration, work permits or residence permits, we find a limited penetration of immigrants from the EU-10 into the Swedish labour market during the years following accession. The increases are strong but the absolute number of immigrants to Sweden is limited. In light of official projections of labour demand in Sweden in the years ahead, immigration is not likely to be boosted to the levels witnessed in Norway. Immigrants from Poland dominate strongly and among immigrants from the low wage neighbouring Baltic countries only Lithuanians have increased in significant numbers. In 2007, when Bulgaria and Romania entered, there were strong increases in immigration from these countries, but from very low levels. The number of men has increased more than that of women and this is also reflected in the types of industry that have attracted immigrants: new immigrants are overrepresented in construction, agriculture and forestry. We have also shown that there have been increases in the number of residence permits issued not only to employees but also to relatives and to those coming for other reasons than work. This has led to fairly low employment shares among EU10 immigrants since accession. On the other hand, the number of hours worked is higher among the new immigrants than among natives, implying that the figures on employment shares may underestimate the increase in labour supply. We also argued that eventually the employment share might rise as more and more immigrants, especially women, join the labour market. References Borjas, G.J. (1999), ‘Immigration and Welfare Magnets’, Journal of Labor Economics 17 (4), 607–37. Borjas, G.J., and H. Lynette (1996), ‘Immigration and the Welfare State: Immigrant Participation in Means-Tested Entitlement Programs’, Quarterly Journal of Economics 111 (May), 575–604. Friberg, J.H., and G. Tyldum (eds) (2007), Polonia i Oslo. En studie av arbejdsog levekår blant polakker i hovedstadsområdet [‘Poles in Oslo. A ����������� study of working and living conditions among Poles in the area of the capital city’], FAFO-rapport 2007: 27. Gerdes, C., and E. Wadensjö (2008), Immigrants from the New EU Member States and the Swedish Welfare State, SIEPS Report No. 9.

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Kaczmarczyk, P., and M. Okolski (2007), ‘Economic Impacts of Migration on Poland and the Baltic States’, CMR/FAFO Working Paper. Lundborg, P. (1991), ‘Determinants of Migration in the Nordic Labor Market’, Scandinavian Journal of Economics 93 (3), 363–75. Passel, J.S., and W. Zimmermann (2001), ‘Are Immigrants Leaving California? Settlement Patterns of Immigrants in the Late 1990s’, Research Report, Urban Institute. Pedersen, P., M. Pytlikova and N. Smith (2004), ‘Selection or Network Effects? Migration Flows into 27 OECD Countries, 1990–2000’, IZA Discussion Papers 1104, Institute for the Study of Labour. TemaNord (2008), Arbeidsmobilitet fra de nye EU-landene til Norden – utviklingstrek og konsekvenser, Slutrapport fra en nordisk arbejdsgruppe under Nordisk ministerråd (Labour Mobility from the New EU countries to the Nordic Area – Development and Consequences), No. 502.

Chapter 5

EU Labour Migration: Government and Social Partner Policies in Sweden Monika Arvidsson

1. Introduction Since 1954 Sweden has had an agreement on the free movement of labour between the Nordic countries within the framework of which, at times, large numbers of – in particular Finnish – workers came to Sweden (see Lundborg in this volume). During the 1950s and 1960s many immigrants also came to work in Sweden from Italy, Greece and Yugoslavia. This implies that Swedish politicians and citizens should be familiar with the phenomenon of migration and its effects on the labour market, and to some extent should also be aware of the means of preventing potential problems, notably for migrant workers. The last time migration and the issue of labour conditions for migrants were high on the agenda was in the late 1960s, when the rules of admission for thirdcountry nationals were changed. A unanimous parliament, and also the trade union confederation LO, argued that in some cases the free movement of labour had led to miserable working conditions. Regulated labour force immigration was considered necessary to maintain decent working and living standards, as regulation would involve a review of working conditions before a work permit would be issued. EU enlargement in 2004 was preceded by a lively debate on its potential effects on the Swedish economy and labour market. The debate was characterized by ethical and economic arguments in equal measure. Although the main actors – notably the social partners – had different views on the details, there was broad agreement on the benefits of cross-border labour mobility, from both an economic and a political point of view. During the Swedish EU presidency in the first half of 2001 and the negotiations with the candidate countries, the Swedish government had clearly indicated that EU enlargement was one of its main aims and that it wanted the citizens of the new member states to have freedom of movement from the date of accession. This was supported by all the Swedish labour market actors, including the trade unions and the employers’ organizations. In autumn 2003, the government changed its mind, however, mainly due to the positions of other member states, and wanted to impose some restrictions. Despite the government’s change of view the Parliament eventually voted against transitional measures.

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2. Government 2.1 The Government’s Views A government report (Swedish Government 2003a) concluded that the Swedish labour market should be open to the citizens of accession states, and that increased labour migration through enlargement could generate economic gains. But the report also identified the risk of misuse of the social welfare system. This last point would require resort to transitional measures to some extent. In fact, the European Court of Justice’s definition of ‘employee’ covers those working as few as four hours per week. Therefore, the report stated, organized criminals could use the system by ‘selling’ fake employment with the objective of obtaining access to the Swedish welfare system. To prevent this, and so as not to give individuals too easy access to the welfare system, it was suggested that work and residence permits should be given only to those with full-time employment and a salary in line with Swedish collective agreements. In addition, the report suggested that permits should be given for one year at a time, for up to five years. Although the question of so-called ‘benefit tourism’ had arisen in the public debate it had not been taken up seriously as an argument for transitional measures. It was therefore surprising when the Social Democratic Prime Minister, Göran Persson, expressed concern in late November 2003 regarding the misuse of social benefits, and announced that the government was reconsidering the imposition of work permits for citizens of the new member states. As already mentioned, this amounted to a government u-turn on the issue. The transitional measures the government had in mind were motivated by the fact that, as had become apparent, most member states would not apply free movement, which would leave Sweden politically isolated and increase the potential inflow of migrants to Sweden. Furthermore, the wide disparity between economic standards in Sweden and those in the new member states would lead, it was feared, to a misuse of the welfare system, notably by employers, who could pay lower wages and use social welfare as a form of wage subsidy. The Prime Minister may also have been trying to respond to attempts by the extreme right to arouse popular anxiety on this issue. 2.2 The Government’s Response The package of measures which the government intended to implement consisted of three parts. First, the possibility of circumventing the rules in the labour market should be limited. The measures that would address this conformed with LO's proposed package (see below). Second, there should be improved monitoring and follow-up of developments in the labour market. This would be achieved by improving supervision of employment at the workplace – making sure that the offered wages, insurance and other employment conditions at least correspond to collective agreements and other conditions of employment in Sweden – checks

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on the genuineness of self-employment, improved monitoring of developments in the labour market and an assessment of health and safety standards in enterprises registered abroad. Third, the rules concerning welfare benefits were to be reviewed: the intention was to avoid payments from multiple systems, to prevent people from falling through the net and becoming uninsured, as well as more broadly to adjust the national welfare system to a globalized world. The government also presented Parliament with a proposal including the requirement that migrants present a contract attesting to continuing employment, and that employers pay wages in line with collective agreements (Swedish Government 2003b). The proposal also called for stricter rules on working conditions. The latter proposal was supported by the Left Party and the Greens. The conservatives and the liberals for their part preferred a rule on self-maintenance; that is, migrants should have to prove that they could support themselves and not be a burden on the welfare system. It was proposed that work permits for citizens of the new member states be issued for up to 12 months. If employment continued beyond this, the employee would have free access to the labour market. During the first period, however, the permit should be tied to one profession and one employer. The conditions of obtaining a work permit, according to the government’s proposal, were that there must be an offer of employment and work must be applied for in the home country; the work should be regulated by collective agreements with contractual wages; and, if doubts arose concerning the employer, tax and social security contribution inspections should be instigated. The government did not have the support of the Left Party and the Greens on the issue of work permits and lost the vote in Parliament; the demand for transitional measures was rejected. This defeat meant that Sweden did not introduce transitional measures, contrary to what the government wanted, although in line with its earlier position. Following enlargement, the Social Democratic government set out to improve the rules on decent working conditions. The different aspects of this and a brief summary of developments are given below, as the point of departure was a set of tools proposed by LO. In September 2006 a right-wing coalition came to power. As a consequence of the right-wing parties’ positive attitudes towards enlargement and free movement, and since the Social Democratic government had not amended any legislation on free movement of labour inside the EU, the change of government has not led to any changes in policy. The work on improving measures for maintaining working conditions has to a large extent been managed by the social partners and so in this area, too, the right-wing government has taken no action. This can clearly be seen as a conscious choice on the part of the government.

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3. The Employers 3.1 The Employers’ Views Although the main Swedish employers’ organization, Svenskt Näringsliv (SN), is in favour of regulated labour migration from third countries, it is very positive in general towards increased labour mobility, both within and from outside the EU. In fact, SN took the view that the free movement of labour after accession in 2004 would not disrupt the labour market, but boost the Swedish economy (Svenskt Näringsliv 2003). In light of current and likely future labour shortages, enlargement should provide increased opportunities for both Swedish employers and citizens from the new member states. Demands for some form of regulation of the freedom of movement would in practice mean that labour mobility was restricted. In this regard SN emphasized the symbolic value of an enlarged European Union and the potential increase of EU competitiveness. SN and the Swedish Confederation of Professional Associations (SACO), the union federation representing graduate employees, considered in a joint debate article that increased competition is good, provided that it takes place on equal terms. It was argued that if, for instance, ‘Polish dentists are able to offer much lower prices than their Swedish counterparts, the problem is not that it is cheap in Poland but rather that it is too expensive in Sweden’ (Ekström, Nordh and Tunhammar 2003). SN argued that the Rollén report did not present persuasive arguments in favour of transitional measures. Moreover, the fact that the Swedish government had earlier taken a clear position for free movement meant that any u-turn would constitute a broken promise. In addition, SN believed that transitional measures would have a negative impact on Sweden’s economic growth and prosperity. Concerns about increased crime and abuse of the Swedish welfare system were exaggerated, according to SN, and Jan-Peter Duker, SN’s vice president, felt that by changing course the government was taking a big risk by ‘driving a policy that causes unfounded worries’ and that it portrayed entrepreneurs as people keen to exploit workers from the new member states (Svenskt Näringsliv 2004). 3.2 The Employers’ Response Although SN did not expect problems, as a counter-proposal to possible transitional measures and to meet other actors’ worries of ‘benefit tourism’, the organization suggested that public authorities be given increased resources to follow up cases of suspected misuse of social welfare (Svenskt Näringsliv 2003). This idea was not to be taken up in practice, however. Since SN did not see any reason to be concerned about developments in the labour market in the context of enlargement, consequently it did not take any preventive measures. This was rational as Swedish employers would benefit from an increased labour supply both from a staffing and wage inflation point of view.

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There is indeed anecdotal evidence of employers benefiting from being able to pay lower wages and offer worse working conditions: •

• •

Many foreign workers are working in substandard or dangerous working environments, on wages far below the average wage of Swedish workers. Union federation LO estimates that over half of migrants who work temporarily in Sweden are working under conditions clearly worse than those laid down in collective agreements. This applies to both large and small workplaces and to different sectors, such as construction, real estate and restaurants (Olauson, Karlsson and Holm 2004). One of the most notable cases concerned some furnace workers from Slovakia who were hired by the established steel manufacturer SSAB on an hourly wage of 13–18 Swedish kronor (€1.40–1.90). Foreign workers constitute only a fraction of the workforce in Sweden, but account for ten per cent of the most serious accidents at work (Olauson, Karlsson and Holm 2004). This is probably explained by the fact that foreign workers are particularly vulnerable and are employed in substandard working environments.

As the employers’ organizations are concentrating on the positive side of free labour movement, they have paid little attention to the negative effects of migration. SN did sign an agreement with LO to encourage better working conditions for migrants, however (see below). Moreover, the Swedish Construction Federation has in various statements taken a position against poorer working conditions for migrants and for competition based on equal conditions. 4. The Trade Unions 4.1 The Trade Unions’ Views Early in the discussions, the President of LO – the main bluecollar union confederation – Wanja Lundby-Wedin stated that free movement for labour should be possible on equal conditions for all European citizens, thereby avoiding a segregated labour market. Opening up of access to the Swedish labour market was demanded not only for reasons of equality, but also in view of future rising demand for labour. LO considered the risk of misuse of the welfare system as very limited. Neither did it see a need for general transitional measures. Some increased risks were pointed out, however: an increasing number of enterprises gaining a competitive advantage based on wages lower than collective agreement levels, a growing black market and increasing bogus self-employment (Landsorganisationen i Sverige 2003). In order to counter these risks, LO called for several measures which would guarantee decent work and employment conditions for all employees, migrant or native.

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LO expected that the share of migrant workers on the labour market would remain relatively modest. In the case of a greater than expected increase in migration the effects on the Swedish labour market were expected to vary with the business cycle. In the long run, gradual economic convergence would reduce the asymmetry between economies, leading to fewer incentives for mobility. The President of SACO, Anna Ekström, was critical of the Swedish government’s idea of imposing restrictions on freedom of movement. Neither Swedish accession to the EU nor the EU’s previous enlargements had brought problems of excessive mobility across borders. Instead, there was a possibility that enlargement could increase the labour supply in sectors likely to face future increases in demand. ‘The problem is rather how we are going to get people to move here than hordes of job seekers pouring into the country’, Ekström said (Svensson and Zettermark 2004). Strong unions and collective agreements would counter social dumping. SACO considered the government’s change of position on the issue of transitional arrangements as unfortunate, amounting to a lack of confidence in and discrimination against the new EU citizens, which would tarnish Sweden’s reputation for a long time to come. If the Swedish government had succeeded with their revised line and imposed restrictions on movement, SACO argued, this might have encouraged more countries to impose limits. At the same time, public opinion on EU membership would have been adversely affected in the candidate countries if more countries had limited mobility (Ekström, Nordh and Tunhammar 2003). Also, the Swedish Confederation for Professional Employees, TCO, rejected transitional measures. Like SACO they argued that wage levels would be maintained by protecting collective agreements. The only justification for transitional arrangements would be if they were considered necessary for a limited period during which the authorities’ and social partners’ ability to maintain working conditions and standards could be examined. 4.2 The Trade Unions’ Response To counterbalance the increased risk of negative effects on the labour market due to enlargement, LO urged that more resources be made available to monitor the practice and maintenance of the collective agreement model. In addition to averting general downward pressure on labour conditions, discrimination against migrants had to be prevented. The risk of increased problems due to employers not respecting collective agreements – notably within the building, transport and service sectors – called for a strategy to enforce decent working conditions for migrant workers. Moreover, according to LO the fact that employers that did respect collective agreements risked unequal competition, together with tax revenue losses for the state budget, made the task important for the economy as a whole. Therefore, under the slogan ‘Orderliness on the labour market’, LO and its affiliates set up an action group to identify means of helping trade unions to

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promote decent working conditions. This was combined with the training of union representatives, putting the collective agreement at the heart of the strategy. Another task was to strengthen contacts with the public authorities linked to the labour market – for instance, the Swedish Public Employment Service and the Swedish Work Environment Authority.  The action group, active from autumn 2003 until spring 2004, issued a handbook for union representatives in order to strengthen their efforts to sign, monitor and develop collective agreements with regard to migrant workers. The action group also presented a list of desirable measures to improve the monitoring of working conditions for migrants and to prevent downward pressure on general labour rights. These measures were to be seen as an alternative to transitional measures. Table 5.1 summarizes the measures and provides a brief follow-up on the results so far; some additional information is given in the following text. Table 5.1  LO’s demands for action and results Measures

Outcomes

Main contractor should be responsible for Supportive official memorandum. subcontractors’ payment of taxes and social However, by August 2008 there had been no progress. contributions. Put temporary employment agencies on a sound basis. Registration of staff and minimum standards for terms of employment.

LO affiliates and temporary employment agencies have agreed on authorization.

Tighten up requirements for awarding self-employment status. Individuals who in practice are employees should be employed, not self-employed.

The tax authorities suggested a timelimited permit for self-employment for foreign entrepreneurs. However, the trend is towards self-employment becoming even easier than before.

Employers who hire migrant workers should give unions the information they need to maintain the practice of collective agreements.

Agreement between LO and SN on conditions for foreign companies in Sweden.

Sweden should ratify ILO Convention 94.

Convention still not ratified.

Transitional measures in road and maritime transport to prevent social dumping.

Measures accepted by the Parliament.

By making the main contractor responsible for subcontractors’ payments of taxes and social contributions, it should be more difficult for main contractors to abdicate

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their responsibility for poor working conditions in the workplace. At the same time, it should become clearer to the subcontractor that collective agreements must be adhered to. The main contractor’s indirect financial incentives – the difference between getting the contract or not – should increase the likelihood that collective agreements will be better observed. The action group saw a specific need to improve conditions within temporary employment agencies, whose employees were often migrants working for wages lower than those stipulated in collective agreements. As in the case of main contractors and subcontractors, employment conditions would be better observed if there was more public monitoring. In this case, however, this was to be brought about through the implementation of reasonable standards, that is, an employer/employee organizations’ joint definition of minimum wages and other working conditions. Employers who respect this standard would be given a certificate of ‘authorization’. Demands were raised for stricter rules for acquiring self-employed status as pressures on costs in several branches – notably taxis – as a consequence of increased competition from deregulation force employees to become selfemployed. Bogus self-employment may be used in order to reduce costs; the selfemployed are not subject to the same conditions as employees concerning working conditions, hours and minimum wages. In order to protect the working conditions of migrants, the action group demanded better access to information when employers are hiring migrant workers or subcontracting to foreign entrepreneurs. This meant the provision of information at an early stage when employers are planning to procure services for coming projects, and better transparency when negotiating wages and other conditions. The outcome was an agreement between LO and SN on establishing local collective agreements for foreign entrepreneurs (see below). ILO Convention 94 on public procurement provides grounds for insistence on the observance of social conditions in public contracts. The Convention stipulates that public procurement orders shall require that wages and other conditions are in accordance with collective agreements in the relevant sector. By ratifying and respecting this convention, a better control mechanism for upholding working conditions would be available, making requirements concerning social conditions already at the stage of procurement. While not limited to issues affecting migrant workers, it would have an impact by helping to ensure that all workers in Sweden are paid according to collective agreements. TCO, the whitecollar trade union federation, broadly shared the positions of LO. Specifically, TCO wanted the government to work towards a change of the EU rule defining employment on the basis of 10 hours’ work per week in order to avoid misuse of social welfare and fake employment (that is, employers selling work contracts the true objective of which was to give the migrant access to the welfare system). The government also took the initiative to introduce compulsory certification of temporary employment agencies. The aim was to establish minimum standards in working conditions (see below). Legislative amendments should strengthen the unions’ right to campaign for Swedish collective agreements

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and improve labour law governing foreigners operating in Sweden. TCO also saw a need to review the practice of self-employment in order to counter bogus selfemployment (Nordens Fackliga Samorganisation 2004). 1. In order to prevent exploitation of labour due to migrants’ lack of knowledge of rules and local conditions, LO should seek collaboration with the Swedish Migration Board to establish contact with people in the asylum system, who have permission to work while their application is being processed. 2. Unions have to be more active at grassroots level and by monitoring businesses detect cases where rogue employers are exploiting migrants’ vulnerable position. 3. LO’s associated unions should assist migrants in the Swedish labour market. 4. Trade union membership should be made possible for migrants working in Sweden temporarily. 5. Local unions should continuously push for more stringent requirements for selfemployment. 6. The associated unions should do more to implement LO’s and SN’s recommendation to ensure the maintenance of working conditions at foreign companies operating in Sweden. 7. LO is pushing for decriminalization of those without papers and indemnification of the employer. 8. Initiating an exchange of experiences with trade union colleagues in other countries would be a good way of coordinating the recruitment and management of migrant workers. 9. The Nordic unions should further develop the practical tools available to assist one another’s members. 10. LO should promote the issue of an international trade union passport in the ETUC. 11. Websites should be used to better target information to migrants. 12. Greater investment in interpreters at workplaces. 13. Improved provision of labour market/trade union information to migrants through an extended telephone service. 14. Dissemination of trade union information through embassies. 15. Production of information material directed towards migrants, to be distributed at workplaces and embassies. 16. Federations should step up work on a system of early information on foreign contracts (see text). 17. Local rather than central union representatives should be involved in efforts towards obtaining early information on foreign contracts, as this would save time. 18. Clear guidelines should be established for trade union action through greater coordination, analysis and harmonization in LO’s advisory committee on agreements. 19. Existing union materials should be enhanced so as to be useful for migrants. 20. Mentoring to provide migrants with a good introduction to the Swedish labour market.

Box 5.1  Proposals of the LO working group (Landsorganisationen i Sverige 2008)

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In spring 2008, based on a comparison of best practice among LO unions, LO presented an updated review of tools that could help to manage downward pressure on labour conditions and prevent exploitation of migrant workers. This was motivated by the fact that lessons can now be drawn from enlargement and areas for improvement can be identified. The results of this review were summarized in an action plan with 20 different tools towards a better migration policy (see Box 5.1). A number of union actions have managed to ensure decent working conditions for migrant workers. In recent years trade union federations have produced multilingual basic information on the Swedish labour market and the role of the trade unions. More recently, and as a result of the LO unions’ review of tools, this has been supplemented by cooperation with foreign embassies and consulates in order to ensure better dissemination of trade union information. More remains to be done, however. One of the most important actions was to improve direct contact with migrant workers. This can be achieved through more union interpreters visiting work sites, a multilingual telephone service, cooperation with trade unions in migrants’ home countries and cooperation with foreign embassies in Sweden and Swedish embassies abroad in order to pass on union and contact-point information to migrants (Landsorganisationen i Sverige 2008). Furthermore, LO should assist migrant workers in dealing with employers, enable them to become union members for the period of time they are working in the Swedish labour market and improve the early warning system, making it possible to establish collective agreements as early as possible. The latter is to be effected by means of information given by local employers to trade union representatives when agreeing contracts with foreign entrepreneurs. 5. Joint Initiatives SN and LO signed an agreement in August 2005. The aim was to ensure clear responsibilities when foreign entrepreneurs provide services in Sweden. The agreement included a recommendation to the organizations’ respective affiliates to take measures in order to guarantee the maintenance of working conditions when foreign companies are established in Sweden. The agreement was supposed to lead to equal treatment in terms of wages, working hours and other conditions for foreign companies and migrant workers. Implementation of the agreement has been disappointing, however, as several of the organizations’ affiliates still have not ratified it. An important prerequisite for a more ‘orderly’ labour market thus exists, but the members of LO and SN still face a challenge in making better use of it.   http://www.lo.se/home/lo/home.nsf/unidView/B96225EF07D58710C125706 D00305195/$file/utlforetagslutligversion30aug05.pdf.

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As minimum wages and other employment conditions are not fixed by law in Sweden, this agreement was seen as very important and a success for the social partnership model. The social partners took the initiative, as the alternative to a joint agreement – legislation – would have been less flexible, which both parties had an interest in avoiding. In the case of failed negotiations, demands for changes in legislation would have been raised by the unions. An agreement was also reached between the Service Employers’ Association – representing temporary employment agencies – and LO. The agreement guarantees the same wage and employment conditions for agency workers as for regular employees. The advantage for agency workers is protection by collective agreements. The advantage for companies is that they attain greater acceptance in the labour market. The agreement also means greater work responsibilities for employees, who can be assigned different types of work. Meanwhile, LO has also endeavoured to conclude international agreements in this area. An agreement signed with the Latvian trade union federation LBAS aimed at improving working conditions by respecting collective agreements and labour laws in the country of destination. The agreement contains, among other things, an agreement on exchange of information, joint conferences and seminars and contact building between the respective organizations’ affiliates. Representatives of LO and LBAS have subsequently met to discuss how the agreement will be implemented. Furthermore, the trade union cooperation that exists in the Baltic region organized by BASTUN (Baltic Sea Trade Union Network), establishes contacts and cooperation across national borders to facilitate labour mobility, ensuring that working conditions should not be open to competition; that is, conditions in the destination country shall apply. LO, TCO and SACO all participate in this cooperation. 6. Vaxholm/Laval Case The most important case concerning developments in the labour market and issues of foreign workers working under worse conditions than natives in Sweden was the dispute at a construction site in Vaxholm outside Stockholm in 2004. The construction company Laval had hired Lithuanian construction workers to work under conditions well below local standards, and refused to sign a collective agreement with the Swedish construction workers’ union. Although this case was really about the freedom to provide services rather than the freedom of movement of labour, it has had a major impact on the Swedish and also the wider European debate. LO stated that it did not accept any form of discrimination concerning wages and working conditions. It asserted the right of Swedish trade unions to demand that companies operating in Sweden sign a Swedish collective agreement, as well as the right to take industrial action against companies that refused to do so.

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LO’s reasoning was that the foundation of a stable labour market is ‘orderliness’ and competition neutrality between companies in terms of wages and conditions of employment. This improves productivity and employment, and constitutes a precondition for the creation of fair and equal wages for equal work. After the construction workers’ union blockaded the construction site, mediation failed and other unions joined in with sympathy action, the main contractor Baltic Construction went bankrupt in February 2005. The Swedish labour court took no decision concerning the Vaxholm/Laval case, but requested a prior ruling from the European Court of Justice. In December 2007 the court ruled that the blockade was not permissible. The Swedish government then set up an inquiry to review the laws giving trade unions the right to demand adherence to Swedish collective agreements on the part of companies operating temporarily in Sweden. The Swedish labour court is expected to address the matter at the end of 2008. SN not unexpectedly reacted positively to the ECJ’s ruling and argued that it would contribute to increased mobility and greater legal certainty for foreign companies. As a consequence, employers believe that the Swedish Codetermination Act must be amended to the effect that industrial action against a foreign employer in the EU must be proportionate and not contrary to the freedom of movement (Svenskt Näringsliv 2007). In SN’s view, the current government review is ‘too LO-friendly’, and it is sceptical of future proposals on legal changes (Svenskt Näringsliv 2008). Prominent representatives of the Social Democrats are arguing that Sweden should refuse to sign the new EU Treaty until the Vaxholm/Laval issue is resolved. Although admitting that workers’ rights are threatened by the ruling, the Swedish unions do not support this line as the new Treaty would strengthen workers’ rights overall. In the short term, the unions are urging that the worst effects of the ruling be eliminated by changes to Swedish law. The long-term solution, however, is considered to be the social clause that the ETUC is working to bring about. This would make it clear that non-discriminatory rules and regulations that raise or maintain workers’ standards could not be challenged with reference to the freedom of movement of goods, capital or services (see http://www.etuc.org/r/846). As a consequence of the Vaxholm/Laval case there has been increased trade union activity. While formerly the Swedish labour market was characterized by consultation and broad consensus concerning working conditions, henceforth it seems that Swedish unions must restructure and become organizations more directed towards struggle. Fundamental trade union rights, long considered selfevident, must be defended once again. Mobilization among union representatives has been significant and the trade union mission to ensure reasonable working conditions has become more prominent than it has for a long time.

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7. Conclusions Sweden ended up with a policy of not imposing transitional measures almost by default: the Social Democratic government’s proposals for transitional arrangements failed to receive support in Parliament. Nevertheless, this approach – which has not changed since the change of government in 2006 – reflected a broad consensus in Sweden that intra-EU migration should be as liberal as possible. At the same time, the government did take some steps to ensure decent conditions on the labour market, largely based on proposals from the trade union federation LO. The work on improving tools for maintaining working conditions has to a great extent been managed by the social partners, although there has been little attention on the employers’ side towards the negative effects of migration. There has been some progress towards improving working conditions for migrant workers and establishing equal competition for companies. For instance, an authorization procedure for temporary employment agencies has been implemented, and the LO and SN agreement on conditions for foreign companies has been put in place. Some actions remain to be taken, however. The demand for stricter rules for self-employed status remains in place, as the situation today is, if anything, rather worse than in previous years. Main contractors are still not responsible for subcontractors’ actions, and ILO Convention 94 has still not been ratified by the Swedish Parliament. Foreign companies are increasingly engaged in temporary work in Sweden and are joining SN affiliates. Wage differences between foreign and Swedish workers are still a problem, however. The differences cannot be explained by different productivity levels among employees, but rather by failure to observe collective agreements. As a result of the enlarged EU, the Swedish labour market is facing new challenges. But there is no evidence of the so-called ‘benefit tourism’ discussed before enlargement. While enlargement initially gave rise to problems of maintaining working conditions in line with collective agreements, Swedish trade unions and employers have increased their cooperation, and the former are also cooperating more with their counterparts across borders. At the same time, the freedom of services, and particularly the ECJ ruling in the Vaxholm/Laval case, presents the Swedish labour movement with new challenges. References Ekström, A., S. Nordh and G. Tunhammar (2003), ‘Låt alla EU-medborgare röra sig fritt’, Expressen (2 March). Landsorganisationen i Sverige (2003), LOs yttrande över SOU 2002:116 (dia.nr 2003-auk-137). Landsorganisationen i Sverige (2004), Mer än bara öppna gränser. www.lo.se

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Landsorganisationen i Sverige (2008), Fackliga verktyg för migranter - En förbundsgemensam rapport från LO. www.lo.se Nordens Fackliga Samorganisation (2004), Arbetskraftens rörlighet. www.nfs. net Olauson, E., A. Karlsson and U. Holm (2004), ‘Diskussion om övergångsregler i samband med EUs utvidgning’, LO-tidningen (30 October). Svenskt Näringsliv (2003), Betänkandet (SOU 2002:116) EU:s utvidgning och arbetskraftens rörlighet. www.svensktnaringsliv.se Svenskt Näringsliv (2004), ’Övergångsregler oacceptabla och osolidariska’, press release (12 March). Svenskt Näringsliv (2007), ‘En välkommen dom och en seger för Laval’, http:// www.svensktnaringsliv.se/material/pressmeddelanden/article41199.ece Svenskt Näringsliv (2008), ’Besvikelse över Laval-direktiv’, http://www. svensktnaringsliv.se/fragor/konfliktregler/article48797.ece Svensson, T., and Å. Zettermark (2004), Åtta kvinnor om det nya Europa. Stockholm: SACO. Swedish Government (2003a), EUs utvidgning och arbetskraftens rörlighet, Swedish Government Official Reports SOU 2002:116, Stockholm: Fritzes Offentliga. Swedish Government (2003b), Särskilda regler under en övergångsperiod för arbetstagare från nya medlemsländer enligt anslutningsfördraget, Swedish Government report 2003/04:119, Stockholm: Fritzes Offentliga.

Chapter 6

The Dimensions and Effects of EU Labour Migration in Germany Max Friedrich Steinhardt

1. Introduction 1.1 Historical Context Germany has a long tradition of immigration from European countries. The most prominent and sustained inflow of European migrants took place during the so-called ‘guest-worker era’ between the mid 1950s and 1973. In this period Germany hired workers under bilateral agreements from Southern European and North African countries in reaction to surplus demand on the labour market. Since the bottleneck on the German labour market mostly concerned unskilled industrial jobs the guest workers tended to have a relatively low qualification profile. In 1973 the German government imposed a recruitment ban on non-EU workers. With the exception of Italy, which was one of the original members of the EU, the ban stopped the inflow of guest workers from Southern European countries. Overall, Germany experienced a net inflow of 3.8 million foreigners during this period. In contrast to the original expectations of the German government a huge share of the guest workers stayed in Germany, permanently influencing the socio-demographic structure of the foreign population. The following decade was characterized by family reunifications, which led especially to an increase in the Turkish population. From the beginning of the 1990s the reunited Germany experienced a strong inflow of refugees from Yugoslavia, asylum seekers and East European migrants. The last group consisted of foreigners and ethnic Germans – the so-called ‘Spätaussiedler’, mostly from Poland, Romania, Kazakhstan and Russia. 1.2 Recent Immigration Patterns In 2005 Germany passed a new immigration law, the first comprehensive law in the history of the Federal Republic that combines the issues of integration and immigration. While the recruitment ban on unskilled foreign workers from outside the EU remains in force the new immigration law liberalizes the entry, residence and work permit scheme for highly qualified migrants. In addition, it alleviates

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labour market access for foreign students who have graduated from a German university (Steinhardt et al. 2006). One year earlier Germany decided to restrict immigration from the new member states (NMS) by implementing transitional measures. By doing so Germany suspended the free movement of workers from the new member states as well as the freedom of services within the construction sector and certain handcraft jobs (Bundesamt für Migration und Flüchtlinge 2007). The declared aim of this measure is to restrict access to the German labour market to existing bilateral agreements, which should ensure that the German population is not harmed by adverse wage or employment effects. In 2006 the German government decided to prolong the transitional period until 2009, using the argumentation outlined above. However, since the end of the 1980s numerous bilateral agreements have been concluded between Germany and the Central and East European (CEE) countries which grant temporary access to particular sectors of the German labour market. This channel is used intensively by German employers and East European migrants, especially from Poland, resulting in huge annual inflows of temporary workers, mostly employed in the agricultural sector. 1.3 Data Situation Data availability concerning foreigners in Germany is comparatively good. Official data on immigration and the foreign population are provided by the Federal Statistical Office of Germany, while data on the labour market situation of foreigners are provided by the Federal Labour Agency (BA) and the European Labour Force Survey (ELFS). However, not all data sources make possible differentiated analysis by nationalities because they only discriminate between Germans and foreigners and thus fail to distinguish between foreign-born and native-born. For this reason, in most official German data sets the identification of migrants is possible only in terms of nationality. It is difficult, therefore, to identify ethnic Germans (‘Spätaussiedler’) in data sets since all of them received German citizenship after entry. In addition, immigrants who naturalize are not identifiable as immigrants as soon as they acquire German citizenship. This may lead to an understatement of the labour market performance of immigrants because of processes of self-selection within the immigrant population. Analysis of micro data has revealed that highly qualified foreigners in particular tend to naturalize

 The term new member states (NMS) refers to all states that have entered the European Union since 2004, including Romania and Bulgaria. The term EU-10 refers explicitly to the ten states of the enlargement in 2004, while EU-2 is used for Romania and Bulgaria.  A notable exception is the new Microcensus that since 2005 makes it possible to identify the migration background of individuals. The migration background is a new and quite complex concept in German statistics that describes the migration experience of individuals and their parents.

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(Steinhardt 2008a). The following analysis therefore refers exclusively to the flows and stocks of foreigners within Germany, including those born in Germany. For the interpretation of immigrant numbers and characteristics two features of German migration statistics are of importance. First, the German statistics are based on cases instead of persons. This means that a person who enters the country several times is counted each time as a new immigrant. Second, immigrants are identified as such only if they register at a German residence registration office (‘Einwohnermeldeamt’). In general this registration is compulsory for every inhabitant of Germany who changes his or her residence. However, a number of federal states have exceptions to this rule for foreigners who stay only up to two months in Germany. Therefore commuters without registered residence in Germany are not included in the official immigration figures. Temporary workers, due to the federal rules, often have no obligation to register or avoid it for various reasons. The result is that a high proportion of temporary workers are not included in the immigration statistics of the Federal Statistical Office. However, it is possible to identify this group using the statistics of the Federal Labour Agency (see Section 2.4). Overall, especially in relation to the new member states it must be considered that unregistered migration is far from difficult. Since inhabitants from the new member states, including Romania and Bulgaria, do not need a tourist visa it must be assumed that some immigrants use this channel to enter Germany and stay without registering. Admittedly there is no serious empirical evidence concerning the dimension of the unregistered stock of immigrants from the new member states in Germany. The qualification structure and sectoral distribution of the foreign workforce are described on the basis of data from the ELFS (see Section 2.5). Since the ELFS is a household survey the information ���������������������������������������������� on ���������������������������������� education relies solely on the respondent’s declaration. This has consequences for immigrants in particular, since we do not know whether a university degree or a professional education acquired in a foreign country is recognized in Germany and to what extent this human capital can be transposed to the German labour market. Second, the household survey may capture foreign students, but it does not include temporary migrants who often live in hostels or residential accommodation. Last but not least, the sample size for the immigrant groups is relatively small. For this reason there are limits on reliability making it necessary to aggregate a number of economic sectors and nationalities.

6 717 115 1 659 564 439 948 112 532 1 764 318 953 578 466 093 826 504 494 578

Overall EU-14 EU-10 EU-2 Turkey States of former Yugoslavia* States of former Soviet Union* Asia Rest of the world

100.00 24.71 6.55 1.68 26.27 14.20 6.94 12.30 7.36

% 6 755 811 1 653 928 482 864 112 196 1 764 041 941 806 477 108 826 432 497 436

2005

Note: * Countries of the EU excluded. EU-2: Romania and Bulgaria. Source: Own calculations using data of the Federal Statistical Office.

2004

 

Table 6.1  Foreign population stock in Germany 2004–2007

100 24.48 7.15 1.66 26.11 13.94 7.06 12.23 7.36

% 6 751 002 1 649 673 526 303 112 406 1 738 831 928 828 472 849 819 623 502 489

2006 100 24.44 7.80 1.67 25.76 13.76 7.00 12.14 7.44

%

6 744 879 1 643 340 555 657 131 402 1 713 551 916 791 466 964 812 816 504 358

2007

100.00 24.36 8.24 1.95 25.41 13.59 6.92 12.05 7.48

%

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105

2. Descriptive Analysis 2.1 Immigration and Population Stock In 2007, 6.7 million residents of Germany had foreign nationality, which corresponds to a foreigner share of 8.2 per cent (see Table 6.1). The largest group within the foreign population are Turks, followed by citizens from former Yugoslavia, Italy, the former Soviet Union and Poland. The Turkish population is equal in size to that from the old member states (EU-14): each group represents one quarter of the whole foreign population within Germany. The share of foreigners from the new member states is relatively low compared to this, but it has been increasing since 2004. Since the overall number of foreigners in Germany has remained nearly constant the share of almost all other foreign groups has declined slightly. In fact, EU-10 citizens have been the only group with increasing immigration numbers in recent years and their absolute share in overall immigration is huge (see Figure 6.1). While Germany exhibited a migration balance of 75,000 in 2006 net migration from the EU-10 was nearly 59,000. This is quite a surprising result considering the imposition of transitional measures. A first explanation of this is the numerous bilateral agreements between Germany and the new member states which allow workers to access the German labour market temporarily (see Section 2.4). In contrast, the net migration of Romanians and Bulgarians has been decreasing since 2003, but the balance of in- and outflows remains positive. Interesting is the negative migration balance of people from the old member states (EU14), indicating a slight process of remigration. Overall, the data indicate that immigrants from the new member states are playing an increasing role in German immigration, despite the transitional measures. Figure 6.2 shows the net inflow of foreigners from the new member states by country of origin.

  The figures from before 2004 cannot be used for a comparison since the Federal Statistical Office conducted a data revision in 2004. Originally the data come from the Immigrant Central Register (Ausländerzentralregister – AZR) which overestimates the real stock since it does not consider remigration and naturalizations.   The group of ethnic Germans, the co-called “Spätaussiedler”, are mainly not included in the pointed figures. Since 1999 they receive automatically the German citizenship at entry and are counted as German immigrants. However, the formerly huge inflow of ethnic Germans is strongly decreasing since 2000. In 2006, only 7747 persons entered Germany as “Spätaussiedler” (Bundesamt für Migration und Flüchtlinge 2007).

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5HVWRIWKHZRUOG $VLD 6WDWHVRIWKHIRUPHU6RYLHW8QLRQ 6WDWHVRIIRUPHU<XJRVODYLD 7XUNH\ (8 (8 (8























Figure 6.1  Net migration of foreigners to Germany, 2003–2006

Note: * Countries of the EU excluded. Migration balance only related to foreigners. Source: Own calculations using data of the Federal Statistical Office.







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Figure 6.2  Net migration of foreigners from the new member states, 2000–2006 Source: Own calculations using data of the Federal Statistical Office.

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On the right-hand scale net migration from Poland is described, while the left-hand scale displays the migration balance from the other new member states; Poles are by far the largest immigrant group from the new member states. Especially with the enlargement in 2004 immigration from Poland increased strongly; it made up about 77 per cent of all immigration from the new member states in 2006. This result is not surprising due to the geographic situation, the unfavourable labour market situation in Poland and the numerous socio-economic linkages and bilateral agreements between Poland and Germany. In addition, most EU-10 countries exhibited a positive net emigration to Germany during the period 2000–2005; the strong increase of immigration from Hungary beginning in 2003 is particularly striking. This boost in Hungarian immigration cannot be explained in terms of an increase of either student numbers or temporary work permits (Bundesamt für Migration und Flüchtlinge 2007). It must therefore be assumed that these inflows are mostly connected to network migration or jobs with unrestricted access (for example, internships, artists and scientists). The almost parallel trends for immigration from the Czech Republic and Slovakia are also interesting, suggesting similarities between the two countries following their political division. The difference in immigration levels corresponds to the different labour market situations of the two countries. In 2005 the unemployment rate of Slovakia (16.4 per cent) was about twice as high as that of the Czech Republic (7.9 per cent) (IAB 2007). This is also reflected in the relatively high number of temporary workers from Slovakia (see Section 2.4). In contrast to the positive trend of the EU-10, the immigration numbers from Romania and Bulgaria have been decreasing since 2002. One explanation for this could be that the abolition of visa requirements for Bulgaria in 2001 and Romania in 2002 has reduced the need for official registration. Another explanation is a redirection of migration flows to countries such as the UK and Ireland that also abolished the visa requirement but also provide easier access to the labour market (Münz and Tamas 2006). The result that the positive immigration trend from the EU-10 states continued in 2005 despite the implementation of the transitional regulations is not surprising since the existing economic push and pull factors did not change substantially in the course of a year and the bilateral agreements were still in force, enabling temporary access to the German labour market. Last but not least, freedom of services in Germany is restricted only for particular sectors, such as construction. However, the decline of immigration in 2006 suggests that the transitional arrangements have induced a redirection of immigration patterns to countries which did not implement them in the first place or had removed them recently. The dominant role of Polish immigrants within the inflow from the new member states is reflected in the composition of the foreign population stocks in Germany (see Table 6.2). The second biggest group is Romanians, followed by Hungarians and Bulgarians. However, all groups except Slovenians exhibited a constant population increase in absolute terms, which corresponds to the migration balance during this time (see Figure 6.2).

552 480 3 775 8 844 14 713 332 292 109 20 244 21 034 30 301 47 808 788 39 167 73 365

2004 100 0.68 1.6 2.66 0.06 52.89 3.66 3.81 5.48 8.65 0.14 7.09 13.28

595 060 3 907 9 477 17 357 360 326 596 21 685 21 195 31 983 49 472 832 39 153 73 043

2005

Source: Own calculations using data of the Federal Statistical Office.

EU 10+2 Estonia Latvia Lithuania Malta Poland Slovakia Slovenia Czech Republic Hungary Cyprus Bulgaria Romania

  100 0.66 1.59 2.92 0.06 54.9 3.64 3.56 5.37 8.31 0.14 6.58 12.27

638 709 3 970 9 775 19 030 379 361 696 23 835 21 109 33 316 52 347 846 39 053 73 353

2006 100 0.62 1.53 2.98 0.06 56.64 3.73 3.3 5.22 8.2 0.13 6.11 11.48

Table 6.2  Foreign population stock from the new member states in Germany, 2004–2007

687 059 4 065 9 806 19 833 410 384 808 24 458 20 971 34 266 56 165 875 46 818 84 584

2007 100 0.59 1.43 2.89 0.06 56.01 3.56 3.05 4.99 8.17 0.13 6.81 12.31

19.1 13.3 10.9 9.5 20.7 12.6 29.2 37.5 27.2

41.9

30.5 12.7

13.3 15.4 9.1 13.2 11 9.6 23.3 16.3 35.1

12.5

18.3 16.3

BadenBayern Württemberg

3.4 13.6

3.5

10.2 6.1 8.8 5.2 4.1 8.1 2.9 2.4 4.2

Berlin

0.6 1.9

0.4

1.9 1.1 2.4 1.9 1.2 1.4 0.7 0.4 0.3

Bremen

1.2 3.5

1.8

2.9 9 4.6 3.5 3.2 4.5 1.6 1.7 1

Hamburg

Source: Own calculations using data of the Federal Statistical Office.

Bulgaria Estonia Latvia Lithuania Malta Poland Romania Slovakia Slovenia Czech Republic Hungary Cyprus

Nationalities in federal states in %

Table 6.3  Regional concentration, 2007

8.1 9

9.2

11.4 7.9 9.3 15.5 14.4 11 10.2 9.7 8.3

Hessen

5.4 5.6

3.8

5 7.8 10.6 11.7 7.6 9.8 5.1 3.9 2.2

Niedersachsen

12.8 19.3

10.4

19.8 19.5 26.6 21.5 19 28.4 16.5 13.2 16.7

6.4 6.4

3.4

4.9 4.1 4.6 5.8 12 5.4 4.2 4.8 2.8

1 1.6

0.7

1.4 0.7 0.7 0.7 0.7 0.8 1.1 0.7 0.5

Nordrhein- RheinlandSaarland Westfalen Pfalz

1 3.2

0.9

1.7 7.9 4.6 4 4.4 2.9 1.2 1.2 0.5

11.4 6.7

11.5

8.6 7.3 7.9 7.4 1.7 5.3 3.9 8.2 1

SchleswigNew Holstein Länder

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2.2 Socio-demographic Structure Table 6.3 gives an overview of the regional concentration of foreigners from the new member states in Germany. As expected, new member state immigrants cluster in Bavaria, Baden-Württemberg and North Rhine-Westphalia, the federal states with the largest populations. The proximity of the new Länder has had only a small impact on the regional concentration of immigrants from Eastern Europe. In particular immigrants from Poland, which has a long border with Eastern Germany, seem to prefer the Western part of Germany. The same holds for temporary workers from Poland who are not captured by the figures in Table 6.3 (see Section 2.4). Immigrants’ preference for Western Germany can be explained by the relatively poor economic performance and high unemployment of the new Länder. However, the figures also illustrate that geographical proximity matters for the location decisions of immigrants under the precondition of attractive labour market opportunities. For example, Bavaria, which has with Baden-Württemberg the lowest unemployment rate of all federal states, has high shares of immigrants from nearby countries, such as the Czech Republic, Slovakia and Hungary. As far as socio-demographic structure is concerned, Table 6.4 sketches for 2006 the gender and age composition of the immigrants who arrived from the new member states in 2006. Overall, the table shows for all countries that the majority of immigrants belong to the lower (under 25 years) and middle (25 to 50 years) age groups. However, the data indicate significant differences between national groups: immigrants from the Baltic States, Cyprus and Malta exhibit high shares of individuals younger than 25, whereas the clear majority of immigrants from Poland, Romania and Hungary belong to the middle age category. Moreover, it is striking that the latter countries have the lowest share of women, while immigrants from the Baltic States are characterized by an exceptionally high share of women. This is notable since in all other immigrant groups except for the Czechs men constitute the clear majority. Are these socio-demographic disparities between immigrant groups in 2006 unique or are they reflected in the stock of the foreign population in Germany? Table 6.5 shows that the foreign population from the Baltic states in Germany is as a matter of fact younger than other immigrant groups. Partly this is due to a relatively short average stay, as immigration from the Baltic states is quite a new phenomenon. In contrast, Slovenians exhibit a high average age, which corresponds to a long average residence. This can be explained by the fact that Slovenians are a special group within the new member states since they were part of the former Yugoslavia and therefore belonged to the category of guest workers. The relatively old age structure of immigrants from Hungary in 2006 also shows in the stock data and is accompanied by higher-than-average residence.

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Table 6.4  Age and gender composition of immigrants from the new member states, 2006   Estonia Latvia Lithuania Malta Poland Slovakia Slovenia Czech Republic Hungary Cyprus Bulgaria Romania

Under 18

18–25

25–50

50–65

65 and older

Female share

10.7 8.8 9.4 6 4.2 3.9 5.3 6.9 2.6 4.1 5.1 3.7

47.7 37.6 31.2 35.8 18.6 28.9 27.8 33.3 17.2 42.1 29.2 17.7

35.7 49.7 53.5 52.2 65.9 60.7 57 53.3 71 45.5 53.9 67.9

5.2 3.5 5.6 4.5 10.9 6.2 8.4 5.8 8.9 8.3 10.7 9.3

0.7 0.4 0.3 1.5 0.4 0.2 1.6 0.7 0.3 0 1.2 1.4

63.8 57.7 61.8 46.3 31.2 35.7 38.1 50.9 23.4 43 44.8 39.8

Source: Own calculations using data of the Federal Statistical Office.

Table 6.5  Socio-demographic characteristics of the foreign population stock from the new member states, 2007     Estonia Latvia Lithuania Malta Poland Slovakia Slovenia Czech Republic Hungary Cyprus Bulgaria Romania

Age structure (share in %) Up to 20

20–35

35–55

13.9 13.9 15 6.3 9.4 9.3 5.4 10.1 5.9 6.6 9.3 10.1

54.4 46.6 51.5 30.5 40.2 60.4 23.7 48.2 38 42.9 55 46.2

23.1 25.6 28.4 45.9 41.1 26.5 26.4 31.5 41.6 35.5 29 36.1

In years

Share in %

55 and Average Average Female residence share older age 8.5 13.9 5.1 17.3 9.3 3.8 44.5 10.2 14.6 15 6.8 7.6

32.4 35.3 31.7 40.9 36.6 31.7 47.4 35 39.1 37.9 33 34.6

Source: Own calculations using data of the Federal Statistical Office.

8.3 8.4 6.1 13.9 9.1 6.5 28.8 9.6 11.7 15.1 7.1 7.7

71.3 66.6 71 54.9 51.2 58.3 50.5 66.3 41.1 43.4 56 56.8

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In addition, the stock of the foreign population from the new member states is characterized by a relatively high share of women. The Hungarian and Cypriot immigrant populations are the only ones characterized by a clear surplus of men, whereas more than two thirds of the immigrants from the Baltic states and the Czech Republic are female. The fact that the majority of immigrants from the Baltic states are young, female and unmarried may, among other things, be explained by a high share of au pairs. The au pair programmes were originally implemented as an opportunity for cultural exchange, but in fact are used as a channel of labour migration (Hess 2005). 2.3 Students The number of foreign students in a country is an important indicator of the sociodemographic composition of immigration flows. It is important to differentiate between students with foreign nationality who completed their education in the German school system, and students that came from abroad only to study. The first group belongs mainly to the second generation of immigrants and therefore is not the focus of this study. The second group are the so-called ‘Bildungsausländer’, meaning that they were educated in a foreign country before they enrolled in a German university. Table 6.6 shows that in 2007 almost 250,000 foreign students were enrolled in German universities, of whom 76 per cent belonged to the category of ‘Bildungsausländer’. The high shares of individuals educated in Germany among the group of students with old member state nationality, but also and in particular Turkey, can be explained by the fact that many of them are descendants of the guest worker generation. In comparison, about 80 per cent of new member state students are ‘Bildungsausländer’. The huge proportion of students within some immigrant groups from the new member states becomes obvious from the last column of Table 6.6. The high share of Bulgarians is particularly striking: one quarter of the Bulgarian population in Germany is enrolled at a German university. One explanation of this could be the Erasmus programme which facilitates access to German universities for foreign students from European countries. In addition, the data show that the young age structure of Baltic state immigrants corresponds to high numbers of students. About 7.5 per cent of all foreigners from Lithuania and Latvia, and 16.5 per cent of all Estonians are studying at a German university. The figures therefore demonstrate that immigrants from the new member states have a substantial presence in the German university system. This highlights the remarkable labour market potential of highly skilled immigrants from the new member states already living in Germany.  In contrast to the rules for the old member states au-pairs from the new member states have to be younger than 25.   The Erasmus programme includes substantial financial support for studying abroad, which might be particularly helpful for East Europeans who on average are faced with higher financial constraints than students from the EU-14.

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Table 6.6  Foreign students by region of origin, 2007 Foreign students EU-14 EU-10 Estonia Slovenia Latvia Lithuana Poland Slovakia Czech Republic Hungary Malta Cyprus Bulgaria Romania Turkey

39 548 24 677 724 524 886 1 667 14 493 1 569 2 132 2 434 27 221 12 170 4 156 22 090

Share of students Share of (Bildungsausländer) in the Bildungsausländer overall population (%) 56.96 82.80 92.68 49.81 83.86 90.52 80.39 91.84 88.51 83.85 59.26 95.93 97.09 90.21 32.50

1.37 3.68 16.51 1.24 7.58 7.61 3.03 5.89 5.51 3.63 3.90 24.23 25.24 4.43 0.42

Source: Own calculations using data from the DAAD and the Federal Statistical Office.

2.4 Temporary Labour Migration The nature of the immigration of East European workers to Germany is due to the transitional measures characterized by bilateral agreements. Under these agreements labour market access is possible for particular economic sectors and jobs, especially in agriculture and services. In general, this access is temporarily restricted. The group of so-called ‘programme workers’ can be distinguished into four categories: i. Contract workers are foreign employees who are allowed to work in Germany on the basis of a contract between a German and a foreign firm. Quotas for this group are adjusted annually and the German unemployment rate is used as the criterion. Since 2004 contract worker agreements for the new member states apply only to sectors in which freedom of services is restricted, such as construction. ii. Seasonal workers are intended to help satisfy seasonal labour demand in the agricultural, hotel and restaurant sectors. Employers can recruit seasonal workers for a maximum period of eight months per year.

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iii. The programme for new guest workers is related to the temporary employment of foreigners for purposes of advanced training (language and occupational skills). iv. Cross-border employees do not belong to the category of migrants since they maintain their residence in their home country and only have their workplace in Germany. This border commuting for employment purposes is allowed if the individuals return daily to their country of origin (or work not more than two consecutive days in Germany) and do not receive any social transfer payments (Bundesamt für Migration und Flüchtlinge 2007). Table 6.7 shows the numbers of programme workers for 2000–2006. It becomes obvious that the huge majority are seasonal workers. These are characterized by a clear sectoral and regional concentration: around 90 per cent of them work in the agricultural sector in Western Germany (see Steinhardt et al. 2006; IAB 2007). Table 6.7  Programme workers in Germany, 2000–2006  

2000

2001

2002

 

2003

2004

20055

20065

(‘000)

Contract employees1 Seasonal workers2 New guest workers3 Cross-border employees4

43.6 263.8 5.9 4.4

45.4 286.9 5.3 5.1

43.8 307.2 4.9 5.5

42.4 33.2 318.5 333.7 3.5 2.5 5.3 5.1

21.2 329.8 1.9 5.1

19.4 294.5 1.4 5.3

Total

317.8

342.6

361.4

369.3 374.5

358

320.6

Note: Annual average; mediated including carnival workers; mediated; employees; 5 estimated number of cross-border employees. Source: IAB (2007). 1

2

3

4

Furthermore, the table shows that the number of new guest workers is relatively small. Although the annual quota in this category is 11,500, the channel is not used frequently. This is due to the lack of occupational and language skills of the applicants and a low preference among German employers for hiring migrants for the purpose of advanced training. The low number of cross-border employees can be   Preconditions for admission under this category are the possession of German sufficient language skills and a completed vocational education. Applicants have to be between 18 and 40, and the aim is to transfer specific technical skills.  To clarify, it must be assumed that a high share of seasonal workers can also be classified as commuters. However, there exist no reliable data on the extent of this.  The category also includes carnival workers (‘Schaustellergehilfen’). However, this group is only marginal and comprehends no more than 10,000 people annually.

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explained by the difficult labour market situation in the new Länder. Therefore the majority of permissions has been granted for Bavaria. However, it has to be assumed that there are a number of commuters outside this programme who are not captured by the official statistics (Bundesamt für Migration und Flüchtlinge 2007). Table 6.8 shows that the vast majority of seasonal workers come from Poland. However, their share has been decreasing over the years (from 87 per cent in 2000 to 78 per cent in 2006), while the share of Romanians increased from 4.5 per cent in 2000 to 17 per cent in 2006. This could be explained by new labour opportunities for Polish workers in the UK and Ireland. Concerning the other employee categories the picture is more mixed: in 2006 around 47 per cent of contract workers came from Poland, 14 per cent from Romania and 5 per cent from Hungary; 28 per cent of the new guest workers are from Poland, 15 per cent from Romania and 13 per cent from Hungary. In contrast, the majority of cross-border employees come from the Czech Republic (see Steinhardt et al. 2006, IAB 2007). The figures clearly indicate that Germany not only has a demand for highly skilled migrants, but also for foreign labour with low qualifications. The agriculture sector in particular is dependent on foreign labour that relieves bottlenecks during harvest time.10 On the other hand, Germany has already had the experience during the era of guest workers that the hiring of unskilled labour might have unintended consequences. The guest workers were originally hired as temporary migrants, but a large share of them stayed permanently in Germany. German immigration policy in the 1960s and 1970s ignored the complexity of migration decisions and the self-energizing power of migration flows. For this reason current German policy is anxious to restrict the inflow of foreign unskilled labour to particular sectors and to fixed periods. Another recent consequence has been the shift to a comprehensive integration policy that tries to increase the social and economic participation of immigrants within Germany. Another possibility for obtaining access to the German labour market is connected to the freedom of establishment. However, there are no official data on the overall number of self-employed from the new member states in Germany. First calculations from the IAB (2007) show that between May 2004 and December 2005 around 14,000 citizens from the EU-10 registered a company at the Chamber of Handcrafts. Most of the companies are located in the urban centres such as Hamburg, Munich, Frankfurt and Berlin. The emphasis lies on manual activities in the construction sector, such as tiling, flooring and cleaning.

10 German policy-makers have made repeated attempts to attract unemployed Germans to these jobs, but the success of these measures has been marginal (IAB 2007).

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Table 6.8  Seasonal workers by country of origin, 2000–2006 (%)*  

2000

2001

2002

2003

2004

2005

2006

Overall 263 805 286 940 307 182 318 549 333 690 329 795 303 492 Poland 86.86 84.83 84.52 85.36 85.89 84.66 77.85 Croatia 2.25 2.15 1.92 1.59 1.40 1.39 1.58 Slovakia 3.17 3.5 3.47 3.01 2.70 2.27 2.23 Czech Republic 1.23 1.02 0.91 0.7 0.59 0.49 0.41 Hungary 1.57 1.67 1.38 1.10 0.83 0.70 0.60 Romania 4.49 6.28 7.24 7.72 8.15 10.03 16.87 Slovenia 0.12 0.09 0.08 0.07 0.06 0.05 0.05 Bulgaria 0.31 0.47 0.49 0.45 0.37 0.40 0.43 Note: * Including carnival workers. Source: Own description using data from the BA (Employment Agency).

2.5 Labour Market Situation Table 6.9 shows two basic indicators in terms of which the labour market situation and participation of foreigners within Germany can be characterized. The employment rate as defined here describes the share of employees liable to social security contributions as a share of the overall population of working age (15–65 years). Accordingly, the self-employed, family workers, soldiers, civil servants and the marginally employed are not included in the nominator. For this reason the employment rate depicted here is significantly lower than the one based on the ELFS.11 The reason for choosing the defined employment rate is that it follows the official definition of the Federal Labour Agency, uses very reliable registration data and focuses on the regular jobs covered by social security contributions (Bundesagentur für Arbeit 2008). The second indicator is the share of marginal part-time workers; this indicator uses the same denominator as the employment rate.12 The figures clearly indicate that foreigners have lower employment rates than Germans.13 Furthermore the data demonstrate huge differences between certain immigrant groups. While the EU-14 is characterized by a relatively high 11  For a comparison with the employment rate calculated on the basis of the ELFS see, amongst others, Liebig (2007). 12  Marginal part-time workers are defined as employees holding a job with a monthly wage of less than €400 – ‘Geringfügig entlohnte Beschäftigte’. 13  Programme workers are partly accounted for in the figures. They are captured as soon as they pay social security contributions, which they are not obliged to in every case. Due to statistical reasons it is not possible to identify this group separately within employees covered by social security or marginal part-time workers.

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employment rate in the German labour market, immigrants from Turkey and, especially, the EU-10 exhibit strikingly low employment rates. To interpret this result we must consider that immigrants from the EU-10 are also characterized by a high share of students, which biases the employment rate downwards since they are always included in the denominator, but in the numerator only on the rare occasion that they have a job subject to social insurance contributions. Nevertheless, even within the EU-10 there are significant disparities: while only one quarter of the Polish and Hungarian populations of working age have a job liable to social security, 43 per cent and 37 per cent of all Czechs and Slovenians, respectively, are employed in regular jobs. The low employment rate of the EU-10 is therefore mainly driven by the low quota of Poles. In addition, the figures show that foreigners are overrepresented in the group of marginal part-time workers. This disparity especially holds true for the Turkish workforce, while the share of marginal part-time workers for the EU-10 is lower than the corresponding rate for Germans. An interesting feature is that Czechs and Slovenians, who have the highest employment rates within the EU-10, also exhibit a somewhat higher share of individuals in marginal employment. Table 6.9  Employment (liable to social security contributions) and marginal part-time workers, 2006 By nationality Germans* Foreigners* Foreigners EU-14 Turks EU-10 Poles Hungarians Czechs Slovakians Slovenians Romanians

Employment rate**

Share of marginal part-time workers

0.50 0.35 0.33 0.41 0.35 0.26 0.24 0.24 0.43 0.29 0.37 0.34

0.09 0.12 0.12 0.10 0.14 0.08 0.09 0.06 0.11 0.07 0.10 0.12

Note: * Figures for the working age population were calculated using data from population statistics (Bevölkerungsfortscheibung). ** The employment rate is only related to employees liable to social security contributions. Figures for the working age population were calculated using data from the AZR (Ausländerzentralregister). Source: Own calculations using data of the BA and the Federal Statistical Office.

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EU Labour Migration since Enlargement

For statistical reasons it is not possible to construct reliable unemployment rates for foreign nationals in detail using data from the Federal Labour Agency.14 The overall figures in Table 6.10 indicate that foreigners in Germany are excessively affected by unemployment, which corresponds to their low employment rates. In recent years the unemployment rate of foreigners has been more than twice as large as that of Germans. Calculations of the IAB (2007) indicate that in particular Poles, other immigrants from the new member states and Turks exhibit high unemployment rates, while foreigners from the EU-14 are characterized by moderate unemployment rates below the average level for foreigners. Another indicator of the economic situation of immigrants is wages. There is empirical evidence of a significant wage gap between native and foreign employees in Germany. A study on the basis of the BA employment panel finds that the relative wage gap between Germans and foreigners is about 15 per cent (Liebig 2007).15 After controlling for demographic and socioeconomic factors such as age, gender and education a wage gap of 8 per cent remains. Recent calculations by Steinhardt (2008b) on the basis of the IAB employment sample reveal this magnitude showing that the relative wag gap between native and foreign full-time employees between 1997 and 2001 was about 16 per cent. Overall, the differences between Germans and foreigners on the labour market are striking and lead to the question of qualifications, which are one of the central determinants of labour market participation and outcomes in modern societies. Table 6.10  Unemployment rate, 2005–2007 (%)  

2005

2006

Related to the whole workforce: Overall

2007  

11.7

Related to the dependent workforce:

10.8

9.0

 

 

Overall

13.0

12.0

10.1

Germans Foreigners

11.9 25.2

11.0 23.6

9.3 20.3

Source: Own description using BA data.

14 The numbers of unemployed individuals by the different nationalities may underestimate the real figures since information is missing from 69 municipalities that provide unemployment benefits and related services on their own responsibility. 15 The relative wage gap is measured as the wage difference between native and foreign employees relative to the wage of native employees.

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119

Figure 6.3 shows the qualification structure of employed persons within Germany by nationality.16 Employed immigrants from the EU-14 possess a lower qualification profile than Germans. The same holds true for the Turkish workforce, which has the weakest skill structure of all groups. The low qualification profile of these groups can be explained by the large shares belonging to the category of guest workers. These migrants traditionally have a low qualification profile and are hired to work in the industrial sector. In contrast, immigrants from the EU-10 possess a higher education profile than the native workforce; the share of highly skilled employees in particular is noteworthy. Polish employees have an educational level comparable to that of Germans. The qualification structure of Romanians and Bulgarians is more diversified, with high levels of low and high qualified employees. Overall, the analysis indicates that immigration from the new member states is connected to a human capital transfer that could help to alleviate skill shortages on the German labour market.17

   /RZ 0HGLXP +LJK



     *(5

(8

75

(8

3/

(8

Figure 6.3  Qualification structure of employed persons, 2006

Note: * Excluding Poland. Source: Own calculations using data from the European Labour Force Survey.

Table 6.11 gives an overview of the concentration of employed foreigners in economic sectors.18 The sectoral distribution of employees shows a significant variation across the different nationality groups. Foreigners from the old European 16  In contrast to the previous analysis the following figures are based on ELFS data. 17 Similar results were found by Münz and Tamas (2006). 18  The need for sufficiently large case numbers means that some economic sectors are aggregated and no information is provided for Poles, Romanians and Bulgarians.

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member states and Turkey exhibit high shares within manufacturing. This corresponds to their qualification structure since a huge proportion of the jobs in this sector require only low skills. Table 6.11  Employees by economic sector and nationality, 2006   Construction Education Health and social work Hotels and restaurants Manufacturing Other community, social and personal services Real estate, renting and business activities Transport, storage and communication Wholesale and retail trade Others

German

EU-14

Turkey

EU-10

6.08 6.34 11.56 2.51 23.35 5.02 8.72 6.01 14.11 16.31

5.27 3.69 5.99 9.38 31.83 5.94 9.19 6.91 15.81 5.99

4.50 0.50 5.62 4.55 39.82 5.95 10.41 7.12 16.44 5.09

3.62 4.88 13.75 9.80 19.28 10.89 12.81 5.66 13.22 6.08

Source: Own calculations using data from the ELFS.

Furthermore, foreigners from the EU-14 and EU-10 countries are characterized by relatively high shares in the hotel and restaurant segment, which is typical of immigrant groups in the host country because access to this sector is comparably easy and presupposes few host-country-specific skills. On the other hand, immigrants can benefit from ethnic and culture-specific skills brought from their country of origin (for example, ethnic restaurants and food). All foreign groups are characterized by a relatively high share in real estate, renting and business activities. It must be supposed that a high share of these jobs are low skilled, such as call centre work or small businesses, such as copy or mobile phone shops (Sassen 2000). Furthermore, foreigners from the EU-10 are highly concentrated in the health sector, which corresponds with their good qualification level. However, the data also indicate, despite that, that they are little present in sectors such as public administration or financial intermediation, which are not listed due to the small sample size.19 While the underrepresentation of immigrants in public administration is a well-known general problem in Germany, the second might be caused by restricted access to the labour market and an insufficient acknowledgment of qualifications from abroad. There is evidence that Poles in particular are faced by a lack of skill transferability (Liebig 2007). This reduces the potential benefits from the new immigration since the relevant employees are forced to carry out 19 See note 18.

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jobs that do not correspond to their skills. Another factor may be the transitional measures that consolidate the problem of mismatch by enabling access only to certain labour market sectors. Overall, the data indicate that the distribution across economic sectors only partly reflects the qualification structure of the different nationality groups. 3. Labour Market Effects One of the major issues in political discussions of EU enlargement in 2004 has been how the new immigration might affect the wages and employment of the native population. One repeated argument against the free mobility of labour is that immigration from the new member states would lead to rising unemployment and falling wages in Western EU countries. However, it is not possible to conduct an empirical analysis of this issue that deals with the post-accession period because too little time has passed to permit the accumulation of sufficient data points. However, a number of empirical studies exist that address the issue for previous periods and that might help to provide insights concerning the impact of future immigration on the German labour market.20 The first empirical analysis of the topic in Germany was carried out in 1994 by DeNew and Zimmermann (1994) on the basis of the German Socioeconomic Panel. They found that an increase in the share of foreign workers by 10 per cent was followed by a decline in native wages of 3.5 per cent. This is by far the strongest effect that can be found in the empirical literature for Germany. Pischke und Velling (1997) analyse the impact of immigration on the level of regional labour markets for the period 1985–89. In contrast to the study by DeNew and Zimmermann (1994) immigration in this time was mainly characterized by skilled migrants. The authors found that immigration had no significant impact on the employment of native workers. Another study is Bauer (1998) who used data from the IAB employment sample, which is a huge micro data set and enables precise analysis of wage and employment issues. He concluded that immigration has only a small adverse wage effect on native employees, whereas differentiation by unqualified workers, skilled workers and employees is crucial for the estimated relationship between native and foreign labour. The studies of Bonin (2005) and Steinhardt (2008b) are based on the skill group approach of Borjas (2003), which is relatively new in empirical migration research. This approach distinguishes labour submarkets by skill groups, whereby an individual’s membership of a skill group is defined by his or her education and work experience. While Bonin (2005) uses the data of the IAB employment sample 1975–97, Steinhardt’s analysis (2008b) is based on the subsequent version of the sample which covers the period 1975 to 2001. Both studies found that 20  For an overview of the theoretical expectations see Münz et al. (2006), and for a detailed demonstration of the theoretical framework see Bauer (1998).

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immigration had only a small negative effect on the wages of the native workforce in Germany. An increase in the foreigner share within a skill group by 10 per cent results in a fall in native wages of 1.02 per cent (Bonin 2005) or of 0.63 per cent (Steinhardt 2008b). Furthermore, both studies show that low qualified employees are disproportionately highly affected by immigration. In contrast to the estimations of Bonin (2005) the analysis of Steinhardt (2008b) also indicates a significant relationship between immigration and the native unemployment rate, although the impact is again small. Two further studies for Germany were recently conducted by D’Amuri, Ottaviano and Peri (2008) and Brücker and Jahn (2008). Both use the IAB employment sample, but take different methodological approaches. The first adopts the general equilibrium model of Ottaviano and Peri (2006), while the second analyses the immigration impact by using a wage curve approach. Both studies conclude that immigration has no negative or even a small positive impact on native wages, but negative effects on the wages of earlier immigrants. One possible explanation for the small overall impact of immigration on labour market outcomes in Germany is that foreigners and natives complement one another, even if they possess the same labour market experience and education. This can happen if they work in different occupations, despite similar qualifications, or if immigrants possess certain culture-specific skills that are of relevance to their job (Steinhardt 2008). In sum, the recent empirical studies for Germany suggest that immigration has not had a strong adverse impact on the labour market outcomes of natives. This relationship should also hold true for future inflows from Eastern Europe under the precondition that the number and skill composition of immigrants will be similar to that of recent permanent inflows. However, this is uncertain since the removal of the transitional measures might change immigration patterns substantially. 4. Conclusions The descriptive analysis has shown that Germany is characterized by substantial and increasing inflows from the new member states, including Romania and Bulgaria. In 2006 83 per cent of net inflows were from East European countries (EU-10+2). Polish immigrants provided the largest group. This immigration has taken place despite the transitional measures which restrict labour market access to Germany. Current migrants from Eastern Europe are characterized by a young age profile and relatively high skill levels. A significant proportion of the new migrants are studying at German universities, which demonstrates that migration also takes place for educational reasons. In addition to permanent immigration, each year Germany receives almost 300,000 temporary migrants from Eastern Europe. This takes place within the bilateral agreements for programme workers that enable labour market access to certain sectors under an annual cap. The huge majority are seasonal workers who are employed in the agricultural sector during the harvest season. It must be assumed

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that a significant share of temporary workers are commuters, although there is no evidence concerning the extent. As with permanent immigration the large majority are from Poland but the share of Romanians has been increasing. This indicates that the economic push and pull factors are still sufficiently strong to motivate individuals from Eastern Europe to migrate to Germany. Wage differentials in agriculture in particular are large enough to attract workers from Eastern Europe, while demand continues from German employers and farmers. However, it seems that the different institutional settings within Europe are leading to a redirection of migration flows to countries that did not implement or dropped transitional arrangements. This can be observed in respect of the declining share of Poles within the group of seasonal workers, while the UK and Ireland have experienced huge inflows of Poles in the construction sector. The labour market situation of foreigners from the new member states is characterized by a relatively low rate of employment subject to social security contributions. However, the low quota is mainly driven by the Polish population. Other groups from the new member states, such as Czechs and Slovenians, exhibit higher employment rates, although they do not reach the level of Germans. Interpretation of these figures should take into account the high student numbers referred to above. In addition, immigrants from the new member states are excessively affected by unemployment like almost all other immigrant groups in Germany. However, the skill structure of foreign employees from the new member states is characterized by a relatively strong presence of highly qualified individuals. This is only partly reflected in the sectoral distribution. Instead of the familiar concentration in manufacturing they are highly represented in the health and service sectors. But there is also evidence indicating that East Europeans have problems getting jobs that match their skill levels. This might be due to an insufficient acknowledgment of foreign qualifications and restricted access to the German labour market. Irrespective of the reasons this mismatch reduces the potential benefits from the new immigration flows. In 2009 the European countries still making use of transitional measures must decide whether they will extend the restrictions regarding the free movement of workers by an additional two years. The main argument against free mobility is downward pressure on wages and rising unemployment. However, recent empirical analyses for Germany show that past immigration had no strong adverse impact on the labour market outcomes of natives. There is no guarantee that this relationship will hold true for future inflows, but the results should help to dispel irrational scenarios. Despite this Germany must lift its labour market barriers at the latest in 2011. Since almost all other countries have already opened their labour markets it is risky to suppose that large numbers of skilled migrants in Eastern Europe are only waiting to migrate until Germany opens up its labour market. Germany definitely needs immigration since there is already an excess demand for skilled workers in certain economic sectors and occupations. For this reason the question of whether Germany should extend the transitional period until 2011 should be discussed in detail.

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References Bauer, Thomas (1998), �������������������������������������������������������������� ‘������������������������������������������������������������� Arbeitsmarkteffekte der Migration und Einwander-ungspolitik: eine Analyse für die Bundesrepublik Deutschland’, Wirtschaftswissenschaftliche Beiträge, Heidelberg. Bonin, Holger (2005), ‘Wage and Employment Effects of Immigration to Germany: Evidence from a Skill Group Approach’, IZA Discussion Paper No. 1875, Bonn. Borjas, George J. (2003), ‘The Labour Demand Curve Is Downward Sloping: Re-examining the Impact of Immigration on the Labour Market’, Quarterly Journal of Economics 118, 1335–74. Brücker, Herbert, and Elke J. Jahn (2008), ‘Migration and the Wage Curve: A Structural Approach to Measure the Wage and Employment Effects of Migration’, IZA Discussion Paper No. 3423, Bonn. Bundesagentur für Arbeit (2008), Analyse des Arbeitsmarktes für Ausländer, Analytikreport der Statistik, Nuremberg. Bundesamt für Migration und Flüchtlinge (2007), Migrationsbericht des Bundesamtes für Migration und Flüchtlinge im Auftrag der Bundesregierung, Migrationsbericht 2006, Nuremberg. D’Amuri, Francesco, Gianmarco Ottaviano and Giovanni Peri (2008), ‘The Labour Market Impact of Immigration in Western Germany in the 1990s’, HWWI Research Paper No. 3-12. De New, John P., and Klaus F. Zimmermann (1994), ‘Native Wage Impacts of Foreign Labor: a Random Effects Panel Analysis’, Journal of Population Economics 7 (1194), 177–92. Hess, Sabine (2005), Globalisierte Hausarbeit. Au-pair als Migrationsstrategie von Frauen aus Osteuropa, Wiesbaden. IAB (ed.) (2007), Auswirkungen der EU-Erweiterung auf Wachstum und Beschäftigung in Deutschland und ausgewählten Mitgliedsstaaten, study for the German Ministry of Technology and Economy (authors: Gerhard Untiedt, Björn Alecke, Timo Mitze, Ben Gardiner, Andrew Lamour, Herbert Brücker, Elmar Hönekopp, Timo Baas, Gudrun Biffl, Peter Huber and Oliver Fritz) (Nuremberg: IAB Bibliothek). Liebig, Thomas (2007), ‘The Labour Market Integration of Immigrants in Germany’, OECD Social, Employment and Migration Working Papers No. 47, Paris. Münz, Rainer, and Kristof Tamas (2006), Labour Migrants Unbound?, Institute for Future Studies, Stockholm. Münz, Rainer, Thomas Straubhaar, Florin Vadean and Nadia Vadean (2006), The Costs and Benefits of European Immigration, HWWI Policy Report No. 3, Hamburg. Ottaviano, Gianmarco, and Giovanni Peri (2006), ‘Rethinking the Gains from Immigration: Theory and Evidence from the U.S.’, FEEM Working Paper No. 52.06, Milan.

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Pischke, J., and J. Velling (1997), ‘Employment Effects of Immigration to Germany: An Analysis Based on Local Labour Markets’, The Review of Economics and Statistics 79 (4), 594–604. Sassen, Saskia (2000), ‘Dienstleistungsökonomien und die Beschäftigung von MigrantInnen in Städten’, in Klaus M. Schmals (ed.), Migration und Stadt. Entwicklungen, Defizite, Potentiale (Opladen), 87–113. Steinhardt, Max, Michael Bräuninger, Elmar Hönekopp, Dragos Radu and Thomas Straubhaar (2006), Effekte der Migrationssteuerung bei Erwerbstätigen durch das Zuwanderungsgesetz, Study commissioned by the Federal Ministry of the Interior of the Republic of Germany. Steinhardt, Max (2008a), ‘Does Citizenship Matter? The Economic Impact of Naturalization in Germany’, HWWI Research Paper 3-13, Hamburg. Steinhardt, Max (2008b), ‘Die Arbeitsmarkteffekte der Zuwanderung – eine empirische Analyse für Deutschland’, Wirtschaft & Statistik 2, Federal Statistical Office of Germany, Wiesbaden, 162–72. Data Sources Federal Statistical Office of Germany Federal Labour Agency (BA) Institute for Employment Research (IAB) European Labour Force Survey (ELFS) German Academic Exchange Service (DAAD)

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Chapter 7

EU Labour Migration: Government and Social Partner Policies in Germany Simon Fellmer and Holger Kolb

1. German Migration Policy: A Story of Ambivalence Germany’s attitude towards international migration can best be described as ‘ambivalent’. The formula ‘Germany is not a country of immigration’, repeated countless times by politicians from all parties, is the focal point of the stubborn denial of a country which Dietrich Thränhardt (1996) characterized as an ‘undeclared’ country of immigration and which in fact is one of the most important immigration countries in the world. It is not even difficult to find empirical evidence: between 1960 and 2004 around 27.9 million foreigners immigrated to Germany, while 20.5 million left during this period. The number of foreigners living in Germany grew from 690,000 in 1960 to 7.3 million in 2004. In 2006, 15.1 out of 82.4 million inhabitants had a migratory background (Statistisches Bundesamt 2006, 24–5; Statistisches Bundesamt 2008, 7). But where did all these migrants come from? The first group that should be mentioned is that of expellees, refugees and ethnic Germans. Between 1945 and 1961 more than 12 million Germans entered the territory of what in 1949 became the Federal Republic of (West) Germany. A second group are the 2 million ethnic Germans that came mainly between 1950 and 1990 from Poland, Romania and the USSR. All in all, the Federal Republic of Germany can be characterized as a country of immigration right from the beginning. After the collapse of communism in Eastern Europe and the abandonment of the previous restrictions on movement in communist countries the numbers of ethnic German immigrants rocketed: between 1988 and 1993 about 1.6 million ethnic Germans immigrated to Germany. The third group constitutes asylum seekers and refugees, mainly since the 1970s. In 1992 the number of asylum seekers peaked at over 430,000. In that year more people asked for asylum in Germany than in the whole of the rest of Europe. The last group that played a major role are the guest workers from Italy, Spain, Portugal, Yugoslavia and Turkey that were recruited mainly for unqualified and heavy manual jobs during the period 1955–73. It was wrongly assumed by both German governments and the migrants themselves that their stay in Germany would be of a temporary nature (Bade 2007); this must be seen as the root of many of the integration problems Germany is facing today. Not only did the stay of these former guests lead to chain migration in the form of family migration, which

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is the major form of migration to Germany today, but as in many countries with ‘unwanted migration’ the education system was poorly prepared and possibilities for migrant children in Germany to reach a high level of education are still inadequate (Radtke 2006, 172). This snapshot indicates that Germany’s self-description as not a country of immigration largely clashes with empirical reality. Joppke (1999, 62–5) pointed to the normative dimension of this denial and its grounding in Germany’s national self-definition. Its roots can be found in the side-effects of the liberation of Germany from the Nazi regime after the Second World War, which led to the division of Germany and thus the emergence of a huge German diaspora. The corollary of this development was the self-perception of the Federal Republic of Germany as an incomplete nation-state. Germany perceived itself as the homeland of all Germans, including those living in the diaspora. As a consequence of this self-definition, Germany prioritized the immigration of co-ethnics, which was semantically disguised as return. The main reason for the problems Germany has had with accepting itself as a country of immigration is now obvious: it would have risked becoming obliged to redefine Germany’s national identity and the weakening of the historical obligation to its dispersed co-ethnics in the East. As a consequence, immigrants could be accepted only on the basis of guest status. Despite the official ‘slogan’ Germany set about laying down a ‘policy behind gilded doors’ (Guiraudon 1997) in the form of a well-developed and quantitatively significant labour market scheme from the late 1980s onwards, mainly for seasonal workers and posted workers from Eastern European countries. As a result, labour migration is, after family migration, nowadays the second biggest source of migration to Germany, something that has not been widely discussed or officially stated. Several changes have taken place in recent years that paved the way for Germany to shift to a more rational, officially stated and strategic approach to labour migration policy: i. Since 1990 Germany has been united, the nation-building process has been accomplished and thus it is no surprise that Germany has started to relax its attitude to the no-immigration formula. ii. Migration as a fact could no longer be denied and politicians were more and more frequently being asked to define migration not as an extrinsic threat but as a process to be shaped and dealt with, and thereby to produce more positive outcomes (Bade and Bommes 2004, 30–33). iii. Demographic development – that is, population ageing and a tendency for the native population to decline – has brought to light a long suppressed  The former preamble of the Basic Law (Grundgesetz) underlines the provisional self-understanding of Germany in the form of an appeal: ‘The German people as a whole remains under the challenge of completing the unity and freedom of Germany in free selfdetermination’.

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discussion on the positive outcomes of migration, a discussion that suddenly broke through like an ‘avalanche’ (Bade and Münz 2002, 12–13). All in all, the way seemed to be paved for a new attitude towards labour immigration and it was reasonable to claim that at the beginning of the new millennium the political discussion about migration could be described as a search for a realistic and pragmatic approach to questions of migration and integration (Bade and Bommes 2004, 23). But it is obvious that a paradigm shift from denying the fact of being a country of immigration to acceptance and active management of immigration is an ambitious task for policy-makers and not something that can be done within a few weeks. This is particularly true for Germany and its mode of policy-making, which can be categorized as ‘incremental’ (Katzenstein 1987). This means that, not least due to the high number of veto players in the German political system, major policy swings are not realistic. Thus the question is, will the changes that have taken place and the newly opened discussion on a more strategic approach to migration policy also lead to results different from the previous situation? From this viewpoint EU enlargement and related discussions on freedom of movement, services and settlement appeared to be something of a litmus test: how far is Germany on the way to a more relaxed attitude to migration, how will the relevant players behave and how substantial can a policy swing on migration be? 2. The Positions of the Parties and the Social Partners before EU Enlargement The debate on EU enlargement appeared in the midst of the fluid political and public readjustment described above. In Germany it was accompanied by diverse scenarios presenting exaggerated estimates of possible migration flows to Germany. We should add that public acceptance of immigration still tended to be low; surveys showed that Germans wanted to limit immigration or wanted the government to enact stricter laws on asylum and immigration (Europäisches Forum für Migrationsstudien 1998). Hence it is not surprising that in 2003 the German public was also sceptical about enlargement: 46 per cent were against it – low qualified workers in particular were afraid of an influx of cheap East European labour (Oswald 2003). Although they differed slightly concerning the speed and methods of accession German political parties, as well as the social partners, generally favoured

  For a brief overview see Freudenstein and Tewes (2001) and Bommes and Kolb (2004). The German weekly Die Welt am Sonntag even reported – adding up the figures incorrectly – that Germany could expect net migration of up to six million persons from the accession countries within the first ten years, in contrast to a European Commission estimate of 970,000.

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enlargement. The most controversial topic has been freedom of movement for citizens of the new member states (NMS) (Semeniy 2003, 70). As the governing party in 1998 the conservative Christian Democratic Party (CDU) and its Bavarian sister party the Christian Social Union (CSU) stressed that the question of freedom of movement for workers was a sensitive one and should be abandoned until 2015. They repeated this in their 1998 manifesto, claiming that nationals from the new member states should not be granted work permits directly after enlargement, otherwise the German labour market would risk being flooded. In opposition (from 1998) their attitude became more differentiated: they stressed that a sufficient transitional period would be necessary, but that each accession country would have to be treated individually (Vitt and Heckmann 2000, 236; Semeniy 2003, 74–8). Before it became the governing party, EU enlargement was not an important topic for the Social Democratic Party (SPD), although it did not hesitate to criticize the government’s standpoint on this issue from time to time. This changed after they won the election in 1998, after which the party tried to stress the advantages of enlargement for Germany. One of their main goals was to ensure that answers were found to the possible risks and challenges, to better inform people and thereby diminish their fears. They also tried to convince the trade unions that enlargement in general would lead to more, not fewer jobs. In line with this, in their government programme of 2002 they argued for a rapid enlargement procedure. The SPD’s approach to freedom of movement and services expressed in the programme was somewhat contradictory in that they regarded them as especially sensitive fields and wanted to establish transitional periods of up to seven years but with the option of shortening them flexibly (Semeniy 2003, 84–7). While the two major national parties the SPD and the CDU/CSU thus favoured transitional periods for workers – and in the case of the SPD also for services – this was not generally the case for the smaller parties. The Liberals (FDP) saw a major opportunity for Germany’s economy and labour market, declaring that they favoured complete accession and therefore were particularly opposed to transitional periods for the new member states. Possible problems arising in the border regions should be solved through other political measures and they were convinced that, as Southern enlargement had shown, fears of a mass influx would not be realized. The Greens (Bündnis 90/Die Grünen), on the other hand, favoured transitional periods for workers but thought that seven years was too long. The Left – at that time PDS, since restructured as ‘Die Linke’ – was opposed to the idea of transitional periods, arguing that people from the EU-10 should not be treated as second-class citizens (Spiegel Online 2004; Semeniy 2003, 82).

 Governing parties during the period in question were (the second party is the junior partner): 17 November 1994 until 26 October 1998: CDU/CSU and FDP; 27 October 1998 until 18 October 2005: SPD and Greens; since 22 November 2005: CDU/CSU and SPD.

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2.1 Employers’ Policies Not surprisingly, the employers’ organizations took a positive view of EU enlargement from the beginning. In particular the opportunities and advantages of a larger internal market and further improvements in flexibility and competition dominated their views. Enlargement was especially promoted by the large industrial employers’ organizations, such as the Federation of German Industries (BDI) and the Confederation of German Employers’ Associations (BDA), which stated that transitional periods for employees should not be ‘too long’. In general, they were thus content with the 2+3+2 model which they saw as flexible enough to enable the cutting back of the transitional period before the maximum of seven years. Nevertheless, they stated that they would have favoured a ‘less defensive but more future-oriented approach’ and proposed a number of measures to soften the transitional arrangements, such as opening up the labour market earlier for certain occupations or widening the possibilities for temporary employment for nationals from the new member states. Freedom of services and establishment, they claimed, should not be limited. Services were regarded as vital for the competitiveness of German companies, and they feared possible ‘revenge’ on the part of the new member states, obstructing their expansion in those countries if Germany restricted freedom of establishment. While the German Chambers of Industry and Commerce (DIHK) more or less took the BDI/BDA’s position, the German Confederation of Skilled Crafts (ZDH), for example, was more sceptical, maintaining that transitional periods for the freedom of movement of workers and services were necessary to avoid ‘distortions of the labour market and domestic companies’ (Bundesvereinigung der Deutschen Arbeitgeberverbände and Bundesverband der Deutschen Industrie 2001; Bundesverband der Deutschen Industrie 2001; Bundesverband der Deutschen Industrie; Bundesvereinigung der Deutschen Arbeitgeberverbände; Deutscher Industrie- und Handelstag; Zentralverband des Deutschen Handwerks 2001). 2.2 Trade Union Policies Like the political parties and the business associations the trade unions generally supported the idea of enlargement and stressed that Germany would be the country that benefited most, especially because of the expected growth of trade. On the freedom of movement and services, however, the trade unions were much more reluctant. In 1999 the Confederation of German Trade Unions (DGB) claimed that the debate should concentrate on matters of substance and not be reduced to dates and periods. For example, before full freedom of movement the DGB demanded that labour and collective bargaining law in accession countries should adapt to EU standards and ensure equal access for migrants to the social security systems.  Collective bargaining legislation can be described as all the laws dealing with collective bargaining processes, the roles and rights of social partners, and so on.

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In respect of the freedom of services the DGB stressed that higher fines, as well as improvements in the Labour Inspectorate would be necessary to combat illegal work (DGB Bundesvorstand 1999). The DGB favoured a general reform of German migration policy, but wanted to see the discussion linked to questions of freedom of movement, too. With unemployment in the early 2000s around the 4 million mark, the DGB underlined the need for transitional periods because they feared that the German labour market might not be able to absorb the additional labour force and that, due to social and economic imbalances, enlargement might otherwise have dramatic consequences for some regional and sectoral labour markets and lead to a downward spiral of social and labour standards. The DGB regarded transitional periods for freedom of movement and services lasting from seven to ten years as vital, though they might be shortened flexibly and leave room for controlled access on the part of labour migrants. One prerequisite would be that the accession states not only adopted but really implemented European standards in labour and social policy law. This should be flanked by the introduction of minimum wages or the general extension of binding wage agreements in Germany; otherwise branches such as construction, hotels and restaurants, crafts, agriculture and low qualified workers in general would lose out from enlargement (DGB 2000; DGB 2001). 3. The Legal Framework after Accession As already mentioned, one could not expect the discussion of the three different freedoms – freedom of settlement and establishment, freedom of movement and freedom of services – to lead to clear-cut outcomes. Nationals from the new member states have enjoyed full rights only in respect of the freedom of settlement or establishment, which means that they are allowed to establish or manage their own company in Germany if they are self-employed (Fehrenbacher 2004a, 23). The same occupational regulations apply as for natives (Bundesministerium der Finanzen 2006, 56). Regarding the freedom of movement of workers as described in the preceding paragraphs, the positions of the players were fairly close and everyone could interpret the 2+3+2 period flexibly and assume that transition would take a favourable course in terms of their interests. The unions could interpret the period as a time during which harmonization might take place and which could be lengthened, whereas the business associations could interpret it as a period to be cut flexibly if necessary. Thus, right after accession the legal situation for NMS workers did not differ fundamentally from the situation before: labour migration to Germany was in general prohibited and work permits were granted mainly to guest, border and seasonal workers (Fehrenbacher 2004b, 241–4). In fact, bigger changes for employees from the new member states wishing to migrate to Germany arose not from enlargement but from the new German immigration law which came into effect less than a year later, in January 2005, even if it was mainly targeted at the immigration of third-country nationals from

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outside Europe (see Fellmer 2007). This reform has to be seen first and foremost as a political compromise and thus stands squarely in the tradition of German policy-making. After much wrangling with the former conservative opposition, the German Red–Green government managed to pass a bill that reformed many aspects of migration control and integration procedures in Germany. The basic principles that the employment and self-employment of foreigners should be matched to Germany’s economic needs and that unskilled and low-skilled workers should not be granted access for employment purposes remain in effect. But some changes were made that also affect nationals from the new member states: i. Highly skilled workers: senior academics and researchers, as well as top-level managers in business and industry who are offered a position in Germany may receive permission to work. The term ‘highly skilled’ refers in particular to scientists with special qualifications and teachers in prominent positions. For this category of persons no wage requirement has been laid down. Specialists and executives who work as employees were required to have a minimum gross income of more than €86,400 annually. ii. Foreign graduates: whereas it proved nearly impossible for foreign graduates to remain in Germany to take up paid employment before the new immigration law was passed, foreign graduates of German universities can now stay in Germany for one year to look for a job that conforms to their skills. In case of a successful job search a residence permit is granted. iii. Qualified workers can be granted a work permit if there is a specific regional, economic or labour market interest. But although some bureaucratic obstacles have been abandoned not much has changed for them. One important fact is that in terms of the law nationals from the new member states are now preferred over third-country nationals. iv. For low-skilled workers the general restrictions remained in place (Storr and Albrecht 2005, 7–9). The rules concerning the freedom of services should be interpreted as a compromise. This freedom is generally granted but not in the case of posted workers. Furthermore, restrictions do not apply to all posted workers but only in certain branches (the building industry and related branches, as well as cleaning and interior decoration). In these branches, which have been selected on the basis of an agreement between the social partners, work permits have to be authorized individually by the employment agency (Bundesministerium der Finanzen 2006, 56). In the construction sector the Posted Workers Act – ArbeitnehmerEntsendegesetz – applies. This means that posted workers in this branch must be employed under the same working conditions and wages as German employees (Deutscher Bundestag 2005, 3; Hunger 2000; for a critical account of the law  As long as transitional periods remain in place, however, NMS nationals are more or less treated like third-country nationals.

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see Straubhaar 1996). Generally, transitional periods for this freedom can last only as long as the transitional periods for employees are in effect, not longer (Fehrenbacher 2004a, 24; Fehrenbacher 2004b, 243–4; Friedrich-Ebert-Stiftung 2005, 9). 4. Freedom of Services and Settlement: Experiences and Social Partners’ Reactions after Enlargement 4.1 Unexpected Outcomes The threat of social dumping and exploitation arising from abuse of the freedom of services – and especially of posted workers – had also been addressed before enlargement, especially by the trade unions. Even before 2004, companies based in the accession countries had the possibility of offering their services in Germany, which had already given rise to controversy. But after enlargement, with – partial – freedom of services, it turned out to be much easier and bureaucratic costs were much lower for firms to send their employees across the border. This seemed to pave the way for cases such as those reported by the trade union NahrungGenuss-Gaststätten (NGG): after enlargement abattoirs quite soon employed almost exclusively East Europeans, without wage or working time regulations and social protection. In some cases workers were not paid and were fired when they complained, which also meant that they lost their residence permits. Some employers found the German situation so attractive that a Danish meat company wanted to close two abattoir subsidiaries in Denmark and relocate them in Germany (Deggerich 2005). The German government has stated that some sectors, especially those with high wage costs and a high level of low qualified workers, have been confronted with a new dimension of competition since enlargement (Deutscher Bundestag 2005, 5–6). However, the main problem was not the freedom of services itself but its abuse by citizens and companies from the new member states, often in cooperation with German firms. Their goal was either to avoid the transitional measures for the freedom of movement or just to offer services at dumping prices. Normally companies who want to send posted workers to Germany have to run a substantive business abroad. But when they investigated the German authorities often found only so-called ‘letterbox companies’ (Bundesministerium der Finanzen 2006, 56). Another problem that arose was that existing minimum wage agreements – for example, in the construction sector – were ignored. Workers were often instructed by their employers to tell inspectors that they earned the agreed wage when they  Adrian Peter reported that ‘practically no Germans are working’ in such butcher companies any longer, characterizing the situation as ‘human trafficking with East Europeans’, with wages as low as €1.50 per hour (Bürkle 2006).   25 per cent of their turnover must be earned abroad (Deutscher Bundestag 2005, 13).

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did not. Monitoring was complicated by the fact that sometimes they did earn the minimum wage but worked a lot of overtime (DGB Bildungswerk 2005, 6–9). Thus one might assume that the main problem has not been the existing legal framework but the illegal and often criminal exploitation of individuals and firms, coupled with difficulties of enforcement. Also, the granted freedom of settlement/establishment produced unexpected outcomes which have been widely recognized and debated in public. After enlargement a growing number of cleaners, tilers, joiners, brick layers and floorers settled, especially near large cities. In 2004 the number of crafts enterprises rose by 4.8 per cent; more than 4,000 new businesses were established by A8 nationals; for example, the number of tilers doubled within a year of accession, many of them East Europeans. In some cities the businesses of nationals of the new member states comprised up to 50 per cent of their branch (Friedrich-Ebert-Stiftung 2005, 16; Süddeutsche Zeitung [Online] 15 April 2005; Düvell 2006, 72). The problem was that many of these persons were ‘fictitiously self-employed’ but in reality doing similar work to employees. Since self-employed persons are not obliged to pay social security contributions for unemployment insurance and old-age insurance (Bundesministerium der Finanzen 2006, 56) they could offer their services at unbeatable rates. Cases were even reported of German companies recruiting East European workers and registering a tiling business for them. The Munich Chamber of Crafts reported that sometimes up to ten craftsmen are registered under one address (Süddeutsche Zeitung [Online] 2005). 4.2 The Government’s Reaction: Tighter Controls For the government this situation called for action: not only did irregular workers flout the state’s authority and undermine the transitional periods but, more importantly, a huge amount of social contribution revenue was lost. Thus together with the social partners it committed itself to a response and in March 2005 created the ‘Taskforce against the abuse of freedom of services and settlement’, which analyses mechanisms and structures and works on measures against abuses. Importantly, the Taskforce paved the way for a better information exchange between different institutions. By means of changes in the Regulation on Commerce (Gewerbeordnung) and the Handicrafts Code it was made possible to transfer and compare data between the Chambers and the public supervisory organizations. Furthermore, other laws and structures have been changed, improving the information exchange between different German authorities. Additionally, the  It is crucial to mention that the developments described here cannot be traced back only to the freedom of movement, but also to reform of the German handicrafts code (Handwerksordnung). This law was liberalized at the beginning of 2004, abolishing many access restrictions to certain occupations. Since the reform, in order to start a business a craftsman does not in all cases has to be entered in the skilled trade register (Handwerksrolle) and prove certain qualifications.

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Chambers of Crafts are now allowed to ascertain whether persons indeed have residence where they want to enrol in the business register. One of the main problems with posted – and bogus self-employed – workers was that they (and/or their employers) often avoided paying social security contributions by relocating formal operations to letterbox companies abroad. In order to improve supervision in this regard the E-101 certificate – which certifies that no social security contributions have to be paid – is now centrally registered at the Pension Insurance Fund, making it easier to identify chain postings or whether posted workers are working consecutively for certain companies or are being sent from certain companies. The Finanzkontrolle Schwarzarbeit – Department for the Investigation of Undeclared Work – is the main organization monitoring illicit work in Germany; it is part of the Federal Customs Administration. The Taskforce has undertaken changes in the law to overcome the problem that it was not possible for the Finanzkontrolle Schwarzarbeit to ask foreign social insurance funds for relevant data. Furthermore, the German authorities established a dialogue with the relevant authorities of the foreign countries in which the sending companies were located – whether letterbox companies or not – in order to avoid misunderstandings, take the opportunity to explain the legal framework for posting workers to Germany and obtain a basis for information exchange. Also, the German authorities gave, for example, the Polish social insurance fund a list of relevant companies and asked them to identify letterbox companies. Generally the Department for the Investigation of Undeclared Work has intensified its activities in construction and meat processing. In 2005, for example, 445 meat processing companies were inspected, resulting in 186 suspicious facts. In March 2006 the Taskforce published guidelines for employees of relevant government institutions; its purpose is to achieve better understanding of this phenomenon and of the legal framework concerning posted workers and the fictitious self-employed (Bundesministerium der Finanzen 2006). 4.3 The Social Partners’ Reaction: Information Exchange and Higher Levels of Transparency The reaction of the trade unions – besides public lobbying to change certain laws – can be described in terms of three overarching topics: (i) improving the knowledge of trade unions and works councils abroad to make them more aware of the legal possibilities; (ii) information exchange with the previously named institutions; and (iii) informing foreign workers in Germany about their rights. i. Especially the trade unions in the border regions close to the new member states had already built up contacts with, for example, the Polish or Czech trade unions before enlargement. One main focus of their cooperation has been to close the knowledge gaps of foreign trade unions and to inform

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persons inside companies about existing EU and national social law and information or participation rights. In addition, they have provided training in successful collective bargaining and have informed them about the advantages and technical questions concerning the establishment of European Works Councils (see, for example, IG Metall Bezirksleitung Berlin-Brandenburg-Sachsen 2005, 6–11; and for a broader overview DGB Bundesvorstand 2004/2005). ii. The trade unions also initiated an information exchange with trade unions in the new member states about working and living conditions, as well as health and safety at work in both Germany and abroad. The aim of this ‘soft’ instrument was to develop solidarity between workers in the different countries by showing that their situations do not differ much and that they face the same challenges on both sides of the border (see, for example, IG Metall Bezirksleitung Berlin-Brandenburg-Sachsen 2005, 12–18). iii. Besides that, the unions directly targeted actual and potential migrants. The unions provided information – for example, by means of flyers in German, Czech, Polish, Russian and English – about workers’ rights of access to the German labour market, under what conditions posting is allowed, and so on. But information was also given about minimum standards in the German labour market (such as overtime, holidays, dismissal, and so on) (Interregionaler Gewerkschaftsrat Elbe-Neiße (IGR ELAN) et al.). 5. Labour Shortages and the Search for Migration Policy While the unexpected outcomes of the freedom of services and settlement could be counteracted by improving supervision and information exchange, Germany’s decision in favour of transitional periods and the question of whether this should be changed was trickier because it goes to the heart of one of Germany’s most controversial topics: does the country need more immigration? The discussion was made even more problematic by the interlinkage with other topics. The question of the right length of transitional periods was mixed up not only with the question of whether Germany needs a general change in its migration legislation, but also with that of whether Germany needs minimum wages. Instead of clear-cut solutions – reducing transitional periods, changing migration legislation, introducing a minimum wage – the result was rather step by step improvement. 5.1 The Debate on Migration Policy after Enlargement Although the general public and political changes led to a more positive reception for migration – see Section 1 above – another important development led to greater demand for labour migration: from 2006 Germany experienced a sustainable and

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significant economic upswing, leading to more and more visible labour shortages in certain highly sought-after skill categories. Such shortages had emerged in Germany also prior to accession. Two prominent and widely discussed examples are shortages within the ICT industry, beginning during the high tech boom at the beginning of the new millennium, which caused employers’ associations to lobby for a new recruitment scheme for highly skilled ICT specialists10 (Kolb 2004, 2005), and a growing shortage of doctors (for example, Fellmer 2007). The debate in Germany has smouldered for at least a decade but in 2007 the discussion on migration was again strongly enlivened because another shortage of labour came to public attention: besides shortages in branches such as health care and ICT Germany was short of engineers.11 Looking back at the restrictions on the admission of non-EU as well as A8-EU nationals for the purpose of labour migration it is not surprising that legislation was not prepared to cope with these challenges. The business associations tried to seize the opportunity to influence the government, for example, by presenting surveys that showed that the economy was in vital need of migrants – nationals from third countries as well as from new member states – and the changes brought in by the Immigration Act of 2005 were not sufficient. They thus demanded both cuts in the transitional periods for employees in the ‘next round’, as well as the establishment of a points-based system for the immigration of third-country nationals (DIHK 2005; DIHK 2006; Europäisches Forum für Migrationsstudien 2006). But the political class was somewhat divided on whether the transitional periods should be cut and/or whether a general reform of labour migration law was sufficient. Some were strictly opposed to cutting transitional periods, declaring that this would lead to a massive influx of workers, especially into the low-wage sector, while others favoured a change. Concerning reform of general labour migration legislation, the situation was similar. Interestingly for both discussions – transitional periods and general reform – different positions were held even within the two main parties, where totally opposed opinions could be found. For example, within the CDU/CSU proposals ranged from ‘cutting the wage limit to  GDP grew by 1.7 per cent in 2008 (2004: 1.1; 2005: 0.8; 2006: 2.9; 2007: 2.5). In 2007, 40 million people were in paid work, more than ever before – nevertheless unemployment rates remained high (Bundesministerium für Wirtschaft und Technologie 2008). 10 The ICT shortage led former Chancellor Gerhard Schröder to announce the ‘famous’ Green Card programme at CeBIT 2000. Initially, the trade unions were rather sceptical. In the end, and despite a debate on its (in)effectiveness, the Green Card can be seen as a symbol of a turnaround in the German immigration debate which paved the way for the new German immigration law described above. 11 Also widely recognized was the shrinking number of seasonal workers available for the harvest. For seasonal workers it is now more attractive to go to Scandinavia or the UK where work is not only less strictly regularized compared to Germany but wages are higher and working conditions better (Eppelsheim 2007; Kowitz 2007).

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€40,000 for highly skilled workers’ to ‘letting foreign workers in but only in small amounts and for a limited period’. In the SPD the positions were equally mixed (Kinast et al. 2007; Europäisches Forum für Migrationsstudien 2007). While politicians were struggling, other players had created instruments to cope with the challenges. The border partnership EURES–TriRegio, for example, was one example of institutionalized cooperation between trade unions, employers’ organizations and employment agencies from Germany, the Czech Republic and Poland, based on the European Employment Services programme, aiming at easier exchange of workers. The employers’ organizations hoped to gain access to a new labour force abroad and by including the trade unions working and social standards had to be guaranteed (Radio Praha 2007). The German Confederation of Skilled Crafts (ZDH), for example, in cooperation with partners from five EU countries has launched a website offering information for employees wishing to work abroad (ZDH 2007). It might be objected that this example was distinct and specific to a particularly challenged region. But all in all the trade unions and business associations proved in this instance to be one step ahead. The trade unions saw more or less the same need for reform of general labour migration law as the business associations. This led to a rare event: the business associations (DIHK and BDA) and the trade unions (DGB) reached a common position: they complained in a joint paper about a growing shortage of labour in many sectors. The lack of qualified workforce, they said, would block the creation of new jobs and stymie the economic boom. They regarded immigration as one possible measure and, in this regard, suggested lowering the income hurdles, as well as introducing a points-based system to systematically control immigration (heise-online 2007a, 2007b). While this joint position targeted reform of general labour migration law and would lead to more controlled immigration, the trade unions’ viewpoint on cutting the transitional periods – and so paving the way for ‘uncontrolled’ migration – was also clear: the DGB has always stressed that training more German workers should be preferred to opening the borders. But together with the Social Democrats the DGB opened up another discussion and linked it to the question of transitional periods:12 the discussion on minimum wages. The Grand Coalition – in office since 2005 – has from the beginning tried to restructure the German low wage sector, but has not been able to settle on a solution mainly because of the open question of minimum wages.13 A tactical push came 12 This discussion was linked not only to employees but to services. 13 The SPD, for example, initially wanted to reach a compromise before the end of 2006 (Lorenz 2006, 95). The discussion was not about the introduction of a general minimum wage but the introduction of minimum wages by two separate laws: if collective agreements cover more than 50 per cent of the employees in a branch, both employers and trade unions can settle on a minimum wage to be introduced via the general Posted Workers Act (this is already in force in, for example, the construction sector and eight more branches have already asked to participate); if coverage is below 50 per cent minimum wages may be

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in April 2007 from within the Labour Ministry, which was under Social Democrat control and in favour of minimum wages, stating that a solution has to be found before increasing liberalization of freedom of services and employees (Süddeutsche Zeitung [Online] 2007a). The proposal became more concrete in July 2007 when the State Secretary proposed lifting the restrictions on the freedom of movement for certain occupations before 2009, but at the same time implementing minimum wages. This idea was strongly supported by the DGB, which stated that an earlier ending of the transitional periods would lead to a downward wage spiral, which could be avoided only if the German labour market was fully protected against wage dumping. Without the implementation of minimum wages, restrictions on East European workers should be extended (Spiegel Online 2007a). Also, some members of the CDU/CSU and the Federal Employment Agency supported the idea of opening the borders earlier for certain occupations in case of labour shortages (Spiegel Online 2007b; Süddeutsche Zeitung [Online] 2007b). 5.2 Crawling Forward: Results of the Debate The results of these three more or less interrelated debates developed step by step. While in 2006 the German government decided to prolong the transitional periods for employees until 2009 (Newsletter Migration und Bevölkerung 2006) it went a little closer towards opening the borders in August 2007 by reaching a compromise to ease the immigration of engineers – and only them – from EU-12 countries from November 2007 onwards (Newsletter Migration und Bevölkerung 2007).14 The topic of transitional periods was enlivened again at the beginning of 2008 by the new SPD Minister of Labour. He stated that Germany should, given the still high figure of three million jobless, prolong the transitional periods until 2011 (Spiegel Online 2008a). In July 2008 the Grand Coalition, supported especially by the Ministry of Labour, reached the decision to extend the transitional period until 2011 – even though the decision does not have to be taken until early 2009. Conservatives pointed out that this decision renders the arguments of the SPD concerning the still outstanding minimum wage issue as obsolete. Before 2011, they argued, problems with foreign workers and wage dumping could not now arise. Interestingly, the decision to lengthen the transitional periods was reached in the round of negotiations in which the restructuring of the German low wage sector was also negotiated (Reuters 2008; Spiegel Online 2008b).15 But even introduced by the government and the social partners via the Minimum Working Conditions Act (Mindestarbeitsbedingungengesetz) (Bohsem 2008). 14  Immigration in this field was to be made easier by lifting the requirement that an employer had to prove that no equally qualified German worker was available (‘individuelle Vorranprüfung’). 15 We should add that this is the decision of the government but has yet to be put into law.

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though transitional periods in general have been prolonged, there was another step forward: university graduates from the new member states will be allowed to work in and migrate to Germany from the beginning of 2009. In addition, the immigration of highly skilled workers has been made easier by lowering the wage limit from €86,400 to €63,600 (Süddeutsche Zeitung 2008). As regards migration policy the results might be interpreted as a compromise which has satisfied most actors. Those who favoured controlled immigration might be satisfied by the possibility for university graduates from the new member states and engineers to immigrate from the beginning of 2009 and by the cut in wage limits for highly skilled workers. Those who were afraid of uncontrolled migration might be content with the general lengthening of transitional periods. Only the group that wanted to see more far-reaching measures, namely abandoning the transitional periods and introducing a points-based system to shape migration flows to the needs of the German labour market might have been disappointed. It is not surprising that the decision to prolong the transitional periods seemed to be the outcome of a deal within the round that also negotiated the restructuring of the low wage sector. With this decision political pressure to introduce minimum wages was reduced by means of lengthening the transitional periods. But the discussion has not been concluded. Although the government has agreed on two draft laws which would make minimum wages possible for certain sectors, no agreement has yet been reached with the parties and the German Länder (Bovensiepen 2008; Bohsem 2008). 6. Continuing Ambivalence? What conclusions can be drawn from this sketch of German migration policy? As we stated at the beginning substantial policy swings cannot be expected from German policy, especially on such a controversial topic as migration policy. The instruments and measures implemented or introduced against undeclared work resulting from misuse of the freedom of services or settlement were more or less beyond dispute: notwithstanding the rogue companies trying to undermine competition by illegal methods and the workers hired on such terms, all parties, both government and social partners, benefited from the higher level of control. But it seems also relevant to stress that the abuse of these freedoms can also be interpreted as the last remaining alternative for those wishing to migrate and that irregular migration was therefore at least partly homemade by the decision not to grant freedom of movement. In the period after enlargement Germany broke with its old slogan of not being a country of immigration, culminating in the new immigration law of 2005. Although it is understandable that Germany, at this point, was overstrained by the request to open its borders totally, one might come to the speculative conclusion that by not granting freedom of movement Germany has missed an opportunity to prove that a more liberal and bold approach to migration policy – as has been pursued in Ireland or Sweden – can deliver a

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positive return in the form of growth and labour market flexibility. This pragmatic and outcome-oriented stance towards migration could also have contributed to a further relaxation of the still emotional policy area of migration. A country that pretends to be able to fully control migration is much more likely to fail and thereby risks reinforcing negative attitudes towards migration. It seems ironic that politicians have paved the way to let in those – engineers and university graduates from the new member states – for whom, since 2007/2008, the absence of freedom of movement was an exception, not normality, and in the end sold this as progress in Germany’s migration policy. By doing so, Germany confirmed its self-image as not a country of immigration. To change this, more clear-cut results would have been needed, including cutting transitional periods and facing the risks as well as the opportunities of the Internal Market. It would also have meant the introduction of a points-based system for the immigration of third-country nationals. As the situation has presented itself since accession, migration still seems to be something forced on Germany from the outside (labour shortages, the EU, and so on). However, one must also conclude that Germany has made progress since enlargement and opened itself up, if only incrementally. Thus the ambivalence continues but a few steps have been taken towards selfacceptance as a country of immigration. Particularly interesting has been the part played by those normally known as veto players. In the period under examination, both sides – employers as well as employees – seem to have coped with the situation much more easily than the political class. The common paper issued by the DGB and the employers’ associations seems to confirm this thesis. With reference to the judgement that major policy swings are not to be expected in Germany it is important to note that in the case of migration policy the commitment of politicians to their long preached slogan that Germany is not a country of immigration seems to have been a more decisive factor in migration policy reform than obstacles raised by the other players. References Bade, Klaus J. (2007), ‘Leviten lesen: Migration und Integration in Deutschland’, IMIS-Beiträge No. 31, 43–64. Bade, Klaus J., and Michael Bommes (2004), ‘Einleitung: Integrationspotentiale in modernen europäischen Wohlfahrtsstaaten – der Fall Deutschland’, in Klaus J. Bade, Michael Bommes and Rainer Münz (eds), Migrationsreport 2004. Fakten - Analysen – Perspektiven, 11–42 (Frankfurt a.M.: Campus Verlag). Bade, Klaus J., and Rainer Münz (2002), ‘Einführung: Migration und Migrationspolitik – säkulare Entscheidungen für Deutschland’, in Klaus J. Bade, and Rainer Münz (eds), Migrationsreport 2002. Fakten – Analysen – Perspektiven, 11–29 (Frankfurt a.M.: Campus Verlag). Bohsem, Guido (2008), ‘Rebellion in der CDU’, in Süddeutsche Zeitung (18 July), 7.

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Bommes, Michael, and Holger Kolb (2004), ‘Integration – Perception and Reality’, in Werner Weidenfeld and Rita Süssmuth (eds), Managing Integration. The European Union’s Responsibilities towards Immigrants, 23–30 ������������ (Gütersloh: Bertelsmann). Bovensiepen, Nina (2008), ‘Mindestlohn für 3,6 Millionen Deutsche’, Süddeutsche Zeitung (17 July), 1. Bundesministerium der Finanzen (2006), Task Force zur Bekämpfung des Missbrauchs der Dienstleistungs- und Niederlassungsfreiheit. Monatsbericht des BMF (September). Berlin. Bundesministerium für Wirtschaft und Technologie (2008), Jahreswirtschaftsbericht 2008: Kurs halten. Berlin. Bundesverband der Deutschen Industrie (2001), ‘EU-Erweiterung zügig und mit realistischen Perspektiven vorantreiben’. Press release (February). Berlin. Bundesverband der Deutschen Industrie; Bundesvereinigung der Deutschen Arbeitgeberverbände; Deutscher Industrie- und Handelstag; Zentralverband des Deutschen Handwerks (2001), ‘Die Erweiterung der EU ist ein Wachstumsprogramm für ganz Europa’, Europa-Konferenz der Spitzenorganisationen der deutschen Wirtschaft. Press release (15 February 2001). Berlin. Bundesvereinigung der Deutschen Arbeitgeberverbände; Bundesverband der Deutschen Industrie (2001), ‘Stellungnahme. EU-Erweiterung: Freizügigkeit der Arbeitnehmer, Dienstleistungs- und Niederlassungsfreiheit’. Press release (February). Berlin. Bürkle, Dorothee (2006), ‘Die kriminelle Energie kennt keine Grenzen. Buchautor Adrian Peter über die Fleischindustrie’, Westdeutscher Rundfunk, [website], , accessed 7 September 2006. Deggerich, Markus (2005), ‘Der Osten kommt’, Spiegel Online (14 February) [website], , accessed 10 May 2008. Deutscher Bundestag (2005), ‘Dienstleistungsfreiheit nach der EUOsterweiterung’, Antwort der Bundesregierung auf die Kleine Anfrage der Abgeordneten Albert Rupprecht (Weiden), Dr. Georg Nüßlein, Peter Hintze, weiterer Abgeordneter und der Fraktion der CDU/CSU. Drucksache 15/5546 (27 May 2005). Deutscher Gewerkschaftsbund Bundesvorstand (Arbeitskreis Migration) (1999), ‘EU-Erweiterung: Arbeitnehmerfreizügigkeit, Dienstleistungsfreiheit, Grenzgängerbeschäftigung’. Press release (25 May 1999). Düsseldorf. Deutscher Gewerkschaftsbund (2000), ‘Die Zukunft der Europäischen Union: Osterweiterung, institutionelle Reformen, soziale Grundrechte’. Press release (7 November 2000). Brussels. Deutscher Gewerkschaftsbund (2001), ‘Wirtschaftliche Chancen und Herausforderungen der EU-Erweiterung. Anhörung des EU-Ausschusses des

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Deutschen Bundestages am 14. Februar 2001’ (14 February) [website], Deutscher Gewerkschaftsbund Bundesvorstand (2004/2005), Gewerkschaftsprojekte zur Förderung des sozialen Dialogs mit den Sozialpartnern aus den EU-Beitrittstaaten. Berlin. Deutscher Industrie- und Handelskammertag (2005), ‘Braun: Deutschland ist Gewinner der EU-Osterweiterung’. Press ����������������������������������� release (1 May 2005). Berlin. ������� Deutscher Industrie- und Handelskammertag (2006), ‘Braun: Arbeits- und Dienstleistungsmarkt jetzt schrittweise öffnen!’ Press ������������������������ release (21 March 2006) [website], , accessed 10 May 2008. DGB Bildungswerk (ed.) (2005), ‘Illegale Beschäftigung’. Migration und Arbeitswelt 35. Düsseldorf. Düvell, Franck (2006), ‘Die Entwicklung der Migration nach der EU-Erweiterung’, in Michael Bommes and Werner Schiffauer (eds), Migrationsreport 2006. Fakten – Analysen – Perspektiven, 63–112 (Frankfurt am Main: Campus Verlag). Eppelsheim, Philip (2007), ‘Getrübtes Spargelidyll’, Frankfurter Allgemeine Zeitung (Online) (19 June 2007) [website], , accessed 18 October 2008. Europäisches Forum für Migrationsstudien (2008), EFMS Migration Report [website], , accessed 23 May 2008. Fehrenbacher, Ansgar (2004a), ‘Die Freizügigkeitsregelungen im Rahmen der EU-Erweiterung und ihre ausländerrechtlichen Folgen’, Zeitschrift für Ausländerrecht und Ausländerpolitik 24 (1), 22–6. Fehrenbacher, Ansgar (2004b), ‘Übergangsregelungen bei der EU-Erweiterung und deren Auswirkungen im Ausländerrecht’, Zeitschrift für Ausländerrecht und Ausländerpolitik 24 (7), 240–46. Fellmer, Simon (2007), ‘Was erleichtert, was hemmt die Zuwanderung polnischer Ärzte. Analyse ihrer Migrationsentscheidung und der relevanten deutschen Zuwanderungspolitik’, Zeitschrift für Arbeitsmarktforschung 40 (1), 23–44. Freudenstein, Roland, and Henning Tewes (2001), Die EU-Osterweiterung und der deutsche Arbeitsmarkt: Testfall für die deutsch-polnische Interessengemeinschaft, ed. Konrad-Adenauer-Stiftung, Arbeitspapier/ Dokumentation, 33 (August). Sankt Augustin. Friedrich-Ebert-Stiftung (ed.) (2005), ‘Polen und Deutschland gemeinsam in der EU: Auf dem Wege zur vollen Dienstleistungs- und Arbeitnehmerfreizügigkeit in Europa?’ Eine gemeinsame Veranstaltung der Friedrich-Ebert-Stiftung und der Wirtschafts- und Handelslabteilung des Generalkonsulats der Republik Polen in Köln. Bonn, November 2005, Europäische Wirtschafts- und Sozialpolitik, 1.

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Fröhlingsdorf, Michael, Dietmar Hawranek, Nils Klawitter, Armin Mahler, Heiko Martens and Janko Tietz (2004), ‘Der Preis des neuen Europa’, Spiegel Online (26 April 2004), [website], , accessed 10 May 2008. Guiraudon, Virginie (1997), ‘Policy Change behind Gilded Doors. Explaining the Evolution of Aliens’ Rights in Contemporary Western Europe (1974–1994).’ Dissertation, Harvard University, Cambridge (Mass.). heise-online (2007a), ‘Wirtschaft und Gewerkschaft beklagen Fachkräftemangel’, heise-online (8 June) [website], , accessed 10 May 2008. heise-online (2007b), ‘Zuzug ausländischer Fachkräfte soll erleichtert werden’, heise-online (16 June) [website], , accessed 10 May 2008. Hunger, Uwe (2000), ‘Temporary Transnational Labour Migration in an Integrating Europe: the Challenge to the German Welfare State’, in Michael Bommes and Andrew Geddes (eds), Immigration and Welfare: Challenging the Borders of the Welfare State, 189–208 (London/New ������������������������������ York: Routledge.) IG Metall Bezirksleitung Berlin-Brandenburg-Sachsen (ed.) (2005), Fit für Europa. Dokumentation des Projektes ‘Unterstützung von Arbeitnehmervertretern Polens und ihrer Gewerkschaften bei der Einführung von EU-Bestimmungen zum sozialen Rechtsbestand’. Berlin. Interregionaler Gewerkschaftsrat Elbe-Neiße (IGR ELAN); Deutscher Gewerkschaftsbund Bezirk Sachsen (ed.) (n.d.), Arbeitsmarktzugang und gesetzliche Mindeststandards für Migrantinnen und Migranten. �������� Dresden. Joppke, Christian (1999), Immigration and the Nation-State: The United States, Germany, and Great Britain (Oxford: Oxford University Press). Katzenstein, Peter J. (1987), Policy and Politics in West Germany: The Growth of a Semisovereign State (Philadelphia: Temple University Press). Kinast, Juliane, Christian Reiermann and Michael Sauga (2007), ‘Auf FachkräfteFang’, Spiegel Online (18 June) [website], , accessed 10 May 2008. Kolb, Holger (2004), Einwanderung zwischen wohlverstandenem Eigeninteresse und symbolischer Politik. Das Beispiel der deutschen ‘Green Card’ (Münster, Westf.: LIT-Verlag). Kolb, Holger (2005), ‘Germany’s “Green Card” in Comparative Perspective’, in Holger Henke (ed.), Crossing Over. Comparing Recent Migration in the United States and Europe, 303–17 (Oxford/Lanham: Lexington.)

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Kowitz, Dorit (2007), ‘Das Märchen vom verrottenden Spargel’, Stern (Online) (24/2007) [website], , accessed 10 May 2008. Lorenz, Frank (2006), ‘EU-Dienstleistungsrichtlinie und gesetzlicher Mindestlohn – rechtliche Bewertungen und mögliche Schlussfolgerungen’, Arbeit und Recht – Zeitschrift für Arbeitsrechtspraxis 54 (3–4), 91–8. Newsletter Migration und Bevölkerung (2006), ‘EU: Diskussion um Freizügigkeit für osteuropäische Arbeitskräfte’, Newsletter Migration und Bevölkerung (March) [website], , accessed 10 May 2008. Newsletter Migration und Bevölkerung (2007), ‘Deutschland: Bundesregierung erleichtert Zuzug von Ingenieuren aus Osteuropa’, Newsletter Migration und Bevölkerung (October) [website], , accessed 10 May 2008. Oswald, Bernd (2003), ‘Der Staat zahlt, die Firmen profitieren’, Süddeutsche Zeitung (Online) (16 June) [website], , accessed 10 May 2008. Radio Praha (2007), ‘Mobilität auf dem Arbeitsmarkt: Gründung der EuresTriregio im Dreiländereck’ [website], , last updated 7 November 2007, accessed 15 August 2008. Radtke, Frank-Olaf (2006), ‘Die Integration der Migrantenkinder durch internationalen Vergleich: Aporien des Qualitätsmanagements in der Erziehung’, in Michael Bommes and Werner Schiffauer (eds), Migrationsreport 2006. Fakten – Analysen – Perspektiven, 165–201 (Frankfurt am Main: Campus Verlag.) Reuters (2008), ‘Deutschland schottet sich gegen Osteuropäer ab’ [website], , last updated 25 April, accessed 10 May 2008. Semeniy, Oleksiy (2003), ‘Die Rolle Deutschlands in der EU-Osterweiterung.’ Dissertation, Münster, Westfälische Wilhelms-Universität, Philosophische Fakultät. Spiegel Online (2004), ‘Wann sollen die neuen EU-Bürger hier arbeiten dürfen?’, Spiegel Online (11 June) [website], , accessed 10 May 2008. Spiegel Online (2007a), ‘DGB warnt vor Lohndumping’, Spiegel Online (24 July) [website], , accessed 10 May 2008. Spiegel Online (2007b), ‘Wirtschaft befürchtet Standortnachteile ohne neue Fachkräfte’, Spiegel Online (26 June) [website], , accessed 10 May 2008. Spiegel Online (2008a), ‘Scholz will Arbeitsmarkt für Osteuropäer erst 2011 öffnen’, Spiegel Online (22 February) [website], , accessed 10 May 2008.

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Spiegel Online (2008b), ‘Deutschland schottet sich weiter ab’, Spiegel Online (28 April) [website], , accessed 28 May 2008. Statistisches Bundesamt (ed.) (in cooperation with the Wissenschaftszentrum Berlin für Sozialforschung (WZB) and the Zentrum für Umfragen, Methoden und Analysen, Mannheim (ZUMA)) (2006), Datenreport 2006. Zahlen und Fakten über die Bundesrepublik Deutschland. Bonn. Statistisches Bundesamt (ed.) (2008), Bevölkerung und Erwerbstätigkeit. Bevölkerung mit Migrationshintergrund. Ergebnisse des Mikrozensus 2006. Wiesbaden. Storr, Christian, and Rainer Albrecht (2005), Das neue Zuwanderungsrecht. Textausgabe mit Einführung, Übergangsregelungen und allen Verordnungen. 2nd ed. (Stuttgart: Boorberg.) Straubhaar, Thomas (1996), ‘Schutzzoll auf Arbeit – Das neue Gesicht des Protektionismus’, List-Forum für Wirtschafts- und Finanzpolitik 22 (3), 209–21. Süddeutsche Zeitung (Online) (2005), ‘Der goldene Boden glänzt nicht mehr’ (15 April) [website], , accessed 10 May 2008. Süddeutsche Zeitung (Online) (2007a), ‘Müntefering drängt zu rascher Entscheidung’ (19 April) [website], , accessed 10 May 2008. Süddeutsche Zeitung (Online) (2007b), ‘Kauder warnt vor Billig-Jobbern’ (30 July) [website], , accessed 10 May 2008. Süddeutsche Zeitung (2008), ‘Kabinett öffnet deutschen Arbeitsmarkt’ (17 July), p. 5. Thränhardt, Dietrich (1996), ‘Germany – An Undeclared Immigration Country’, in Dietrich Thränhardt (ed.), Europe – A New Immigration Continent. ������������� Policies and Politics in Comparative Perspective, Studien zu Migration und Minderheiten 1, 198–223. 2nd ed. (Münster: Lit.). Vitt, Veronika, and Friedrich Heckmann (2000), ‘Dokumentation: Migration und Migrationspolitik in Deutschland 1998–2000’, in Klaus J. Bade and Rainer Münz (eds), Migrationsreport 2000, 223–78 (Frankfurt a.M.: Campus.) Zentralverband des Deutschen Handwerks (2007), ‘ZDH koordiniert Projekt für Mobilität von Arbeitskräften’ (24 August) (Berlin: ���������������������������� Zentralverband des Deutschen Handwerks).

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Chapter 8

The Dimensions and Effects of EU Labour Migration in Austria Ewald Walterskirchen

1. Introduction 1.1 Austria’s Unique Position as Regards Labour Mobility In the case of Austria, the free movement of persons within the enlarged EU involves not only a considerable inflow of migrants in general, but more particularly an inflow of cross-border commuters. This is due to Austria’s geographical situation and its continuing high wage differentials with the neighbouring new member states. Special attention should be paid to Austria’s geographical situation in Central Europe. Austria shares 1,256 kilometres of common borders with new member states, four to five million of whose citizens live near the Austrian border. The conurbations around Vienna, Graz, Linz and Klagenfurt are all close to the border. From conurbations such as České Budějovice, Brno, Bratislava, Győr, Sopron, Szombathely and Maribor it is 60 kilometres at most to the Austrian frontier. Two capitals, Vienna and Bratislava, are situated only 65 kilometres apart. The small distances between conurbations on either side of the border, especially the proximity of Vienna to the frontiers with the Czech Republic, Slovakia and Hungary, inevitably constitute a considerable attraction for commuters in the context of freedom of movement. By contrast, during previous enlargements the commuter problem was negligible. None of the EU countries that opted for free movement of persons in this enlargement – the United Kingdom, Ireland and Sweden – face a commuter problem due to their geographical situation. The European Commission argued that there would be no dramatic increases in migration and that the impact on EU labour markets would be limited. While this may be true for the EU labour market as a whole, it may not hold for neighbouring countries during the period of transition. Striking wage differences at current exchange rates that are highly relevant in respect of likely commuter movements – commuters combine higher wages with a lower cost of living – exist between Austria and most of the neighbouring   This chapter draws on an earlier paper by Biffl, Huber and Walterskirchen (2006).

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new member states (Czech Republic, Slovakia and Hungary), though it is true that wage differentials have declined in recent years: GDP per capita at current exchange rates has reached 30 per cent of the Austrian level in Slovakia and Hungary (37 per cent in the Czech Republic). Differences in GDP per capita (at purchasing power parities) – which are relevant for the decision to migrate – have also declined in recent years, but they are still considerable, particularly vis-à-vis Poland and Slovakia. In 2007, GDP per capita (PPP) reached 40 to 50 per cent of the Austrian level. Austria – followed by Germany – already has the largest proportion of workers from the new member states in its labour force (about 2 per cent in 2007). The overall share of foreigners within the employed population in Austria amounted to 12.5 per cent in 2007 and that within the total population to almost 8 per cent (Figure 8.1). Furthermore, the aggregate share of third-country nationals is much larger than in most other EU countries, at almost 8 per cent. In view of the expected migration and commuter potential from new member states special attention is being paid to the absorptive capacity of the Austrian labour market.

Figure 8.1  Foreign residents and employees in Austria

Notes: 1 Percentage of total employees. 2 Percentage of total population. Source: Federation of Austrian Social Security Institutions, Statistics Austria.

With respect to migration there are distinctive differences between the new member states. Not only are there substantial differences in present and anticipated income levels, but also in the expected structural adjustment processes – for example, further decline in agricultural and industrial employment – as well as in their historical migration patterns and levels. Here, too, the situation is not comparable to the one in Spain and Portugal when they joined the EC. At that time, the waves of migration from these countries towards the EC – resulting from disparate income levels – had already come to an end long before their accession. For most new

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member states migration flows to their target countries will presumably continue after the end of the transition period. 1.2 Historical Context Labour recruitment from abroad, particularly for the construction industry, started in Austria in the early 1960s. Bilateral agreements with Yugoslavia and Turkey to recruit temporary workers were followed by the establishment of recruitment offices in these countries. The intention of government and social partners was a guest worker regime to be modified in accordance with demand on the Austrian labour market. Migration policy was regarded as labour market policy. There were two major waves of economically motivated immigration to Austria accompanying economic boom periods. During the first immigration wave in the early 1970s the share of foreign workers in total employment rose from 4.7 per cent in 1970 to 8.7 per cent in 1973. According to monthly Austrian labour market statistics based on social security data, foreign workers are defined as employees – excluding self-employed – with non-Austrian nationality. They were called ‘guest workers’, and most of them were really guests who returned to their native country after the end of the boom and the two oil crises. By 1984, the share of foreign workers had fallen to 5.1 per cent, only slightly higher than the initial level in 1970. During the second wave of immigration the share of foreign workers increased from about 5 per cent in the late 1980s to 8.9 per cent in 1991. This period was characterized by an economic boom following German reunification. This time, most of the foreign workers did not return to their home countries after the end of the boom, and many of them brought their families in as soon as they were permitted to. Thus, the share of foreign workers in total employment increased steadily from about 9 per cent in the early 1990s to 12.3 per cent in 2007. Even with transitional measures, EU enlargement added considerably to this increase. In both periods, scarcity of labour was the main reason for bringing in workers from abroad. The close relationship between economic booms and immigration makes it clear that pull factors were crucial. Push factors, in contrast, were decisive for the inflow of refugees. 2. Analysis of Recent Migration Trends to Austria 2.1 Population Structure When we look at the population in general we get a similar historical picture. The share of foreign citizens in the population has increased more or less at the same pace as foreign employment rates. The share of non-Austrians in the population has been about one to two percentage points below their share in employment. This may be explained by commuters and the age structure of immigrants. The

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gap widened in recent years when young foreign workers without families began to come in, and the number of commuters from the new EU member states increased. The population data are not as reliable as the labour market statistics since the outflow of migrants has not always been reported in time. Immigrants usually register when they come to Austria, but not all of them deregister when they return to their home country or leave for another country. Migration flows are driven mainly by three factors: 1. economic immigration; 2. political refugees; 3. family reunification. In recent decades, ‘economic pull immigration’ has been the major factor. Refugees played an important role in some periods: for example, Hungarians in the 1950s and Bosnians in the 1990s. In general, it took some time before refugees were allowed to work in Austria. Family reunification has been the major source of immigration in recent years, when the high numbers of young male immigrants of the early 1990s were permitted to bring their families in. In January 2008, the Austrian population was about 8.3 million, including 855,000 non-citizens. More than one third of the population without Austrian citizenship had their origins in the former Yugoslavia, about one seventh in Turkey and in Germany. Over time, the share of Yugoslavians has declined substantially, while the share of immigrants from Germany and the new member states has increased. Statistics Austria provides information about the population with a migration background (foreign born to foreign parents). Accordingly, the proportion of first generation migrants in the Austrian population had risen to almost 15 per cent by January 2007, while the share of foreign citizens had increased to 10 per cent, thus increasing the gap to nearly 5 per cent (Biffl 2007). Illegal immigration stabilized in 2006, according to the ‘illegal immigration’ report of the Ministry of the Interior. The number of people apprehended was 39,400 (Biffl 2007); half of them were Romanians. Trafficking in and smuggling of human beings plays an important role. Austria is considered to be both a destination country and a transit country for illegal migrants on their way to other EU member states. The resident population has risen significantly in recent years in Austria (Lebhart and Marik-Lebeck 2007), in the main as a result of net migration (Figure 8.2). In 2007, population growth (+33,300) continued to be substantial as a result of immigration. The total inflow of migrants amounted to 32,700, the effect of a net inflow of foreigners of 38,200 and a net outflow of nationals of 5,500. Net migration amounted to 0.5 per cent of the population. In 2007, net migration flows were higher than in 2006 (27,800), but much lower than in 2004 and 2005 (about 50,000). The increase in net migration compared with 2006 was due primarily to the higher inflow of Romanians (2007: 5,700).

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Figure 8.2  Development of population and migration in Austria Source: Statistics Austria.

As a result of the long history of immigration, inflows due to family reunification have a particularly pronounced weight. A relatively new phenomenon is the immigration of Germans, particularly from the regions of the former East Germany – partly as a consequence of the recent German labour market reforms. On the other hand, migration flows from Austria to Germany have declined due to weak economic pull factors from Germany. The major inflow of settlers into Austria is through family reunification (Nowotny 2007). This represents a change in the migration regime. Up to the early 1990s essentially foreign workers came in, while since the new legislation in 1993 a switchover to family reunification has taken place (see Chaloupek and Peyrl in this volume). 2.2 Migration to Austria in the International Context The flows of immigrants to Ireland and the UK appear to have been much larger than expected. Projections made by Boeri and Brücker (2005) indicate that the migration flows to Ireland and the UK are four to five times larger than expected, while the flow to Sweden is less than expected. This raises the question of whether this is the result of diversions of traditional regional migratory flows – patterns – due to the restrictions imposed by the other EU-15 countries. Sweden, however, even with its labour market restrictions lifted did not attract half as many migrants as Austria. Indications are that it is above all economic growth and employment opportunities which act as pull factors. Also, the language in the receiving country – English, German – appears to play a role. Austria has experi­enced substantial employment growth which has acted as a pull factor for workers from other EU-15 countries, particularly Germany. The number of Germans coming to work in Austria has increased to such an extent

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that now more Germans are working in Austria than Austrians in Germany. The reverse was previously the case. Clearly, as employment conditions in Germany deteriorated relative to Austria, Germans started to flow into Austria in larger numbers, particularly from the poor regions of former East Germany. Judging from the experience with Germany, increasing flows of migrants from neighbouring countries in the East may be expected as restrictions on free labour movement are lifted in Austria. 2.3 Migration Potential Forecasts of migration potential are extremely uncertain. In the 1990s a number of studies of migration potential produced a wide range of estimates. The main estimate for annual migration from the new member states to Austria after lifting the transitional arrangements ranged between 23,000 and 40,000 per year (0.7 and 1.2 per cent of employees). The experience with enlargement so far has done little to resolve the uncertainty concerning migration potential. In some countries that did not apply waiting periods for free access to the labour market or lifted them subsequently, actual migration exceeded the estimated potential substantially – notably in Ireland and the UK – while in others migration was substantially lower than expected, for example, in Sweden and Italy. These developments could be due either to differences in national migration regimes, a rerouting of migrants who would otherwise have gone to countries applying the transitional regimes, differences in economic growth and thus employment opportunities for migrants or simply a general underestimation of the mobility of the workers from new member states. Which of these interpretations applies is currently not clear. 3. Characteristics of Foreign Workers in Austria since 2000 The employment of foreign workers has increased continuously since 1999. This is mainly the result of a significant increase in immigrants from (East) Germany and the new EU member states. The latter was due to new legislation (2003) modelled on the US green card. It granted third-country citizens who have legally resided in Austria for five years permanent residence status with the right to access to the labour market without the need for a work permit. In Austria, employment growth has become more dynamic since 2003 (Hofer 2008). About half the employment growth was due to foreign workers. The employment of workers from the new member states has increased significantly in the last couple of years. This may be taken as a sign of deepening integration in the enlarged EU. According to social security data, Austria had 412,600 foreign wage earners in 2007; that is, 21,900 or +5.6 per cent more than in 2006. The current year will see another boost to foreign employment by about 25,000. Foreign workers’ share

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in employment will rise to 12.5 per cent in 2008. The exact number of foreigners is somewhat overestimated in the social security data because naturalizations become known to the social security department only with a certain time lag. 3.1 Nationality Over the long term, there has been a shift in immigration from Yugoslavs and Turks to Germans and citizens from the new EU member states. Between 2000 and 2007 the number of the latter increased by 23,000 to 70,000 (+50 per cent); thus, the growth rate was higher than that of other foreign workers in Austria, except Germans. The comparatively small increase in the number of workers from the new member states – compared with East Germans – indicates that the transitional agreements on the movement of workers have had the expected effect of reducing inflows. Only those citizens from the new member states could obtain free labour movement who had been legally employed in Austria for 12 months prior to enlargement. The largest groups of employees from the new member states are Hungarians (18,000) and Poles (14,600), followed by Slovaks, Czechs and Romanians. Hardly any citizens from the Baltic States are working in Austria (Table 8.1). It is interesting to note that while the migration rate of Hungarians to other receiving EU countries is rather low compared with other new member state citizens, in Austria their number is the highest and also the increase over time has been the fastest (see Hárs in this volume). This reflects the geographical and cultural vicinity of the two countries. Hungarians in Austria typically work in tourism, not far from the border – for example, in Burgenland. Poles typically work in the construction industry, all over the country. The sizeable inflow of workers from Germany – +43,000 between 2000 and 2007 – may be taken as an indicator that cross-border labour mobility can be strong even between countries with similar income levels, if unemployment is high and rising in the source region and unemployment benefits are meagre or of short duration. In most new member states unemployment rates are higher than in Austria; in Poland and Slovakia, according to the definition of the European Labour Force Survey, they are currently as high as 8.5 and 10.5 per cent respectively, for mobile youth even higher. This compares to an unemployment rate of about 4.5 per cent in Austria. The share of workers from pre-war Yugoslavia has been declining, from nearly 50 per cent in 1995 to less than 40 per cent in recent years. Also, the share of Turks has declined. This is due to the rapid increase in naturalization rates rather than a reduction in inflows.

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Table 8.1  Foreign employees in Austria by nationality Employees

Hungary Former CSFR Poland Romania Slovenia Bulgaria Other NMS 12 NMS Former Yugoslavia except Slovenia Germany Turkey Others Total

2000–2007

2000

2003

2007

10 399 9 979 11 158 9 660 3 603 1 528 115 46 442

12 657 11 400 11 549 10 687 3 999 1 798 186 52 274

18 042 16 154 14 594 13 094 5 301 2 356 337 69 877

+ 7 643 + 6 175 + 3 435 + 3 434 + 1 698 + 828 + 221 + 23 435

154 889

157 123

159 111

+ 4 222

20 887 57 128 40 503

31 525 55 689 53 751

63 830 55 126 64 634

+ 42 943 – 2 003 + 24 131

319 850

350 361

412 578

+ 92 728

Source: Federation of Austrian Social Security Institutions.

3.2 Gender and Age The share of male foreign workers in employment is higher than that of females (Table 8.2). In 2007, 40 per cent of all foreign workers from the new member states were women; this was lower than the share of women in total employment (46 per cent), but slightly higher than the share of women in total foreign employment (39 per cent). Most foreign women work in health and household services, tourism and the retail trade. The majority of male foreign workers are employed in manufacturing industry, construction and tourism. The number of female employees from the new member states rose more quickly than that of men. Between 2000 and 2007, it increased by 12,600 (+85 per cent). Male employment from the new member states rose only by 11,400 (+37 per cent). This development may be partly explained by family reunification. The share of women in foreign employment from the new member states rose from 33 per cent in 2000 to 40 per cent in 2007. This increase was much stronger than for total foreign employment (+2.6 percentage points). However, the proportion of women in foreign employment from the new member states remained  The following characteristics of new member state migrants – gender, age and industry – are based on data from the Public Employment Service. These data differ somewhat from the social security statistics used so far.

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clearly below the Austrian average. The share of women in foreign employment also differs greatly by country of origin. Foreign employment from Hungary is male-dominated (68 per cent), while almost half of the immigrant workers from Romania and Bulgaria are women. Table 8.2  Foreign employees in Austria by nationality and gender 2000

Hungary Former CSFR Poland Romania Slovenia Bulgaria Other NMS 12 NMS Former Yugoslavia except Slovenia Germany Turkey Others Total

2007

2000–2007

Males

Females

Males

Females

Males

Females

7 826 6 494 7 298 5 781 2 867 814 64 31 144

2 812 3 570 3 690 3 595 1 065 672 58 15 462

12 637 9 138 9 113 6 624 3 842 1 075 101 42 530

5 611 7 176 5 819 6 278 1 664 1 262 239 28 047

+ 4 812 + 2 644 + 1 815 + 842 + 975 + 261 + 38 + 11 387

+ 2 799 + 3 606 + 2 129 + 2 683 + 598 + 590 + 181 + 12 585

89 088

58 548

82 911

59 981

– 6 177

+ 1 433

12 691 40 205 22 378

9 467 14 795 13 085

40 322 36 537 36 904

24 679 15 234 24 365

+ 27 631 – 3 669 + 14 526

+ 15 211 + 440 + 11 280

195 505

111 357

239 204

152 306

+ 43 699

+ 40 949

Source: Public Employment Service Austria WIFO calculations.

The age structure of foreign workers from the new member states differs from that of other countries (Table 8.3). The share of workers under the age of 25 is relatively low, at 9 per cent, compared with 24 per cent among employees with Turkish nationality. More than 60 per cent of foreign workers from the new member states are between 25 and 45 years of age. Among workers from Poland, the share of employees over 45 is relatively high (40 per cent).

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Table 8.3  Foreign employees in Austria by nationality and age group 2000

Hungary Former CSFR Poland Romania Slovenia Bulgaria Other NMS 12 NMS Former Yugoslavia except Slovenia Germany Turkey Others Total

2007

Until the age of 25

25 to 45 years

45 years and more

Until the age of 25

25 to 45 years

45 years and more

856 773 816 943 344 118 14 3 864

6 601 6 395 6 686 6 857 2 528 1 040 94 30 200

3 179 2 896 3 487 1 576 1 061 328 14 12 542

1 103 1 358 1 398 1 725 386 183 49 6 202

11 818 10 200 7 641 8 431 3 333 1 569 250 43 243

5 326 4 756 5 893 2 746 1 786 585 41 21 133

22 802

84 753

40 080

19 866

76 711

46 315

2 752 13 533 3 958

14 603 33 181 25 806

4 803 8 286 5 700

10 963 12 218 8 095

38 866 29 974 40 028

15 172 9 578 13 146

46 908

188 543

71 411

57 344

228 822

105 345

Source: Public Employment Service Austria, WIFO calculations.

3.3 Economic Activity of Foreign Employees by Industry Most foreign employees work in seasonal industries and in jobs with rather poor working conditions. The share of foreign workers from the new member states is very high in agriculture, but also in tourism, trade and construction (Table 8.4). Their share is also high in health and household services, as well as cleaning. In 2007, about 17 per cent of all foreign workers came from the new member states. In agriculture, their share in all foreign workers was 65 per cent, but only 18.5 per cent in trade, tourism and transport, 15 per cent in industry and 12 per cent in real estate and business services. Immigrants from the new member states among foreign workers are thus underrepresented in industry, tourism and services. The high share of foreign workers from the new member states in agriculture is mostly linked to harvest work and other seasonal activities, particularly near the Austrian border.

29 908 10 557 14 852 8 100

1 516

254 242 451

7 234

Total

Source: Public Employment Service Austria, WIFO calculations.

76 038

3 392 2 285 1 997 2 809 1 849 253 36 12 621

966 1 086 1 352 942 366 54 7 4 772

Industry, including energy

Hungary Former CSFR Poland Romania Slovenia Bulgaria Other NMS 12 NMS Former Yugoslavia except Slovenia Germany Turkey Others

Agriculture, forestry, fishery

43 964

4 000 6 555 2 726

22 061

2 393 1 429 2 880 1 080 740 90 10 8 622

Construction

Table 8.4  Foreign employees in Austria by nationality and industry 2007

135 152

23 706 16 406 23 948

45 709

8 057 6 584 3 915 4 147 1 629 913 138 25 383

Trade, tourism and transport

73 752

14 642 9 835 12 733

27 726

1 710 1 707 2 118 2 147 526 548 61 8 816

Real estate and business activities

55 369

11 840 3 880 13 312

15 971

1 731 3 224 2 671 1 777 396 478 88 10 365

Other service activities

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3.4 Earnings and Skill Levels Migrants are not only more likely to be affected by unemployment, but they also experience discrimination in terms of remuneration and career opportunities. This is mainly because they are concentrated in small enterprises, low-wage sectors and seasonal industries. There are hardly any reliable data on the hourly wages and working conditions of foreign workers in Austria. Many foreigners work in seasonal industries and in jobs – cleaning, elderly care, and so on – for which Austrians are hard to find. It may well be assumed that the working conditions of foreign workers in these jobs are inferior. Social security data show that the monthly wages of foreign blue-collar workers are about 15 per cent below the average. This difference is influenced by working hours and skill levels. It is likely that foreigners work more hours per month, but they are employed mainly in less skilled jobs. Blue-collar workers from Germany and Poland have about 10 per cent lower monthly income than Austrians, while workers from the former Yugoslavia and Turkey get 15 per cent less and workers from Hungary, Slovakia and the Czech Republic 20 per cent less than Austrians (Table 8.5). These data are not controlled for the working time, age and skills of blue-collar workers. It should be noted that a large part of immigrants from Poland work in construction, where overtime is the norm. Workers from Hungary, Slovakia and the Czech Republic are typically young immigrants, who tend to have lower incomes. The difference in monthly income between foreign and Austrian workers is much smaller for women than for men. The main reason appears to be that Austrian women more often work part-time. Table 8.5  Median income of employees in Austria in 2005 by nationality and gender  

Total

Males

Females

Foreign employees total Germany Former CSFR Former Yugoslavia Poland Romania Turkey Hungary Others

85.2 91.5 80.0 85.6 89.5 83.0 84.6 79.1 84.0

83.1 90.4 76.3 84.0 85.5 82.9 81.9 75.8 81.6

96.5 97.5 90.7 98.0 87.4 93.6 93.5 95.8 97.2

Source: Federal Chamber of Labour.

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No recent data are available on the educational profile of foreign citizens. A survey carried out in 2002 showed that persons from the then EU member states and accession countries of Central and Eastern Europe were well educated, but persons from the former Yugoslavia and Turkey had a low formal education (Bock-Schappelwein 2006). Labour market policy in Austria was not very successful in attracting qualified employees from abroad. There was a strong increase in the number of immigrants at the upper and the lower ends of the educational profile, but a shortage of skilled workers. Additional qualified workers could be attracted from the new member states, but they have sometimes been employed in jobs below their educational level (Huber, Bock-Schappelwein and Bremberger 2008). The educational profile of immigrants from the new member states appears to be much better than that of former inflows from the former Yugoslavia and Turkey, but it is difficult to assess whether these abilities are adequately used or not. Lack of education is most pronounced among the unemployed. In 2004, almost half of the foreign unemployed had not finished elementary school (compared with 22 per cent of the Austrian unemployed). 3.5 Employment Status and Unemployment Rates of Foreign Workers Most foreign workers in Austria are dependent employees. They are defined as workers with non-Austrian nationality. Their number increased from 319,900 in 2000 to 412,600 in 2007; that is, from about 10 to 12 per cent of total employment, although in recent years a high number of foreign citizens have become Austrians. A new phenomenon is bogus self-employment from the new member states. Individuals start a business on their own account in a liberalized trade – freies Gewerbe – associated with construction work (for example, gypsum wall builders), and then end up doing regular construction work for employers. Thus, they are de facto dependent employees. Estimates by the Chamber of Commerce indicate a minimum of about 10,000 inflows, approximately 3,000 to 5,000 on an annual basis. The unemployment rate of foreign workers is substantially higher than that of Austrians. In 2007, almost 9 per cent of the foreign labour force was unemployed, with the total unemployment rate amounting to 6.2 per cent (according to Austrian definitions). The unemployment of foreign males is higher than that of women, but the gap has declined in recent years to about one percentage point. Foreigners used to have higher unemployment rates in most occupations, with the exception of tourist services and agriculture, where foreigners tend to have a contract for a fixed period, which does not automatically confer eligibility for unemployment benefits (Biffl 2007). The increase in unemployment rates since 2000 has been much larger for foreigners than for the native labour force. It is above all the unemployment rates of migrant workers from traditional source countries – that is, the former Yugoslavia

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and Turkey – which have risen substantially. In contrast, the unemployment rates of citizens from the new member states have risen less than proportionately, except in the case of Poles. Persons from the new EU member states in 2007 had rather moderate unemployment rates (6.8 per cent on average), ranging from 4.4 per cent for Hungarians to 8.5 per cent for Poles (in contrast with those of Turkish, at 11.7 per cent, and former Yugoslavian employees, at 9.5 per cent) (Table 8.6). Informal workers are concentrated in elderly and child care, as well as cleaning in the household sector. A large number of women, mainly from Slovakia, are engaged in care work. The employing households not only pay significantly lower wages than the legal minimum, but in addition avoid paying social security contributions. Illegally resident foreign workers in Austria have access to public health care in case of emergencies, but they are not eligible for social security benefits (Forba 2007). Table 8.6  Foreign unemployment in Austria by nationality Unemployed

Hungary Former CSFR Poland Romania Slovenia Bulgaria 12 NMS Former Yugoslavia except Slovenia Germany Turkey Others Total

Unemployment rate %

2000

2003

2007

2000

2003

2007

425 532 817 779 347 104 3 011

610 784 1 196 1 055 440 162 4 266

825 1 096 1 350 1 155 442 207 5 108

3.9 5.1 6.8 7.5 8.8 6.3 6.1

4.6 6.4 9.4 9.0 9.9 8.2 7.5

4.4 6.4 8.5 8.1 7.7 8.1 6.8

12 974

19 031

16 766

7.7

10.8

9.5

1 549 5 647 2 576

2 438 8 019 3 034

3 409 7 283 3 866

6.9 9.0 6.0

7.2 12.6 6.7

5.1 11.7 8.0

25 758

38 209

39 563

7.5

9.8

8.8

Source: Public Employment Service Austria, WIFO calculations.

4. Impact of Migration on the Austrian Labour Market 4.1 Labour Market Supply and Demand The absorptive capacity of the labour market has not been enough to accommodate the substantial rise of the labour supply in the last couple of years. Between 2000 and 2007, labour supply increased by about 1 per cent per annum; about half

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of the increase was due to foreigners. The absorptive capacity was raised by the economic boom, but that ended mid-2008. Even though labour demand grew substantially – largely part-time work – unemployment continued to rise slightly. The total unemployment rate increased between 2000 and 2007 by half a percentage point, the unemployment rate of foreign workers by 1.5 percentage points. Obviously competition among foreign workers increased as young and middle aged newcomers flowed into the labour market and filled the jobs formerly occupied by resident foreign workers, often older workers. Half of the rise in unemployment hit foreign workers in Austria. Competition for jobs traditionally held by foreign workers has not only risen because of increased inflows of migrant workers from abroad, but also due to increased labour market inflows from within. The so-called integration package, a combination of legal changes and implementation procedures, has opened up access to the labour market for family members of migrant workers who did not have special skills which would have allowed them to enter the labour market upon arrival in Austria. Since the majority of those migrants have resided in Austria for more than four years, the introduction of the settlement certificate – Niederlassungsnachweis – in 2003 led to a substantial increase in the labour supply of un- and semiskilled migrants. This rise in the labour supply in specific sectors/ occupations has contributed to the more than proportional rise in unemployment of migrant workers (substitution effect). There appears to be a slightly negative effect of rising foreign workers’ shares on wages per worker (Huber 2008) since foreign blue-collar workers earn 15 per cent less per month than Austrians. This is likely to have an effect on the wages of Austrian workers and the preference of entrepreneurs for foreign workers. Moreover, through the mechanism of an increasing labour supply relative to demand and the rise of unemployment the bargaining power of unions has been reduced, thereby exerting downward pressure on wages. 4.2 The Effects of Free Movement of Labour: A Social Experiment in Austria in 1990–91 In the early 1990s, the inflow of foreign workers was liberalized in Austria for about two years. The idea was to overcome the labour shortage in the economic boom following German reunification. The experiment was stopped when the share of foreign workers in employment reached 10 per cent. What can we learn from this social experiment? The effect on GDP growth and employment was highly positive. Foreign workers added 3 per cent to total employment within two years. GDP and employment growth were definitely higher than they would have been without immigration. However, there was an ‘overshoot’ on the part of immigration. Older Austrian and foreign workers were replaced by young foreign workers. As a consequence, the unemployment rate increased by more than one percentage point in an economic boom period. We

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may say that an inflow of 100,000 persons added 70,000 to employment and 30,000 to unemployment. Another important effect of immigration in the early 1990s was a strong rise in nationalism (Walterskirchen 2002). The percentage of the vote for antiforeigner parties increased to about 20 per cent. Austria’s insistence on transitional agreements within the enlarged EU was certainly affected by the outcome of this social experiment in the 1990s. 4.3 Regional Effects Immigration is concentrated in Vienna, where the unemployment rate is already far above the national average. In 2007, the share of foreigners in employment was almost 17 per cent in Vienna, compared with a national average of 12 per cent. The share of foreigners is also relatively high in the Western parts of Austria, but it is relatively low in the Southern regions. Commuting is, of course, concentrated in the Austrian border regions adjoining the new member states. They are characterized by a below-average level of economic development, a high share of agricultural employment and a low share of service sector employment. In many of these regions low-wage industries – both in services and manufacturing – dominate the industrial employment structure and the labour market situation reflects the structural problems of the regions. In many cases unemployment rates exceed the national average and participation rates, in particular of females, are generally low. Table 8.7  Regional unemployment rate in Austria   Vienna Lower Austria Burgenland Styria Carinthia Upper Austria Salzburg Tyrol Vorarlberg Austria

2007 8.5 6.3 7.6 6.4 7.3 3.6 4.0 5.3 5.7 6.2

Source: Public Employment Service Austria, WIFO calculations.

Furthermore, some of the Austrian provinces – in particular Burgenland and Styria – located at the borders of the new member states are among those with traditionally

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high unemployment rates. However, Vienna has experienced the highest rise in unemployment rates and falling employment levels in the last decade. Registered unemployment rates in Vienna were 8.5 per cent in 2007 (see Table 8.7). The major reason for these substantial labour market problems is structural changes: on the one hand, de-industrialization in the city and on the other stagnating public sector employment. While most border regions benefited from increased trade after the opening of the markets of Austria’s Eastern European neighbours in the early 1990s, experiences since EU accession in 2004 are mixed. At the provincial level, employment developed below the national average in two – Vienna and Burgenland – out of five border regions. Industrial border regions showed a clearly worse employment growth than comparable inland regions. In the long run the deepening integration between Austria and the new member states in general, and in the border regions in particular, will lead to an acceleration of the regional specialization process. Particularly in rural border regions this is expected to lead to declining employment in both low-productivity manufacturing and service sectors. In general the effects of rising competition will be felt more strongly in these regions because also the producers of non-tradable services will experience additional competition. 4.4 Cross-border Commuter Migration and its Impacts As already pointed out, cross-border commuting enables workers living sufficiently close to the border to combine the high wage levels at the (accessible) work place across the border with the low costs of living in the original place of residence. This difference is particularly pronounced as the currencies of the new member states continue to be undervalued – in relation to PPP rates – and, though it is projected that such undervaluation will decline gradually, the time horizon and extent of that decline are still unclear. The actual volume of cross-border commuting also depends, of course, on the accessibility of the labour market to the foreign work force. This accessibility has been much greater in the enlargement of 2004 than was the case with the accession of Spain and Portugal. As already mentioned, the length of the border Austria shares with the new member states is 1,256 kilometres with almost no geographical barriers and very high permeability, whereas Spain and France have a common border of 576 kilometres, 80 per cent of which is very mountainous. The size of the labour force in the border regions in relation to the total labour force was much smaller – 12 per cent – in France in 1986 than it is in Austria, where 77 per cent of the labour force lives in the provinces within reach of workers from the border regions of the neighbouring new member states. The situation with respect to commuting is difficult to ascertain. Apart from the research deficit with respect to commuting potential in the context of Austria’s unique geographical position, there is also a lack of recent historical experience from which commuting potential could be inferred. Early estimates of commuting

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potential expected some 110,000 commuters from the neighbouring countries to Austria within five years of accession and estimates of the long-run potential reached 200,000 commuters. However, traffic infrastructure, settlement structures and housing market conditions may limit the number of daily commuters. Recent poll research conducted in the Austrian provinces of Vienna, Lower Austria and Burgenland, as well as in the border regions of the Czech Republic, Slovakia and Hungary suggests that commuting potential may be of the same magnitude as migration potential and somewhat higher than estimated previously. 5. Conclusions and Policy Implications 5.1 Can Eastern Enlargement be Compared with Southern Enlargement? The labour migration experiences of previous enlargements are frequently raised in connection with Eastern enlargement. It is argued that transitional arrangements were not necessary as no increase in labour migration could be observed. As a matter of fact, in the case of Southern enlargement some net return migration was recorded. This was the result of two opposing flows, whereby highly skilled migrants tended to migrate to the North in larger numbers than in the past, but these outflows were more than compensated by the return migration of un- and semiskilled migrants. Overall income differences between the new member states and the EU-15 today are, by and large, comparable to those that then existed between the Iberian Peninsula and the EC. However, the situation today differs in several other respects, with the result that a simple comparison between the two enlargement processes does not seem valid. The differences include: • •

•

the phenomenon of commuting; a considerably lower stock of migrants from these regions as a result of barriers to entry at the time of the Cold War and also after opening the borders; therefore a backlog of people who are potential migrants is to be expected; a considerable number of workers from these countries are already working in Austria; a policy priority is to allow their family members to enter the labour market; this is one reason for the substantial inflow of workers from the new member states to the labour market without a permit. This policy priority, which promotes socio-economic inclusion and cohesion in Austria, runs counter to uncontrolled inflows which can be expected to be substantial as a result of pull factors and chain migration.

The most prominent difference between the enlargements of 1986 and of 2004, however, concerns opportunities for cross-border commuting.

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5.2 Conclusions for Austria Austria has never defined itself as an immigration country, although in fact more than 10 per cent of the population has no Austrian passport. Migration policy has been oriented towards a guest worker regime and on the principle of rotation of foreign workers (Forba 2007). Austria’s geographical situation and the high degree of uncertainty about the impact of free mobility of labour and service provision has been the major reason for maintaining the transitional arrangements in Austria. Employers can be expected to pave the way for citizens of the new member states to work in Austria, basically with the help of recruitment agencies – a strategy which could be observed in the surge of German worker inflows to Austria. Recruitment will merely be diverted, from the current regions of Dresden/Leipzig towards the East, as one may expect to find workers who are willing to work in Austria for higher wages than those in the source regions. The basic problem is that individual enterprises’ demand for foreign workers may reach a level that the Austrian labour market is unable to absorb. Experience indicates that enterprises prefer to recruit newcomers from abroad rather than resident migrant workers who have lost their jobs. Already today the re- and upskilling of unemployed migrant workers is a challenge for regional and structural employment and growth policies, together with the integration of a large and rising number of immigrants (Biffl and Bock-Schappelwein 2007). Despite the transitional regulations, in Austria the official inflow of workers from the new member states has been larger than in Sweden, a country that applied the EU rules of free mobility of labour from the day of accession. This may indicate that the special features of Austria relative to the new member states, in particular neighbourhood and an actively pursued renewal of historical socio-economic and cultural ties, act as attractors beyond economic opportunities (trust building crossborder cooperation). Austria granted free mobility of labour to those citizens of the new member states who had already worked in Austria before May 2004, including their family members; this, together with the practice of giving priority to citizens of new member states in case of work permit applications (labour market testing), was the main reason for the increase. It has been argued that transitional regulations are not warranted as they promote clandestine work rather than legal employment. This hypothesis appears not to have been corroborated as there is little indication of a rise in clandestine work in Austria – one must admit, however, that this is difficult to verify as no survey of the extent and structure of clandestine work has been undertaken. It is known that clandestine work is pervasive in certain jobs, in particular in the care sector as well as in households in general (probably some 10,000 persons in household and care services). Regardless of the legal ramifications, economic growth and employment opportunities attract migrant workers. The high unemployment in Germany,

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particularly former East Germany, has resulted in increased inflows of Germans to Austria even at similar wage levels. The absorptive capacity of the Austrian labour market reached its limits in the wake of outsourcing of work and continued inflows of migrants after 2001, however. Thus it can be shown that it is increasingly difficult to target worker inflows in relation to economic development objectives, given the current migration policy instruments. Austria has high inflow rates of third-country migrants, compared with other EU countries (Biffl 2007). The major inflow is the result of family reunion and humanitarian intake. In order to promote the employment opportunities and thus the integration into the labour market of the large numbers of migrants already resident in Austria, the government intends to prolong the transitional regulations until 2011. This does not imply a halt to new inflows from the new member states, but rather regulated inflows according to bilateral agreements – for example, cross-border agreements – in line with socio-economic regional development plans (CENTROPE). In recent years it has become clear that the integration of foreign workers into the labour market in the traditional skill segments is becoming increasingly difficult as, in the wake of globalization, Austria is outsourcing production processes in which migrant workers tended to find employment (Huber et al. 2008). Thus a major effort is needed to upgrade the skills of migrants already residing in Austria so that they can profit from the growing job opportunities at the higher value added end of production of goods and services. References Biffl, G. (2007), SOPEMI-Report on Labour Migration: Austria 2006–2007, WIFO Study for the OECD (Vienna). Biffl, G., P. Huber and E. Walterskirchen (2006), Auswirkungen der Übergangsregelungen im Bereich der Freizügigkeit und der Dienstleistungsfreiheit (January) (Vienna: WIFO). Biffl, G., and J. Bock-Schappelwein (2007), Zur Niederlassung von Ausländern in Österreich, Studie im Auftrag des BMI- WIFO-Gutachtenserie. Bock-Schappelwein, J. (2006), ‘Ungleiche Ausbildungsstruktur unter der ausländischen Wohnbevölkerung in Österreich: Herausforderungen für den Aus- und Weiterbildungsmarkt’, Wirtschaftspolitische Blätter 2, 191–204. Boeri, T., and H. Brücker (2005), ‘Migration, Co-ordination Failure and EU Enlargement’, IZA Discussion Paper No. 1600 (Bonn). FORBA (2007), Austria Country Report: Undocumented Worker Transitions (July) (Vienna). Hofer, H. (2008), ‘Zuwanderung: Ein zusätzliches Wachstumspotential für die österreichische Wirtschaft?’, Wirtschaftspolitische Blätter, 199–210. Huber, P., J. Bock-Schappelwein and C. Bremberger (2008), ‘Zuwanderung von Hochqualifizierten nach Österreich’ (mimeo) (WIFO).

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Huber, P. (Koordinator) (2008), ‘Die ökonomischen Wirkungen der Immigration in Österreich’ (mimeo) (WIFO). Lebhart, G., and S. Marik-Lebeck (2007), ‘Einfluss der Migration auf die Bevölkerung Österreichs’, Statistische Nachrichten 11, 998–1009. Nowotny, I. (2007), ‘Das Ausländerbeschäftigungsgesetz. Die Regelung des Zugangs von AusländerInnen zum österreichischen Arbeitsmarkt’, in H. Fassmann (ed.), Österreichischer Migrations- und Integrationsbericht 2001– 2006, 47–73 (Klagenfurt–Wien: Drava-Verlag). Walterskirchen, E. (2002), ‘Migrationspolitik in Österreich’, RWI-Konferenz, Essen.

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Chapter 9

EU Labour Migration: Government and Social Partner Policies in Austria Günther Chaloupek and Johannes Peyrl

1. Introduction Today, foreign nationals account for a significant part of the Austrian labour force. In 2007, the share of migrants in the supply of dependent labour was 12.5 per cent. Approximately one fifth of them come from the new member states that joined the EU in 2004 and 2007. In accordance with the accession treaty, Austria has applied transitional arrangements to suspend free access from new member states – Cyprus and Malta excepted – to its labour market until 2009, with a further extension until 2011 to be decided in the coming months. Employment of foreign workers increased significantly in the late 1960s when economic growth was strong and domestic labour supply stagnated. The admission and active recruiting of workers from Yugoslavia and Turkey was intended to alleviate the labour shortages that began to emerge in the construction sector and tourism, and to prevent a general acceleration of wage inflation in the Austrian economy. Employment of foreign workers reached an at that time record level of 226,000 in 1973, 8.8 per cent of the dependent labour force. Since 1976, the legal framework for the employment of foreign workers has been provided by a special ‘Ausländerbeschäftigungsgesetz’ (‘Employment of foreign nationals act’: for specific provisions see Section 2 of this chapter). The issue of work permits is tied to certain criteria, such as sectoral bottlenecks, skill shortages and also general business cycle and employment conditions. Originally, the law envisaged a kind of ‘rotation system’ in which variations in the employment of foreign workers would provide the necessary flexibility for adjustments of the labour supply to demand fluctuations. Social partner organizations – trade unions, the Chamber of Labour, the Economic Chamber – were assigned an important role in the institutional setup that regulates access to the Austrian labour market. In most cases, consensus between the social partners is necessary for a decision, which gives trade unions a strong position vis-à-vis employers’ demands for additional permits for foreign labour. In a study jointly undertaken by the social partners’ Economic and Social Council (Beirat für Wirtschafts- und Sozialfragen) in 1976 an agreement was reached on the recommendation that the employment of foreign workers should be reduced in case of excess supply of labour. The adjustment to changing

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demand-side conditions should give due consideration to social aspects – in particular, reductions in the foreign labour force should result as much as possible from voluntary return of foreign workers to their home countries (Beirat 1976, 87). During much of the 1980s, policies on the employment of foreign workers were in accordance with this recommendation. By 1984, the number of foreign workers had declined to 139,000, remaining at a low level until 1988. The share of foreigners in total dependent employment decreased from 8.8 per cent in 1973 to 5.4 per cent in 1988.

     

   



                                                  



Figure 9.1  Foreign nationals as a percentage of total dependent employment After 1988, the orientation of policies for the employment of foreign labour changed markedly. First, in the early phase of the business cycle upswing of 1989/90 the government satisfied urgent demands from the employers for more workers from abroad. As a consequence, access to the Austrian labour market was practically liberalized for more than one year for migrants from the neighbouring countries and from Turkey. In addition, when secessionist conflicts were exacerbated in Yugoslavia after 1990, several tens of thousands of refugees from this region, seeking shelter and protection from the war, came to Austria where many of them had relatives who had been working for some time already. Due to this sudden inflow from abroad, total supply of labour increased sharply. Despite strong growth in GDP and employment, the unemployment rate rose during the boom phase of the cycle. The government and the social partners reacted to these developments with a joint decision in 1991, under which a ceiling was laid down for the employment of foreign labour – 10 per cent of the total dependent labour force – and access to the labour market was again restricted for

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foreigners. Nonetheless, the employment of foreigners continued to rise modestly, so that the ceiling was reached by the end of the 1990s. When Austria became a member of the EU in 1995, no significant net inflows of labour were expected from other member states. After 2000, however, labour immigration accelerated once more. Between May 2000 and May 2008, the number of foreign nationals with regular employment in Austria increased by 118,500 or 40.3 per cent, compared to an increase of total dependent employment of 9.4 per cent in the same period. The share of foreign nationals in the dependent labour force increased to 12.5 per cent in 2007 (annual average). In May 2008, 81,300 foreign workers came from the new member states, making up 18.4 per cent of the foreign labour force. In recent years, the majority of labour immigrants have come from old and new EU member states (see Walterskirchen in this volume). As a consequence, the growth of foreign labour supply in Austria seems to be largely determined by exogenous factors such as labour market or political conditions in neighbouring countries and income differentials. 2. The Regulatory Framework for the Employment of Foreign Nationals in Austria Access to the labour market for third-country nationals is restricted to so-called ‘key workers’, which means that only highly qualified migrants can obtain a residence permit for the sole purpose of employment (whether self-employed or as an employee). Another possibility is family reunification; in fact, in recent years most of the third-country nationals who have gained access to the Austrian labour market have done so on grounds of family reunification. The remainder of this chapter will focus exclusively on citizens of the new member states. 2.1 Transitional Measures The free movement of workers within the European Union is one of the main principles of the Community. However, access to the Austrian labour market has been suspended for the member states that joined the European Union on 1 May 2004 (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovenia and Slovakia). The same transitional measures apply to citizens of Bulgaria and Romania which became EU member states in January 2007. According to the accession treaty the period during which it is possible to suspend the free movement of workers is limited to seven years; this period further divides into a 2+3+2 scheme after the accession of the A8 countries. There were no specific requirements for the first five years of transitional arrangements; member   This expectation proved true until 2003. Thereafter, there was a strong inflow of workers from Germany.  With the exception of Cyprus and Malta.

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states who wanted to restrict access to their labour markets for A8 – and A2 – nationals only had to notify the EU Commission of their decision. For the last two years of the transitional period member states still have the option of extending the restrictions regarding free movement of workers but only if their labour markets suffer serious disturbances: A member state may ... in case of serious disturbances of its labour market or threat thereof and after notifying the Commission, continue to apply these measures until the end of the seven year period following the date of accession. (Accession Treaty between EU-15 and the new member states)

At present, there is uncertainty about how the European Court of Justice (ECJ) might interpret this clause, since no precedent exists in European law. Moreover, the formal procedure remains unclear, too. Does a unilateral notification suffice, or do the member states have to make a formal application? A legal expert opinion by Professor Werner Schroeder of the University of Innsbruck points out that the member states will have wide scope to interpret this expression and that member states that would like to extend the transitional measures merely have to notify the Commission. This view is shared by the Austrian Ministry of Economics and Labour, the Chamber of Labour (AK) and the Austrian Federation of Trade Unions (ÖGB). 2.2 Employment of A8 and A2 Nationals during the Period of Transitional Measures Citizens of A8 and A2 countries are not yet permitted to be employed or seek employment in Austria freely; that is, without specific authorization. They need a work permit which is granted by the public employment service only after an economic needs check has been carried out. The duration of a work permit is normally one year. The potential employer has to apply for a work permit at the employment service which will try to place a person already available on the Austrian labour market in the particular job. If the employment service fails to do so, the economic needs check is deemed to have been passed (Schumacher and Peyrl 2007, 232ff). After passing the labour market check, several other conditions must be fulfilled before the permit can be granted: either the regional advisory board

  Article 5 of the ‘List referred to in Article 24 of the Act of Accession’, Official Journal of the European Union, L 236, 23.9.2003. The texts of all annexes of the A8 countries have the same wording.  The Commission and the A8 countries have the possibility of taking legal action against such a decision.

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within the labour market service (‘Regionalbeirat’) permits the employment by unanimous decision or the A8 or A2 national meets the criteria for a highly qualified employee (so-called ‘Schlüsselkraft’ – ‘key worker’). The criteria for qualifying as a ‘key worker’ are as follows: the annual salary before tax and social security contributions has to amount to at least €33,087.60 (2008). Key workers must also possess special training or specific skills for which there is special demand on the labour market. Furthermore, it is necessary to have a diploma from university or college unless other ‘soft’ criteria such as ‘benefiting the economy of the area’ are met. Overall, 2,970 work permits for highly qualified persons have been granted since EU enlargement in 2004. By February 2008, the total number of work permits issued for A8 and A2 nationals – including temporary permits for seasonal workers – was 245,018. However, for A8 and A2 nationals who have been working in Austria for a specific time period special rules for free access to the labour market during the transitional period apply: A8 and A2 nationals are granted completely free movement and are entitled to freely choose employment all over Austria if they were legally employed on 1 May 2004 or, respectively, 1 January 2007 or thereafter and were admitted to the regular labour market for at least 12 months without interruption. Free access to the labour market also applies to all A8 and A2 citizens of the mentioned states who have settled permanently in Austria for five years and currently have a regular income from a permitted occupation – self-employed or employed – and to persons who are entitled to a so-called ‘Befreiungsschein’ (§15 Ausländerbeschäftigungsgesetz – Alien Employment Act).10

 The ‘Regionalbeirat’ is an advisory board situated in every regional office of the employment service; its members are delegated from social partners and the employment service itself.  This is 60 per cent of the ceiling on the obligation to pay social insurance contributions.   The figure excludes permits for citizens of Estonia, Lithuania and Latvia because for some unknown reason they are not listed in the statistics of the Austrian employment service. However, in January 2008 only 328 persons from the Baltic countries were employed in Austria.  The 12-month employment requirement does not apply to spouses of an Austrian or EU-15 citizen, who are allowed to work in the Austrian labour market without further permission.  A ‘Befreiungsschein’ is a document which allows the holder to work in Austria without restrictions and is valid for five years. It is granted to people who are former spouses of Austrian or EU-15 citizens after divorce or the death of the partner. A ‘Befreiungsschein’ can also be granted to people who have been employed in Austria for at least five years. 10 This is an integral part of the accession treaty – see Article 2 of the list referred to in Article 24 of the Act of Accession. See footnote 3 for details.

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Normally, after being employed with a work permit for one year, they earn free movement – of workers – in Austria.11 It is important to mention that this freedom applies only to Austria and is of no significance as regards the other member states that have restricted labour market access for A8 and A2 nationals. Family members – spouses and children under 21 years, or older if maintenance is provided – of the persons mentioned above also enjoy free access to the Austrian labour market. However, for a transitional period – until 31 December 2008 – family members of Bulgarian and Romanian citizens (A2 nationals) are entitled to free labour market access only if they had common legal residence in Austria on 1 January 2007 (date of accession) or, if they entered Austria after 1 January 2007, if they had common residence for 18 months. By February 2008, 30,140 people had gained free access to the Austrian labour market, which means that they can take up any employment they like without permission. Their legal status within the framework of the free movement of workers is therefore exactly the same as that of, for example, an Irish or French national. 2.3 Employment in Certain Professions Special rules apply for A8 and A2 nationals who help to fill skill gaps and/or labour shortages in certain professions; they can get a work permit more easily. Employers still have to file an application, however. If the employer can prove that the person to be hired has a formal vocational training in a listed profession,12 a work permit is granted immediately upon a labour market check being passed. A8 and A2 nationals who work in nursing and/or care do not need a work permit if they work for a private household.13 Nurses working in a hospital do need a permit, but such permits can be obtained relatively easily. However, there are no special arrangements for cross-border commuters; for example, if a Slovakian citizen living in Bratislava wishes to work in Vienna, the procedures described above apply.14

11 ������������������������������������������� Deutsch, Neurath, Nowotny and Seitz (2008). 12 The professions to which the special procedure applies are listed in a government regulation. The list includes brick layers, plasterers, carpenters, concrete workers, civil engineers, roofers, tilers, glaziers, joiners, some types of plumbers, varnishers, smiths, locksmiths, turners, cutters, welders, motor mechanics, crane operators, architectural technicians, heating technicians, opticians, butchers and cooks. 13 Some criteria must be met: the persons to be nursed must be entitled to nursing assistance (so-called ‘Pflegegeld’ within the meaning of the Bundespflegegeldgesetz). 14 There are bilateral agreements with Hungary and the Czech Republic regarding employment in border regions and trainees.

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2.4 Seasonal Workers In case of short-term labour demand which cannot be covered by workers already residing and available in Austria, the Austrian Federal Ministry of Economic Affairs and Labour is authorized to enact a regulation on the admission of seasonal workers in a specific branch of the economy or in a certain area.15 Usually such regulations apply to seasonal workers in agriculture and in winter and summer tourism. Work permits for seasonal workers may normally not be valid for more than six months, but work permits for A8 and A2 nationals may be granted for nine months if they are employed in agriculture and have been employed as seasonal workers for at least three years consecutively. If it is still impossible to find someone else in the labour market, the work permit can be extended for another six months, up to a maximum of 12 months. After 12 months seasonal workers cannot obtain a new work permit for the next two successive months.16 Although this regulation theoretically makes it possible to obtain free access to the Austrian labour market, in fact this hardly ever happens because it is nearly impossible to be employed for 12 continuous months as a seasonal worker. 2.5 Posting of Workers There are also some restrictions on the free movement of services in respect of the posting of workers. In order to prevent serious labour market disturbances in sensitive service sectors,17 which might arise in certain regions due to the provision of services across borders, Austria is entitled to maintain the national law on the posting of workers by companies established in the new member states. Companies from the new member states that want to enter into contracts with their own workers – who are employed in a new member state – must apply for a posting permit (‘Entsendebewilligung’). In most cases a labour market check is carried out before permission is granted. Such an economic needs check is not necessary if workers residing in Austria are not able to do that specific work or provide the specific service.18

15 This regulation by the Ministry for Economic Affairs should not be confused with a corresponding regulation by the EC Council. 16  For further details see Bichl, Schmid and Syzmanski (2006). 17 These sensitive service sectors are as follows: gardening/horticultural services, cutting, shaping and finishing of stone, manufacture of metal structures and parts of structures, construction (including related branches), security activities, industrial cleaning and home nursing and ‘social work and activities without accommodation’. 18  §18 Ausländerbeschäftigungsgesetz (Alien Employment Act): for instance, if it is clear that the contract can only be performed by workers of the posting company (for example, because they are the only ones with the required know-how).

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2.6 Bogus Self-employment A problem frequently encountered since May 2004 is so-called ‘bogus selfemployment’, which involves services being offered by persons who pretend to be self-employed whereas in reality their relationship with the client is one of dependent labour under Austrian labour law. Restrictions apply only to the free movement of dependent employees (see Section 2.1) and, apart from minor restrictions regarding the posting of workers (see Section 2.6), there are no transitional measures regarding self-employment. It is therefore possible for citizens of new member states to settle in Austria and run their own business. Whether a given agreement is indeed a contract of services or – in reality – a work contract is not subject to arbitrary decision: it depends on the real intentions of both partners in terms of independence, freedom to choose working times, possibility of substitution, and so on. It therefore does not matter what the title or even the wording of such a contract is, if in reality the partners have something else in mind.19 In most cases, however, it is difficult or even impossible for the authorities to prove that the person is engaged in bogus self-employment and so requires a work permit. In most cases, therefore, the employer gets away with it. If the authorities are able to prove that the worker from a new member state is being employed by the company, and so is not self-employed, the employer not only has to pay taxes and social insurance contributions retroactively but will also be fined at least €1,000 for every person employed without a permit. The fine can be up to €50,000 per person without a valid permit. Most cases of bogus self-employment occur in the construction sector. Many persons officially run a business for ‘spackling gypsum plasterboards’ (this is not the only but the most prominent example), for which a permit can be obtained easily. 3. Review of Other Government Policies and Practices since 2004 As already pointed out in Section 2, although the Austrian government adopted transitional measures to restrict access to the labour market for A8 and A2 nationals and extended those measures into the second phase of the 2+3+2 years scheme there are several ways in which such persons can work in Austria. The figures we presented in Sections 1 and 2 above and those in the chapter by Walterskirchen in this volume show that in fact a large number of citizens from new member states – more than 70,000 – work legally in Austria. Step by step, the government has 19  For example, if a person is obliged to work at a construction site as a bricklayer regularly from 7 o’clock in the morning until 5 o’clock in the evening without the right to call in a replacement and if he receives instructions from a foreman he in fact has a work contract, regardless of whether the agreement he has signed says that he is self-employed.

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created more options for such people either to get a work permit or to work even without having to apply for permission. Since accession the restrictions on free movement of workers have been relaxed by the government in a number of jobs: for example, since 2004 nurses in hospitals can obtain a permit easily if they receive an annual salary of €22,000 or more. Since 2006 workers in care and in nursing do not need a permit if the job is done in private households. Since 2007 persons delivering newspapers no longer need a work permit, and since 2008 – to some extent already in 2007 – workers in professions in which there are labour shortages can also obtain a permit easily. Furthermore, due to Community preference, people from new member states must be given preference over third-country nationals regarding permits for seasonal workers. There is no active recruiting by the government. Therefore, a company which would like to employ an A8 or A2 citizen cannot rely on government programmes. As far as workers in the field of care in households are concerned, most workers are assumed to have been working without permission before the restrictions were lifted. It is worth mentioning that these restrictions were lifted following a public debate on ‘the care crisis’ during the 2006 general election campaign. The Minister of Economic Affairs and Labour has already indicated that Austria will retain transitional measures until 2011, but will continue at the same time to open the labour market step by step for persons working in certain professions. However, no formal decision has yet been taken. 4. Review of the Attitudes and Positions of the Social Partners towards Regulation of Access during the Transitional Period 4.1 Agreement of the Austrian Social Partners In October 2007 the Austrian social partners jointly published a paper called ‘Arbeitsmarkt – Zukunft 2010’ (‘Labour market – towards 2010’),20 in which they underline the need to manage the labour market to meet future needs. According to the social partners a sustainable labour market policy should have the following features:

20 This paper is published on the website of the Austrian social partners, www. sozialpartner.at.

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• • •

•

The unemployment rate, which is still worryingly high, must be lowered (with particular attention to long-term unemployment). Targeted measures to support people at a disadvantage due to global competition. The full potential of people already residing in Austria and available on the labour market should be tapped by supporting occupational and vocational retraining to fill labour shortages, paying particular regard to persons with a migrant background (‘second generation’). To meet the needs of the economy, the social partners propose that the employment service should provide additional training and retraining for up to 10,000 skilled workers every year. Given that the Austrian labour market will be opened step by step to A8 and A2 nationals, as a first step highly qualified persons and workers filling skill gaps and labour shortages should be granted access to the Austrian labour market. If the demand for skilled workers cannot be covered by people already residing in Austria, the Austrian social partners agreed that the quota for highly skilled third-country nationals to be admitted to the Austrian labour market should be increased significantly, to 5,000 places per year.21

Nevertheless, the social partners agreed that the transitional measures should in general be extended until 2011. In order to prevent wage dumping and social dumping, the social partners also agreed that the authorities should be able to check whether the wages of posted workers are being paid by the posting company. There is anecdotal evidence that posting companies often do not pay the wage required under the posting directive.22 4.2 Employers The position on transitional arrangements taken by the employers’ associations is not uniform. Whereas the Austrian Federal Economic Chamber23 (Wirtschaftskammer Österreich – WKÖ) – membership of which is compulsory – has in principle accepted the need for such arrangements and their application for a long period,

21 The government did not accede to this demand: the quota for ‘key workers’ for 2008 was fixed at 2,545. 22  Directive 96/71/EC, Official Journal L 18, 21.January.1997. 23 The system of interest representation in Austria is based on Chambers (‘Kammern’) for most forms of economic activity. Membership of the WKÖ is mandatory for all companies and businesses. Likewise, all workers and employees – with few exceptions – are members of the Chamber of Labour (Arbeiterkammer). There is also a Chamber of Agriculture for farmers, and several small chambers for the liberal professions.

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the Federation of Austrian Industry (Industriellenvereinigung – iv)24 has generally questioned the need for restrictions and has frequently called for liberalization of access for workers from new member states. As the general organization of Austrian enterprises, WKÖ has explicitly supported the transitional arrangements, while at the same time emphasizing the need for instruments that give access to workers from new member states in case of demand for increased labour supply, especially for skilled workers. According to the position of the WKÖ, demand of this kind should be met by granting access through bilateral ‘agreements for practitioners’ (‘Praktikantenabkommen’) with neighbouring countries, by increasing the maximum number of seasonal workers and by issuing permits in accordance with existing regulations (see, for example, Leitl 2004). WKÖ wants to extend the transitional measures for free movement of services. WKÖ had an interest in forestalling serious disturbances in specific sensitive service sectors – especially in regions bordering new member states – which might arise from the cross-border provision of such services. For WKÖ it was essential that the provisions of national law on the posting of workers should apply to companies from the new member states for the transitional period (see Section 2.5). In 2006, WKÖ gave general support to the extension of transitional arrangements until April 2009. When labour markets improved during the business cycle upswing 2006/2007, the WKÖ put forward the demand for additional permits for workers from the A8 to ease skill shortages which, according to the employers, had emerged with the upswing in industrial production (see Section 2.3). In contrast to WKÖ, the Federation of Austrian Industry (iv) has taken a rather uncompromising position in favour of swift and full liberalization of access to the Austrian labour market for A8 and A2 citizens. If restrictions are maintained, which is more than likely, the Federation (iv) has called for flexible application of quotas: for example, easier access for R&D specialists. Neither the Federation of Austrian Industry (iv) nor WKÖ offer specific incentives to skilled employees to sign an employment contract in Austria, however. On the contrary, the Chamber of Labour and the Austrian Federation of Trade Unions fear that the wages of such workers are likely to be well below those of Austrian workers or migrant workers already residing in Austria (for details see Section 4.3). The difference in attitude towards restrictions on free movement of labour between WKÖ and the Federation of Austrian Industry (iv) can be explained by the fact that the latter represents a more narrowly defined, more homogeneous group of companies which are highly export oriented and therefore primarily interested in reducing labour costs. WKÖ represents all companies and businesses, 24  Membership of the Federation of Austrian Industry is voluntary. Most of the bigger industrial companies and also some companies providing services are members of iv. Small businesses are not iv members.

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the majority of which are small and medium-sized enterprises, to a large extent dependent on domestic demand. The Chamber of Agriculture is primarily interested in obtaining a sufficient number of permits for seasonal workers to meet the short-term demand for labour at harvest time. 4.3 Trade Unions Both the Chamber of Labour (AK) and the Austrian Federation of Trade Unions (ÖGB) expressed satisfaction when the government introduced transitional measures in 2004 since this was exactly what both organizations had called for. Both AK and ÖGB had expressed their concerns that a sudden increase in the number of immigrants could push up unemployment figures that were already high by historical standards, especially because of the possibility of commuting for persons living near the Austrian border (though there are bilateral agreements with Hungary and the Czech Republic regarding employment in border regions and trainees, many people work without obtaining a regular work permit – see Section 2 – and sometimes illegally).25 Moreover, it was feared that considerable downward pressure on wages would result from an increase in labour supply. Transitional measures were also considered necessary because an increase in the labour force in Austria was foreseen due to immigration of third-country nationals and EU citizens (both A8 nationals who started to work lawfully in Austria after accession and nationals from old member states, for example, Germany). ÖGB and AK also stressed that permits for seasonal work (see Section 2.4) should – according to European law – be primarily granted for nationals of ‘new’ member states (socalled Community preference). This view was shared by the government. AK and ÖGB have supported the extension of transitional measures until 2009. In their judgement, a further extension to 2011 is also justified because there is at least the threat of labour market disturbances (see Section 2.1 for details).26 There are no special projects or programmes geared to migrant workers because AK and ÖGB feel that all their members should be treated equally. Indeed, many, if not most of the people seeking help from AK to take action against their employer have a migrant background.27 An exception is a special counselling project that

25 According to Hárs in this volume, about 25 per cent of the cross-border commuters from Hungary to Austria work without permission. 26 One should bear in mind that when the restrictions on free movement of workers are abandoned, the transitional measures regarding the posting of workers in particular branches will also disappear (see Section 2.5). 27 This is anecdotal evidence from the legal advisors; no statistics exist on the nationality of people seeking legal advice.

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provided migrant workers – most of them cross-border commuters – in the border region of Austria and Hungary with legal advice about their rights.28 There is evidence that blue-collar workers from new member states earn up to 20 per cent less than Austrian blue-collar workers (see Walterskirchen in this volume). The Chamber of Labour and the Austrian Federation of Trade Unions also fear that the wages of workers arriving under the so-called ‘FachkräfteVerordnung’ (see Section 2.3) might be well below the wages of Austrian workers or migrant workers who have settled in Austria recently – regardless of whether they enjoy free movement of workers or not – because the education they acquired outside Austria is often not formally acknowledged in Austria. In some collective agreements a higher wage is linked to possession of a skilled worker’s diploma (‘Lehrabschluss’). In theory, workers educated outside Austria can apply for a ‘decision of equivalence’ – a so-called ‘Gleichhaltungsbescheid’ – but this does not happen very often because the procedure is complicated.29 5. Conclusions The transitional arrangements for labour market access came into force with EU enlargement in May 2004 (and one and a half years ago after the accession of Bulgaria and Romania). From the viewpoint of the institutions that called for such restrictions, the policy has been successful. The aim was not to seal off the Austrian labour market completely but to prevent a sudden increase in labour supply and to allow for a gradual transition to full freedom of movement of workers. The number of migrant workers from new member states has increased significantly in terms of annual average full-time employment. The strategy proposed by AK and ÖGB has worked: on the one hand, to maintain national laws on admitting newly arriving A8 and A2 nationals (especially carrying out a labour market check), but on the other hand, to ease restrictions step by step for workers needed on the Austrian labour market and to introduce measures to make Austria ‘fit’ for when transitional measures expire.30 If the government follows the recommendations of the Austrian social partners recently submitted in a joint paper (see Section 4.1), the extension of transitional arrangements in combination with steps towards facilitating access for additional groups of workers would constitute a continuation of policies that have proven workable and effective in the last four years.

28 International Council of Trade Unions Western Hungary and Burgenland, see <www.igr.at>. 29 In fact, most applications are made when the applicant is seeking to retire on the grounds of occupational disability and needs this decision to prove he has worked as a qualified worker. 30 See the recommendations of the social partners, Section 4.1.

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References Austrian Social Partners (2007), Arbeitsmarkt – Zukunft 2010 (Vienna). Beirat für Wirtschafts- und Sozialfragen (1976), Möglichkeiten und Grenzen der Beschäftigung ausländischer Arbeitskräfte (Vienna). Bichl, N., C. Schmid and W. Szymanski (2006), Das neue Recht der Arbeitsmigration. Kommentar zum Ausländerbeschäftigungsgesetz und Niederlassungs- und Aufenthaltsgesetz samt einer Einführung aus der Sicht der Praxis (Vienna–Graz). Deutsch, H., E. Neurath, I. Nowotny and R. Seitz (2008), Ausländerbeschäftigungsrecht (Vienna: ÖGB Verlag). Leitl, Christoph (2004), ‘Die EU-Erweiterung aus Arbeitgebersicht’, Wirtschaftspolitische Blätter 51/1, 13–30. Schumacher, S., and J. Peyrl (2007), Fremdenrecht (Vienna: ÖGB Verlag). Official Documents Ausländerbeschäftigungsgesetz (Alien Employment Act), Bundesgesetzblatt No. 218/1975, as amended No. 78/2007. Treaty concerning the Accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia, the Slovak Republic to the European Union, Official Journal L 236 of 23 September 2003.

Chapter 10

Dimensions and Effects of Labour Migration to EU Countries: The Case of Poland Agnieszka Fihel and Marek Okólski

1. Introduction 1.1 Historical Context Poland has been a net emigration country since the late nineteenth century. Despite the Communist regime’s attempts to keep the outflow of people under tight control, after around 1955 emigration gradually increased; according to official estimates, from 2,000 in 1955 to typically 20,000–30,000 per annum in the years that followed. By far the most common reason for emigration was family reunion, with destinations principally in Germany and the United States. Between 1948 and 1990, a number of sizeable waves of ethnic outmigration were allowed (or encouraged) by the regime. In 1957–59 and 1976–80 they included some 400,000 ethnic Germans, and in 1949–50, 1956–59 and 1968– 69 some 75,000 Jewish emigrants. The outflow of ethnic minorities, especially Germans, continued in other years and probably accounted for the bulk of emigration for family reasons. After 1980, however, the out-movement of Polish citizens to Germany requesting the status of Aussiedler mainly took the form of illegal emigration. In 1988–90 alone Germany granted Aussiedler status to some 520,000 newly arrived Poles, most of whom had left their country of origin under the guise of tourists. Although hardly any outmigration from Poland was permitted during that period, the total number of emigrants between 1948 and 1990 was officially 1,258,000. Plausible estimates suggest that before 1980 close to 100,000 and in the 1980s another one million people making short business or leisure trips to foreign countries overstayed long enough to became de facto emigrants. It follows that after 1947 (after the period of mass forced transborder resettlements) Poland lost

 ��������������������������������������������������� See, for example, Frejka, Okólski and Sword (1999).   Aussiedler, meaning literally an expelled (or displaced) person was (and still is) a highly preferential status granted by Germany to immigrants of German descent from the countries of Eastern (former communist) Europe, whether they were in fact displaced or not. Among other things, such persons enjoy immediate access to German citizenship.

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a total of 2,350,000 people due to emigration (15 per cent of its natural population increase). Because of the restrictions on emigration, in the 1970s and 1980s alternative forms of international mobility developed in Poland. One such form was temporary migration to work in other countries of Eastern Europe (for example, USSR, GDR and Czechoslovakia) and some countries in North Africa and the Middle East. In 1989, shortly before the break up of the Communist regime in Poland, nearly 200,000 Poles were working abroad. Many more Polish people were involved in another form of mobility, namely ‘incomplete’ migration. Many travellers engaged in incomplete migration – often called ‘false tourists’ – performed various commercial activities, such as petty trade, transborder smuggling of goods or occasional short-term employment. Even modest profits earned as a result of such activities were valuable upon return to Poland where, at the exchange rates effective in the early 1980s, the average monthly salary ranged between 20 and 30 US dollars. At the root of incomplete migration was a labour surplus, predominantly in rural areas and small towns, which could not be productively absorbed by the ailing Polish economy. Another important factor was the considerable disparities between Western European market economies and the centrally planned economy of Poland in terms of level of economic development, prices, real incomes and quality of life. Furthermore, the differences in prices and availability of consumer goods between Poland and other countries in Eastern Europe made the latter attractive to Poles, too. Once international tourist travel became available to Poles, hundreds of thousands of Poles in the 1970s and millions in the 1980s took pendular trips to foreign destinations, such as Germany (FRG and GDR), Austria, Italy, USSR and Hungary. Incomplete migration from Poland reached its peak in the 1990s. Due to the visa-free regime for Polish tourists in the EU-15, thousands of migrants undertook irregular employment abroad, mostly in West European metropolises, such as Brussels, Berlin, London and Rome, as cleaners, home carers or construction workers. Since such trips ostensibly for tourist purposes could last up to three months, Polish workers were involved in temporary, almost pendular migration between Poland and Western European cities. Another form of ‘incomplete’ outflow took place within the framework of various bilateral agreements. Undoubtedly the most important was the circulation of seasonal workers between Poland and Germany, a movement that at its peak (2004) involved as many as 300,000 people a year. It must be underlined, however, that despite the high level of incomplete migration and in contrast to the Communist era, in the 1990s fewer people were willing to emigrate for good. Family reunion migration decreased and ethnicitybased outflow came to a complete halt. Moreover, many emigrants of the 1970s and 1980s returned to Poland.

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1.2 Definitions and Data Sources As in many other countries, consistent and reliable evidence concerning outmigration from Poland is missing. The basic and only official statistical source is the central population register, which includes all residents of Poland. New entries, apart from the newly born, consist of immigrants, that is, those who have arrived from abroad and have been registered as permanent residents in any basic administrative unit of Poland. In turn, new exits include the deceased and emigrants, that is, those who have been deregistered as permanent residents due to departure to a foreign country. However, many ‘permanent residents’ who as such have continued to represent an entry in Poland’s population registers have also become emigrants and have de facto ceased to live in Poland. In official statistical sources, however, de facto emigrants are included in the estimates of Poland’s population as long as they figure in the registers as ‘permanent residents’. The only way to remove someone from a register of permanent residents is their voluntary act of cancellation of residence, which most Poles perceive as unnecessary, if not disadvantageous. For this reason, official estimates of Poland’s population might be seriously biased by not accounting for a sizeable group (and excluding that group) of former ‘permanent residents’ who live in another country. In official Polish sources the category ‘Poland’s population’ denotes the total number of ‘persons actually living in Poland’, which at national level includes all ‘permanent residents’ irrespective of the place (a foreign country) of their actual residence. In short, at national level all persons registered as permanent residents of Poland are considered to be actual (de facto) residents. Permanent residents remaining in a foreign country for longer that two months are called temporary migrants. The stock of temporary migrants is estimated on the basis of data extracted from population censuses (conducted in 1988 and 2002) and the microcensus of 1995. Since 1994 the Polish labour force survey has served as a data source for estimating, each quarter, the stock of temporary migrants aged 15 or above.

 ���������������������������������������������������������������������������������� A ‘permanent resident’ of Poland is someone who has been registered as such at an address in Poland.  �������������������������������������������������������������������������������������� According to the Polish Central Statistical Office, since 2007 a temporary migrant is a permanent resident who have been continuously absent from Poland for more than three months.

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2. Scale of Migration and Socio-demographic Characteristics of Polish Migrants 2.1 Selectivity of Migration and Cross-country Comparison Selectivity of persons with regard to basic socio-demographic characteristics, such as sex, age and education level, is a common feature of migration. In fact, Polish migrants differ in significant ways from the general population of Poland. With regard to age, labour migration attracts young people, of economically active age, whereas children and older persons are underrepresented. Apart from age, selection of migrants is conditioned by determinants in receiving countries, mainly the demand for foreign workers. Due to the opening up of the Irish, Swedish and British labour markets to Polish migrants, pull factors started to determine migration from Poland more significantly, and thus selection of certain groups of migrants became stronger. In general terms, Polish migrants constitute a very heterogeneous group. It is, therefore, reasonable to present the most important socio-demographic characteristics of Polish migrants in cross-country comparison, namely by distinguishing several groups of receiving countries. There are three important groups of receiving countries for Polish migrants: 1. three countries of the EU-15 that did not introduce labour restrictions on Polish migrants on 1 May 2004: Ireland, Sweden and the United Kingdom; 2. the other member states of the European Union, other countries belonging to the European Economic Area (Norway and Iceland) and Switzerland (other EEA, CH); 3. other countries of the world, the most important of which is the United States. This division of destination countries reflects the division of EU member states with regard to introducing or removing transitional arrangements for workers from Poland. In fact, as we shall prove by comparison of pre- and post-accession migrants, since 2004 institutional restrictions have been the key factors determining the direction of mobility and socio-demographic selectivity of Poles.

 The countries that opened their labour markets to Polish citizens – namely Ireland, Sweden and the United Kingdom – were exposed to the first post-accession wave of migrants. It is worth mentioning, however, that very soon some other ‘old’ EU member states and EEA countries followed in their footsteps: in 2006, Finland, Greece, Iceland, Italy, Spain and Portugal, in 2007 the Netherlands and in 2008 France.

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2.2 Scale of Post-accession Migration and Destination Countries The 2004 EU enlargement was the most important emigration stimulus in Poland’s contemporary history. Recent estimates by the Central Statistical Office (CSO 2008) depict a veritable post-accession exodus: the number of Polish nationals residing abroad temporarily increased within three years – from 2004 to 2007 – from approximately 1 million to almost 2.3 million (Table 10.1). This increase involved most European receiving countries, including both traditional destinations, such as Germany and Italy, and new destinations, such as Ireland and the United Kingdom. Very rapidly, in the two years following EU enlargement, the United Kingdom became the most important receiving country for Polish migrants, attracting 580,000 persons, a 25-fold increase since 2002. The situation was similar in Ireland, which occupied third position among destinations as far as number of Polish migrants is concerned. Table 10.1  The number of Polish citizens staying abroad for longer than two or three months by destination country (estimates, in ‘000) Destination

2002 (May)

20041

20061

20071

Total

786

1000

1950

2270

European Union Austria Belgium France Germany Ireland Italy Netherlands Spain Sweden United Kingdom

451 11 14 21 294 2 39 10 14 6 24

750 15 13 30 385 15 59 23 26 11 150

1550 34 28 49 450 120 85 55 44 25 580

1860 39 31 55 490 200 87 98 80 27 690

Note: 1 End of the year. Source: Central ���������������������������������� Statistical Office (������ 2008).  ������������������������������������������������������������������������������� That is, longer than two (until 2006) or three (since 2007) months. See Note 4 above.   Due to the fact that the Central Statistical Office considered several ������������������� sources of information on migration from Poland, including the 2002 population census, the register of temporary migrants in receiving countries and quarterly LFS data, ��������������������� these estimates seem reasonable. As far as the scale of Polish emigration is concerned, we should rely on the above-quoted estimates. As far as the sociodemographic structure of outflow is concerned, we should rely on the LFS.

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This rapid increase in the number of Polish emigrants is also reflected in the LFS (Figure 10.1): in the middle of 2007 this number was twice as high as three years previously. In 2004–2006 short-term migration (lasting less than one year) dominated; since the end of 2006, however, the number of long-term migrants has risen. This cohort effect resulted from the fact that post-accession migrants prolonged their stay abroad, as a result of which the ratio of short- to long-term migrants became 1:1, similar to the situation in the 1990s. 





















 

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Figure 10.1  The number of Polish residents residing abroad, by length of stay and quarter of year Note: LFS has not been conducted in the second and third quarter of 1999. Source: Kępińska (2007), based on Polish Labour Force Survey.

The following analysis of the socio-demographic characteristics of Polish migrants is based on information from the Polish LFS and compiled by the CMR team in the so-called Migrants’ Database. It consists of two categories of migrants aged 15 and over, each numbering over 1,800 persons, who have resided abroad for at least two months either in the period 1999–2003 (‘pre-accession migrants’), or in the period from 1 May 2004 to 31 December 2006 (‘post-accession migrants’). Unfortunately, for methodological reasons it is impossible to distinguish between short- and longterm migrants in the general category of those who left after 1 May 2004. The Migrants’ Database confirms the previous conclusion that after EU enlargement the geographic direction of Polish mobility has fundamentally  ������������������������������������������������������������������������������������ To put it more straightforwardly, persons who left in 2005 were recorded in 2005 as short-term migrants and in subsequent years (if they stayed abroad) as long-term migrants.

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changed. The dominant destination country, which prior to EU enlargement was Germany (32.1 per cent of pre-accession migrants, see Table 10.2), is now the United Kingdom (31.4 per cent of post-accession migrants). The three countries – Ireland, Sweden and the UK – that did not introduce labour market restrictions attracted 12.1 per cent of those who left before 2004 and as many as 42.4 per cent of post-accession migrants (an increase of 30 percentage points), whereas the share for other EEA destinations decreased from 62.6 per cent to 45.3 per cent (see Figure 10.2). Table 10.2  Polish pre-1 and post-accession migrants2 by destination country (%) Destination country

Pre-accession

Post-accession

IE, SE, UK Ireland Sweden UK Other EEA, CH Austria Belgium France Germany Greece Italy Netherlands Norway Spain Other EEA and CH Other Other in Europe Canada US Other

12.1 1.4 1.0 9.7 62.6 2.9 3.4 3.8 32.1 1.6 11.9 3.0 0.5 2.6 0.7 25.3 1.1 1.0 19.3 3.9

42.4 9.1 1.9 31.4 45.3 1.5 1.7 3.2 18.9 1.5 8.4 3.0 2.0 3.1 2.0 12.3 1.5 0.8 9.1 0.9

Note: 1 Aged 15 and over who were abroad for at least two months in the period 1999–2003; 2 Aged 15 and over who were abroad for at least two months in the period 1 May 2004–31 December 2006. Source: CMR Migrants’ Database, based on the Polish LFS.

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192   







  





 







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Figure 10.2  Polish pre-1 and post-accession migrants,2 by group of destination countries (%) Note: 1, 2 See Note in Table 10.2. Source: CMR Migrants’ Database, based on the Polish LFS.

The following socio-demographic analysis of pre- and post-accession migrants in cross-country comparison will be done with regard to sex, age, family status, education level, region of origin in Poland and main source of income. 2.3 Sex, Age and Family Status The outflow from Poland has largely involved males and after 2004 this became even more marked. Before EU enlargement men made up 57 per cent of migrants, which means that each flow of 100 women was matched by a flow of 133 men; thereafter, this percentage increased to 65 per cent, that is, 186 men per 100 women. Given that men make up 47 per cent of Poland’s general adult population, this reveals the high selectivity of outmigration with regard to sex. After Polish accession to the EU the main reason for the increased ‘masculinization’ of immigration was the rise in men’s general propensity to undertake international migration; the change in the structure of the receiving countries had a limited impact. The percentage of men increased in two out of three groups of destination countries (Table 10.3): first, in the three EU member states that opened up their labour markets to Polish migrants (from 55 to 69 per cent), and second, in other EEA countries and Switzerland (from 57 to 62 per

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cent). After Polish accession Italy, Canada and the United States remained the only destination countries attracting mostly female migrants (69, 62 and 52 per cent of post-accession Polish migrants, respectively). Table 10.3  The percentage of men among Polish pre-1 and post-accession migrants,2 by group of destination countries (%) Destination country

Pre-accession1

Post-accession2

IE, SE, UK Other EEA, CH Other

55 57 58

69 62 54

Total

57

65

Note: See Note in Table 10.2. Source: CMR Migrants’ Database, based on the Polish LFS. 1, 2

In general terms, the outflow from Poland has been dominated by young persons (aged 20–39). Since 2004 the percentage of those aged 20–24 has increased from 23 to 24 per cent, of those aged 25–29 from 22 to 28 per cent, and of those aged 30–34 from 12 to 14 per cent. On average, female migrants were younger than male migrants by one year.10 The age structure remained stable within each group of receiving countries (Figure 10.3). Destinations that attracted mostly young persons were Ireland and the United Kingdom – in both periods of analysis, the percentage of those aged 20–29 was as high as 70 per cent, while the median age of those in the UK was 25, the lowest among all receiving countries (Table 10.4). In contrast, in other countries of the world Polish migrants were statistically older, for instance in Canada, where 50 per cent of them were over 46. The rising importance of Ireland and the United Kingdom among the destination countries affected the age structure of all migrants. More precisely, the increase in the share of those going to Ireland and the United Kingdom resulted in a rise in the number of young migrants. Therefore, after EU enlargement the age structure of Polish migrants became significantly younger: the mean age decreased by 1.5 years (from 33.9 to 32.4), the median age by 2 years (from 30 to 28).

 ����������������������������������������������������������������������������� In Belgium the pre-accession dominance of women among migrants (57 per cent) ceased after 2004. 10 ��������� Mean age.

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Figure 10.3  The age structure of Polish pre-1 and post-accession2 migrants, by group of destination countries (%) Note: 1, 2 See Note in Table 10.2. Source: CMR Migrants’ Database, based on the Polish LFS.

Table 10.4  Mean and median age of Polish pre-1 and post-accession2 migrants by main groups of destinations and selected destination countries Destination country

Pre-accession

Post-accession

Mean

Median

Mean

Median

IE, SE, UK Ireland Sweden UK Other EEA, CH Germany Italy Norway Spain Other Canada US

28.9 28.5 34.8 28.2 32.0 33.0 34.2 39.5 31.6 36.1 44.9 39.6

25.0 26.0 32.8 25.0 29.0 30.4 31.0 37.0 29.0 32.0 46.3 38.0

28.5 30.0 29.6 28.2 33.6 35.6 35.3 36.1 32.6 34.9 45.3 39.6

26.0 27.0 26.0 26.0 31.0 34.0 32.0 34.0 28.0 30.0 46.1 35.3

Total

33.9

30.0

32.4

28.0

Note: 1, 2 See Note in Table 10.2. Source: CMR Migrants’ Database, based on the Polish LFS.

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The Polish Labour Force Survey gives limited information on migrants’ family status; in fact, it refers only to migrants’ relationship to the head of household.11 As far as migrants to Ireland, Sweden and the United Kingdom are concerned, both prior to EU enlargement and afterwards they were mostly children or childrenin-law of heads of households (in the two periods of analysis, 73 and 75 per cent, respectively). In the case of the second group of receiving countries – other EEA members and Switzerland – the share of children was counterbalanced by the high share of husbands or wives of heads of households: the former group of relatives constituted 59 per cent of pre-accession and 50 per cent of post-accession migrants, whereas the latter group of relatives made up 30 per cent and 42 per cent, respectively. A similar pattern applied to the group of other destination countries. We shall discuss these results in detail below. 2.4 Level of Education Apart from gender and age, level of education is another selective factor as far as emigration from Poland is concerned. In general, Poland in the transitional (post1989) period has not been affected by a ‘brain-drain’. According to the LFS, in the period 1994–2003 Polish migrants were rather low-qualified, and the percentage of highly-skilled persons in the outflow has never exceeded 15 per cent.12 The main reason for this was institutional restrictions that made it very difficult to participate in the formal labour market abroad, whereas entering the ‘informal’ (‘secondary’) segment of the labour market was much easier. Consequently, working abroad was associated rather with simple, low-paid and insecure jobs, which held no appeal for highly-skilled persons. According to the Migrants’ Database, based on the Polish LFS, the preaccession outflow from Poland was dominated by persons with secondary vocational and vocational qualifications, who constituted 61 per cent of migrants (Table 10.5). Although this remained a general feature of Polish emigration after 2004, the share of university graduates has risen significantly. Every fifth postaccession migrant is a university graduate; given that only 14.3 per cent of the overall population of Poland (in 2004) are graduates this gives the appearance of a brain-drain, particularly in the case of female migrants, 27 per cent of whom were highly-skilled. As in the case of age distribution, after EU enlargement the change in migrants’ education structure was not caused by a higher propensity on the part of highly11 �������������������������������������������������������������������������������� The head of household is defined as the person that receives the highest income. 12 ������������������������������������������������������������������������������� In contrast to emigration in the 1980s, when a brain-drain, defined as an overrepresentation of highly-skilled persons among migrants in comparison to the overall population, did take place. Paradoxically, at the turn of the 1980s and 1990s the main reason for the decrease in the number of Polish scientists was not emigration, but economic transition and the outflow of scientific employees into private companies (Hryniewicz, Jałowiecki and Mync 1992; 1997).

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skilled persons to leave Poland.13 In each group of destination countries the shares of university graduates among migrants have not increased drastically. However, due to the change in main destination countries – namely the shift of migration routes to Ireland and the United Kingdom – which attract university graduates to the greatest extent, the number of highly-skilled migrants (and thus their share) rose (Figure 10.4). The post-accession flow of highly-skilled migrants to these two countries consisted mostly of very young persons: at the time of EU enlargement 50 per cent of them were aged 25 and under, and a further 25 per cent were aged 26–27.14 This warrants the conclusion that many university graduates going to Ireland and the UK have never sought employment opportunities in the home country, but left Poland straight after finishing their education. Table 10.5  The educational structure of Polish pre-1 and post-accession2 migrants by sex (%) Level of education

Pre-accession

Post-accession

Total

Men

Women

Total

Men

Women

University degree Secondary Secondary vocational Vocational Primary Unfinished

14.7 14.0 26.1 34.8 9.9 0.4

12.0 7.1 26.0 45.4 9.3 0.2

18.3 23.1 26.3 20.9 10.9 0.5

19.8 14.2 28.1 30.9 7.0 0.0

15.6 8.8 29.8 39.2 6.6 0.0

27.0 23.8 25.1 16.2 7.8 0.0

Total

100.0

100.0

100.0

100.0

100.0

100.0

3

Note: 1, 2 See Note in Table 10.2.; 3 Including BA, MA and PhD. Source: CMR Migrants’ Database, based on the Polish LFS.

To sum up, the three EU member states that did not introduce labour market restrictions on Polish migrants attracted mainly young and better educated persons, probably with at least a basic knowledge of English (or other foreign languages). These persons entered the labour market by means of international migration, but this would probably not have taken place if labour restrictions had been introduced in all EU member states. In other words, EU enlargement gave an impulse for

13 ����������������������������������������������������������������������������������� This would have been the case if the share of migrants among all Polish university graduates had increased to a greater extent than in other educational categories. 14 �������������������������������������������������������������������������� This very young age structure applied also to migrants with secondary and secondary vocational levels of education.

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emigration to a new group of persons, mostly those who would not have been able to overcome the obstacles of foreign working regulations previously.15 Also, to some extent, young migrants who before 1 May 2004 went to countries other than Ireland, Sweden and the United Kingdom, after Polish accession changed their direction of mobility. EU enlargement had a limited impact on the sociodemographic profile of migrants heading for other EEA members and other countries of the world. Prior to Polish accession and thereafter these countries attracted older and less educated migrants.

  









 











  

 





 



 







 







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2.5 Region of Origin in Poland By European standards, a large proportion of Poland's population lives in rural areas and small towns; as high as 38.5 per cent in 2006.16 In this context the large share of migrants from rural areas and small towns (under 20,000 inhabitants) is a natural consequence of the distribution of the Polish population. In general terms, the share of persons from these two kinds of settlement constituted 59 per cent of pre-accession and 56 per cent of post-accession migrants, whereas persons from 15 ��������������������������������������������������������������� Or, more probably, for whom it would not have been beneficial. 16 �������������������������������������������������������� But not necessarily involved in agricultural production.

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medium-sized (20,000–100,000 inhabitants) and large (over 100,000 inhabitants) cities made up, respectively, 21 and 20 per cent of pre-accession, and 20 and 24 per cent of post-accession migrants. This means that among Polish migrants (both preand post-accession) residents of villages and small towns were overrepresented relative to the population, whereas in the case of residents of larger cities the opposite was true. This pattern of geographical selectivity of Polish migrants is related to (lack of) work opportunities in the place of residence. Distribution of regions of origin differs significantly with regard to the group of destination countries (Figure 10.5). In the case of outflow to Ireland, Sweden and the United Kingdom, before and since EU enlargement one in four migrants came from large cities. In the case of the second group of receiving countries, by contrast, every second migrant came from rural areas.17 Also, other countries of the world attracted mostly rural inhabitants, although since EU enlargement the share of migrants from large cities has increased significantly. This is in line with the rise in the share of university graduates among migrants heading for those countries (Figure 10.4).

 





 











 







 







 







 



 



 











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17 ����������������������������������������������������������������������������� In the case of Austria three out of four Polish post-accession migrants were recruited from rural areas.

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Migrants were recruited mostly from southern and eastern Poland (Figure 10.6). These regions are either rural and underdeveloped (the east and south-east) or the most populated areas (south-central and south-west). However, since Polish accession to the EU the importance of traditional regions of origin, such as south-eastern Poland, has diminished slightly, while the central areas have grown in importance. The lifting of labour restrictions in Ireland, Sweden and the UK meant that migration from Poland became more dependent on pull factors in the receiving countries. The extent to which out-migration was determined by push factors in regions of origin and by migration networks diminished; for centuries the latter had informally linked southeastern Poland with the United States or south-western Poland with Germany.

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Figure 10.6  Regions of the highest (dark grey), medium (light grey) and the lowest (white) out-migration1 per 1,000 inhabitants, by group of destination countries Note: 1 Both pre- and post-accession. Source: CMR Migrants’ Database, based on the Polish LFS.

2.6 Main Source of Income The last characteristic derived from the Polish Labour Force Survey refers to the major source of income of migrant households in Poland.18 A striking characteristic of migrant households was a relatively high share of those dependent on sources of income other than employment, such as pensions, and disability and unemployment benefit. Before EU accession the percentage of migrant households dependent on income earned by their employed members ranged, depending on the migrant’s destination, from 51.6 to 59.5 per cent (Table 10.6), whereas the respective percentage in the general population of Poland was 60 per cent around 2004. After 1 May 2004 this share among migrant households rose, albeit slightly, ranging from 51.0 to 61.7 per cent. In parallel, the share of migrant households maintained by ‘other’ sources 18 ���������������������������������������������������� Nothing is known about households maintained abroad.

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of income, including remittances from abroad, increased sharply: before accession this share ranged between 5 and 8.4 per cent, whereas afterwards it was between 15 and 26.9 per cent. This may indicate that household economic strategies involving sending a family member abroad became more widespread. Table 10.6  The main source of income of pre-1 and post-accession2 migrant households in Poland by group of destination countries (%) Main source of income of household in Poland

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2.7 Socio-demographic Profiles of Polish Migrants Although the outflow from Poland is very diverse with regard to migrants’ sociodemographic characteristics and region of origin, an important conclusion can be drawn from the above analysis. The pre-accession outflow was dominated by persons statistically older, less educated and originating mostly from rural areas and small towns, whereas the post-accession ouflow also includes younger and better educated persons, originating from medium-sized and large cities (Figure 10.7). The latter profile was typical of migrants who went to Ireland, Sweden or the United Kingdom after EU enlargement (Figure 10.8). They were mostly males and aged 20–29, and the proportion of university graduates was high, at slightly under 30 per cent. The share of their (Polish) households maintained by welfare benefits was marginal by Polish standards, at under 10 per cent. The lack of institutional barriers in Ireland, Sweden and the United Kingdom significantly affected the economic determinants underlying the outflow from Poland. In contrast to what took place prior to EU enlargement, when migration constituted a necessity for those who could not make a living in their region of origin, thereafter foreign labour markets attracted younger and better educated persons, whose attributes boosted their chances of success. In this way such factors as the possibility of acquiring a higher level of financial and human capital than in the home country started to play a more important role than previously. This higher propensity to migrate found its

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counterpart in economic prosperity and ensuing high demand for labour (expressed, among other things, in huge numbers of vacant jobs) in a number of European countries. The United Kingdom serves as a good example of a large labour market absorbing hundreds of thousands of Polish labour migrants in a short period of time. PDOHV

       

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Note: 1 See Note in Table 10.2; 2 Large cities: over 100,000 inhabitants; % welfare benefit is the share of migrants’ households for which the main source of income is disability or unemployment benefit. Source: CMR Migrants’ Database, based on the Polish LFS.

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3. Consequences of the Outflow 3.1 Population Loss As already mentioned, a plausible estimate of the number of Poles who are temporary migrants living and working in other countries was 1,950,000 as of 1 January 2007. It might be argued that the size of that population category increased by 1,070,000 after 1 May 2004. Since over the corresponding period approximately 80,000 people emigrated from and 25,000 people immigrated to Poland, the total net loss of population between the date of EU accession and 1 January 2007 seems close to 1,100,000, 2.8 per cent of the total resident population. This estimate further ‘translates’ into 1,010,000 people aged 15–59, 4.0 per cent of the resident population of that age (Okólski and Mioduszewska 2008; Grabowska-Lusińska and Okólski 2008). Our concern here will be the impact of the outflow from Poland on the resident population according to certain important demographic and social characteristics. In order to distribute the total net population loss due to post-accession migration across various groups of the population it might be reasonable to refer to the resident population aged 15 or above and the ‘post-accession migrants’ aged 15 or above.19 That is because the only reliable source of relevant data, the LFS, excludes people below the age of 15. A point of reference will be 3.3 per cent, which is the share of net outflow in the post-accession period relative to the resident population (on 1 May 2004). The loss of males amounted to 4.4 per cent of the respective population, while the loss of females was 2.2 per cent. The largest loss according to age was recorded in the 25–29 age group, which diminished by 9.3 per cent. The losses of other groups were as follows: 20–24 years, –8.8 per cent; 30–44 years, –3.8 per cent; 45+ years, –1.1 per cent and 15–19 years, –0.8 per cent. The population loss of rural areas was 3.5 per cent (4.7 and 2.4 per cent, respectively, for males and females), exceeding the loss of urban areas by 0.4 percentage points. In fact, among the inhabitants of towns and cities the tendency was further diversified. The inhabitants of larger cities (above 100,000) displayed a distinctly different pattern from that of the inhabitants of medium-sized and small towns, which was itself similar to that of the rural population pattern. For instance, in the age group most strongly affected by population outflow, namely 25–29, the loss in the rural population amounted to 9.5 per cent and in the population of medium-sized and small towns to 10.0 per cent, while in the case of large towns it was 8.2 per cent. In the 20–24 age group in the two former categories it was 9.6 per cent, and in the latter category 7.0 per cent.

19 ������������������������������������������������������������������������������ Resident population 15+ at about the date of Poland’s accession in the EU was nearly 31,800,000, and we estimate the total loss due to post-accession migration (15+) at 1,045,000.

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In a cross-regional perspective (16 regions being at the same time principal administrative units) the loss varied from 1.8 per cent (Mazowieckie, with the capital city Warsaw) to 7.2 per cent (Podkarpackie, in the very remote southeast of Poland, see Figure 10.1a in the Appendix). The smallest loss in terms of male rural population was in Slaskie in the south (1.8 per cent) and the largest in Podkarpackie (9.0 per cent), while in terms of the male urban population losses ranged between 2.7 per cent in Opolskie in the south and 10.3 per cent in Swietokrzyskie in Central Poland. The losses in terms of female rural and urban populations were much lower, in the range of 0.6 per cent (Mazowieckie) and 5.9 per cent (Podkarpackie). In general, outmigration in the post-accession period has caused a considerable loss in Poland’s population, particularly the working age population. Most strongly affected by the post-accession outflow were the underdeveloped regions of eastern and south-eastern Poland, especially medium-sized or small towns and villages, mainly involving the male population of prime age. 3.2 Labour Market Impacts In the pre-accession period Poland, similarly to other ‘new accession countries’, was struggling with serious structural mismatches in the labour market. The unemployment rate was within the range 18–20 per cent (2001–2003), one of the highest in Central and Eastern Europe, and severe job shortages led to economic stagnation in local labour markets. A gradual improvement was visible as early as 2003, but it accelerated rapidly after 1 May 2004. Between the second quarter of 2004 and the first quarter of 2007 the number of unemployed decreased from 3.1 million to 1.5 million, and the unemployment rate fell below 10 per cent. Needless to say, the unfavourable situation in the Polish labour market was the main push factor for the outflow before 1 May 2004 and thereafter. As already mentioned, the group of post-accession migrants consisted of very young, relatively well-educated persons originating from urban areas. Many of them did not seek employment in the home country at all, but migrated (for instance to the United Kingdom) immediately after graduation. However, despite the relatively high educational attainments of Polish migrants in Britain, they were offered (and accepted) mostly low-skilled and low-paid jobs, such as factory, warehouse or farm work, cleaning and driving (Department of Work and Pensions, Accession Monitoring Report 2007). On the one hand, linguistic problems sometimes meant that they could not compete with British workers, but on the other hand, the motives of most migrants were purely financial and so they readily agreed to work beneath their qualifications, intending to return to Poland one day. Examination of the relationship between the unemployment rate and the number of Polish temporary migrants (both according to the LFS) suggests that between the late 1990s and the date of EU enlargement, unemployment was one of the most important push factors and its developments paved the way for changes in the migrant stock in pretty much the same direction. However, after 2004 a

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rising stock of temporary migrants was accompanied by declining unemployment which led to an inverse relationship (Figure 10.9). The loss of 4 per cent of the population of working age due to outmigration did play a role in the reduction of unemployment, but the direct effect cannot be quantified.









     



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Figure 10.9  Temporary migrants (aged 15+) from Poland (left scale) and unemployment rate (right scale) according to LFS, 1994–2007 Note: LFS has not been conducted in the second and third quarter of 1999. Source: Kaczmarczyk and Okólski (2007) (based on the LFS).

Large post-accession migration contributed not only to a deep reduction in unemployment but also to another economically important phenomenon: that is, since 2005 the number of vacancies has been sharply rising. In the fourth quarter of 2005 only 1.8 per cent of companies reported hiring difficulties, while in the second quarter of 2007 as many as 12.7 per cent did so. The shortage of workers became particularly acute in construction (over 30 per cent of companies reporting hiring difficulties) and manufacturing (15 per cent). Although in 2007 the overall vacancy rate still remained at a relatively low level (slightly above 1 per cent), in some sectors (such as construction) it exceeded 5 per cent. This has happened despite a reversal in the declining employment trend; between the first quarter of 2004 and the first quarter of 2007 the number of employed increased from around 13.5 million to around 15.2 million. Needless to say in the foreground was rapid economic growth, which among other things stimulated factor mobility, expansion of firms and labour demand.

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With a certain time lag, by the end of 2006, absolute and relative wages began to react coherently to the migration-led labour market changes. This represented a distinct novelty; throughout the period of economic transition wages had been fairly inflexible and relatively flat, hampering labour market reform. Even after EU accession, between 2004 and 2006 wages in Poland rose merely symbolically (by around 2 per cent). That changed in 2007, however, when the average monthly salary increased by 9 per cent. More important, wage rises became diversified across economic sectors, branches and professions (Kaczmarczyk and Okólski 2008). The abovementioned phenomena – the massive scale of post-accession outflow, a sharp rise in the number of vacancies in several economic sectors and an increase in wage levels and differentials – might indicate subsequent structural tensions in the Polish labour market. Skill mismatches and shortages among certain professional groups could already be observed. Health care personnel can serve as an example. In the period 1 May 2004–30 June 2006 fewer than 4 per cent of physicians applied for a certificate testifying to their medical qualifications according to EU rules, which can approximate the propensity to emigrate (Kaczmarczyk and Okólski 2007). However, in some branches of medicine, such as anaesthesiology, radiology, plastic and chest surgery, the proportion exceeded 13 per cent, and the consequences of such losses, if realized, might have been disastrous. In view of these arguments, even though presented in very general terms and in an unsophisticated manner, our tentative hypothesis (developed earlier by Kaczmarczyk and Okólski 2007; 2008) claiming a significant impact of postaccession migration on the Polish labour market seems highly plausible. 3.3 Flow of Remittances One of the immediate effects of increased outmigration after 1 May 2004 was likely to be increased financial flows to Poland. Indeed, as the World Bank database on remittances suggests, between 2003 and 2006 the value of remittances increased by 164 per cent (Figure 10.10). However, the rise was not as impressive as in the case of some other ‘new accession countries’, such as Latvia (279 per cent) and Lithuania (541 per cent). It should be mentioned that, compared to many other net emigration countries, Poland receives relatively little by way of private money transfers from abroad. For instance, in terms of the share of remittances in GDP Poland is far below the average value for Eastern Europe and the former Soviet Union countries. In 2004 it was around 1.5 per cent, while, for example, in Latvia it was 2.5 per cent, in Lithuania 3 per cent, in Croatia 5 per cent and in Hungary 5.5 per cent (in Albania, and in some ex-Soviet and ex-Yugoslav countries it was far in excess of 10 per cent). Despite a massive outflow of people over the following two years, the relative value of remittances in Poland fell further (1.3 per cent in 2006). In turn, the remittance-to-FDI ratio in 2006 exceeded 0.5 and was significantly higher than in the pre-accession period (Kaczmarczyk and Okólski 2007).

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Leon-Ledesma and Piracha (2001) estimated the impact of migration on two major GDP components, investment and private consumption, in ten Central and Eastern European economies in the 1990s, and found that the elasticity of money transferred by migrants to their home countries in respect of consumption was almost twice as high as in respect of investment. This clearly reflects the nature of the process, namely the fact that remittances are spent predominantly on consumer goods. Following that line of reasoning it might be interesting to look at the importance of remittances for private expenditures. At the macro level it is reflected in the ratio of remittances to consumption: in 2001–2006 a strong rise in total remittances brought about a very modest increase in their share in total private consumption in Poland and almost no change could be observed in the relevant trend after EU accession. In contrast, in Lithuania that increase was very rapid, especially in the post-accession period. The impact of migration on private consumption in Poland is more obvious when observed at the household level. This is in large part because of migrants’ habit of bringing their foreign savings back home either in cash or in merchandise (for example, a second-hand car for resale in Poland). As a couple of extensive surveys revealed, migrants in the immediate pre-transition period who originated from the western part of Upper Silesia (Śląsk Opolski, Opolskie voivodship) were able to transfer to Poland, in either form, as much as 75–80 per cent of their earnings in Germany (Jończy 2003; 2005). A similar estimate and the same conclusion ensue from a national survey of seasonal migrants who worked in Germany in 1999– 2002 (Kaczmarczyk and Łukowski 2004). According to Jończy (2003; 2005), in the case of Śląsk Opolski money transferred by migrants has a tremendous impact on household incomes, radically improving the relative position of the region in

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a cross-regional perspective.20 For instance, in 2000 disposable monthly income per capita in the region officially amounted to PLN 630, ranking it tenth among Poland’s 16 regions. After including remittances from outside the banking system, however, disposable income was raised to PLN 840, that is, by one third. This adjustment radically improved the position of Śląsk Opolski among all Polish regions, elevating it to number one spot. This extreme case shows that migration and remittances can seriously affect the economic situation not only of migrants, but also of local communities or even entire regions. 4. Conclusions Economic transition and the liberalization of population movements in the 1990s, followed by freedom to work in certain EU member states after 2004, greatly enhanced the already strong propensity of Polish labour to work abroad. In fact, EU enlargement proved to be one of the most important emigration stimuli in Poland's contemporary history. The number of persons abroad rose significantly from 1 May 2004; as of the end of 2007, it was estimated at almost 2.3 million persons. The range of destinations widened, encompassing not only traditional migration routes to Germany, Italy and the United States, but many other European countries, to mention only the United Kingdom, Ireland, the Netherlands, Norway, Sweden and Spain. Another change that took place after EU enlargement concerned the socio-demographic profiles of migrants: in comparison to the pre-accession outflow they are younger, more often well-educated and originating from urban areas. Such characteristics, typical of those heading for Ireland and the United Kingdom, indicate that the lack of transitional restrictions in those countries modified migrants’ motives and strategies. Especially the role of pull factors, such as the possibility of acquiring financial and human capital, increased. It is expected that many migrants will return to the home country in the near future, however, as for many of them work abroad represents merely a possibility of earning capital needed for living and/or investment. Return migration will grow along with Polish economic convergence with other EU member states. Due to the rise in wage levels in Poland and rapid appreciation of the Polish currency (towards the US dollar, the British pound and the euro), employment abroad is becoming less and less beneficial for Poles. Moreover, the generally limited social, cultural and linguistic capital of Polish migrants will likely prevent their successful integration and, ultimately, settlement in the destination countries. As a rule, foreigners have problems in rising substantially in the social and economic hierarchy abroad, and in the case of some Polish migrants this factor may constitute an important incentive to return. 20 ����������������������������������������������������������������������������� Due to the simple fact that most of the money repatriated by migrants is not recorded officially and thus cannot be included in the GDP accounts.

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EU Labour Migration since Enlargement

The demographic and economic consequences of post-accession emigration from Poland seem strong. Although the number of migrants constitutes less than 3 per cent of the total resident population, in some regions of Poland and particularly in the 20–29 age group the losses are much higher. Due to the scale of the outflow of young persons that accompanied economic prosperity, the situation in the labour market has become more complex: on the one hand, the unemployment rate has decreased and the level of wages has risen; on the other hand, in some economic sectors the vacancy rate has increased and skill shortages can be observed. In the near future these phenomena will presumably introduce additional tensions to the Polish labour market. Last but not least, since EU accession the amount of remittances sent to Poland has increased, but in comparison to other new EU member states it remains at a relatively low level. Moreover, remittances are spent predominantly on consumer goods in Poland. However, if some Polish migrants decide to return, the incomes earned abroad will be used for investment, which will certainly stimulate the development of entrepreneurship in Poland. References CSO (2008), Informacja o rozmiarach i kierunkach emigracji z Polski w latach 2004–2007 [Information on the scale and directions of emigration from Poland in 2004–2007] (CSO: Warsaw). Department for Work and Pensions (2007), Accession Monitoring Report, May 2004–September 2007. Frejka, T., M. Okólski and K. Sword (eds) (1999), In-depth Studies on Migration in Central and Eastern Europe: The Case of Poland (New York, Geneva: United Nations). Grabowska-Lusińska, I., and M. Okólski (2008), ‘Migracje z Polski po 1 maja 2004 r.: jej intensywność i kierunki geograficzne oraz alokacja migrantów na rynkach pracy krajów Unii Europejskiej’ [Migration from Poland after 1 May 2004: its intensity, geographical directions and the allocation of migrants in EU labour markets], CMR Working Papers, No. 33 (91) (CMR: Warsaw), Hryniewicz, J., B. Jałowiecki and A. Mync (1992), Ucieczka mózgów ze szkolnictwa wyższego i nauki. Raport z badań [The brain-drain from higher education and science. A research report] (Warsaw: Europejski Instytut Rozwoju Regionalnego i Lokalnego). Hryniewicz, J., B. Jałowiecki and A. Mync (1997), Ruchliwość pracowników naukowych w latach 1994–1997 [The mobility of science workers in 1994–97] (Warsaw: Europejski Instytut Rozwoju Regionalnego i Lokalnego). Jończy, R. (2003), Migracje zarobkowe ludności autochtonicznej z województwa opolskiego. Studium ekonomicznych determinant i konsekwencji [Migration for work of indigenous population from the Opole region. A study on economic determinants and consequences] (Opole: University of Opole).

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Jończy, R. (2005), Wpływ procesów migracyjnych na rynek pracy i dysharmonię rozwoju województwa opolskiego [Impact of migration on labour market and disharmony in the development of Opole region] (Opole: Regional Statistical Office). Kaczmarczyk, P., and W. Łukowski (eds) (2004), Polscy pracownicy na rynku Unii Europejskiej [Polish workers in EU labour markets] (Warsaw: Scholar). Kaczmarczyk, P., and M. Okólski (2007), ‘Economic impacts of migration on Poland and the Baltic States’, FAFO paper, Kaczmarczyk, P., and M. Okólski (forthcoming 2008), ‘Demographic and Economic Impacts of Migration on Poland’, Oxford Review of Economic Policy (autumn). Kępińska, E. (2007), ‘Recent Trends in International Migration. The 2007 SOPEMI report for Poland’, CMR Working Papers, No. 29 (87). Leon-Ledesma, M., and M. Piracha (2001), International Migration and the Role of Remittances in Eastern Europe, Studies in Economics 01/13, Department of Economics, University of Kent at Canterbury. Okólski, M., and M. Mioduszewska (forthcoming 2008), ‘Direct Demographic Consequences of Post-Accession Migration for Poland, in R. Black et al. (eds), EU Enlargement and Labour Migration within the EU (Amsterdam: Amsterdam University Press). World Bank (2006), Labour Migration from the New EU Member States, World Bank EU8 Quarterly Economic Report (World Bank: Warsaw).

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Appendix

Figure 10.1a  Poland by voivodships

Chapter 11

Labour Emigration: Government and Social Partner Policies in Poland Robert Szewczyk and Joanna Unterschütz

1. Introduction According to Poland’s Main Statistical Office (GUS), at the end of 2006 about 1.95 million Poles were living and working abroad, predominantly in EU countries, in comparison with 1.45 million in 2005 and 1.0 million at the end of 2004. By the end of 2007 the number had reached approximately 2.27 million. Of course, statistical data represent rather an estimate than reality, as this group is very dynamic. However, these numbers also include Poles living and working abroad before EU enlargement, regardless of their legal status, before 1 May 2004. As a result, among the countries with the highest Polish presence Germany, which implemented a seven-year transitional period concerning the free movement of labour comes second after the UK, which opened up its labour market instantly. Whatever the real numbers, the outflow of Polish workers to Western European economies is clear and has created both many opportunities and benefits, and disadvantages and difficulties of an economic, demographic and social nature. It is important to mention a number of trends which have characterized migration from Poland. Concerning who is leaving, the largest group, demographically speaking, is young people between 25 and 35 years of age, often fresh graduates or young skilled workers. A number of British scholars conducting research on Polish migrants present four basic groups of migrants which they characterize as follows: ‘storks’ (approximately 20 per cent) who work in the UK for several months, usually in low paid jobs; ‘hamsters’ (16 per cent) who come once but for a longer time in order to earn as much as possible; ‘pioneers’ (42 per cent) who have not yet decided whether to stay, move on or return home; and ‘settlers’ (22 per cent) who seriously consider settling in the host country. Second, as regards what professions are migrating, the answer is twofold. One group is skilled workers in construction, specialist doctors, nurses or welders who usually migrate with concrete plans and destinations, with a reliable place of residence and the offer of a labour contract before they arrive. The other group, comprising a wide variety of professions ranging from unskilled workers to university graduates, counts rather on luck in getting a good job or they have an  GUS Communiqué of 30 January 2008.

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‘anchorage’ – relatives or friends – who will help them to find accommodation and seek employment. This group usually takes jobs in hotels, restaurants, cleaning or agriculture. The third question is whether the migration is permanent. Again, there is no single and obvious answer to this, as the migrants are a very dynamic group and their decisions depend on a series of interlinked factors: labour market conditions in both the country of origin and the host country, personal situation and family ties, exchange rates, and so forth. According to various sources, between 20 per cent and 30 per cent of Poles who have migrated westwards want to settle down permanently in the host countries. This percentage may increase as time goes on and migrants get used to the local living standards and working conditions. On the other hand, as the economic situation improves and remuneration in Poland increases, migrants may be drawn back home, especially those who maintain strong family and social ties. It is important to note that a significant share of migrant workers, especially in industry, are employed on a so-called ‘6/2’ basis – six weeks’ work abroad and two weeks’ holiday at home in Poland. These workers can be characterized rather as long-distance commuters than as ‘full-time’ migrants. This working pattern applies particularly in the case of Norway which not only offers secure work places and very high wages but also readily grants work permits to Polish workers. It is important to understand that migration policy in Poland before EU accession was influenced by different factors than those that have shaped migration policy in EU-15 countries. Neither demand for foreign workers and refugees nor political and public debates influenced the policy. On the other hand, it was necessary to reconcile requirements to protect EU borders and meet international human rights standards (Weinar 2005). Both economic transformation after 1989 and EU integration shaped Polish migration policy and directed its transition from a country of closed borders to a member of the Schengen Area. In 1997 a new Act on Foreigners – Act on Foreigners of 25 June 1997, Journal of Laws No. 739, Item 739 with further amendments – was passed after it had become clear that the previous one, dated 1963 and amended in 1991, did not comply with international standards. However, this act still exemplified a traditional, mainly administrative approach to migrants, concentrating on conditions of entry, residence, deportation and strengthening the role of the administration (Weinar 2005). The EU integration process brought not only amendments to the Act on Foreigners, incorporating the acquis communautaire in this area, but it was also a first step towards institutionalizing Polish migration policy by creating an Office for Foreigners and Repatriation. The year 2003 was a watershed for Polish migration policy between a period of rapid adaptation to changing realities and modifications influenced predominantly by the common European policy on migration. In 2003 an Act on Rules and Conditions of Entry and Residence of EU Citizens in the Territory of the Republic of Poland of 27 July 2002 (Journal of Laws, No. 141, Item 1180) entered into force. This act, essential for enabling the free movement of persons within the EU,

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also established double standards in this regard for EU citizens and third-country nationals. In the same year the Act on Foreigners was amended once more to adapt further to EU migration policy standards. 2. Government Policy after EU Accession 2.1 Employment Policy towards Foreigners Although it is still justified to consider Poland a country of origin for mobile workers, its character is gradually changing due to the recent positive labour market trends and the increased demand for foreign workers, especially in some branches. It is therefore important to present the government’s policy towards foreign workers in Poland, especially since checks carried out by the Labour Inspectorate show that every third firm employing foreign workers – mostly from Ukraine, Belarus and Russia – is in breach of the law. The most common infringements concern employment without prior permission or without a written contract (PIP 2007). This means that many foreigners still work in the shadow economy, which may directly influence their working conditions regarding social security, health insurance, wages and, last but not least, health and safety at work. There are also isolated reports of workers, especially from the Far East, experiencing exploitation (Janczewska 2008). Since 2007 the Labour Inspectorate has been authorized to verify workers’ migration status. The employment of foreigners in Poland is regulated in several acts. The most important ones, from the perspective of relevance to general employment policy and migration policy, are the Act on Foreigners and the Act on Promoting Employment and Labour Market Institutions (hereafter, the Employment Act). The Act on Foreigners of 13 June 2003 (Journal of Laws, No. 234, Item 1694 of 2006, consolidated text) is a broad regulation covering a wide range of issues, such as crossing the border, visas, different types of permits for foreigners (permit to settle, permit to stay in the country), rules of expulsion, registers concerning foreigners, and so on. The European Act, which came into force in 2004, relates to labour market policy and labour market institutions and instruments, as well as various forms of assistance to the unemployed. It also includes regulations concerning the employment of foreigners in Poland. More detailed provisions concerning issues such as the procedure and conditions of issuing work permits to foreigners and posted workers and the performance of work by foreigners without a requirement to obtain a work permit are included in regulations of the Ministry of Labour and Social Policy issued in 2006 (Journal of Laws, No. 156, Item 1116). These legal acts constitute two different legal systems of employment of foreigners on Polish territory: one for EU citizens and another, more restrictive  Act of 13 April 2007 on the National Labour Inspectorate (Journal of Laws, No. 89, Item 589).

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one for third-country nationals, with a sub-category including citizens of Belarus, Russia and Ukraine. No transitional periods were established for citizens of Bulgaria and Romania, after the accession of these two countries to the EU. This decision resulted from a campaign to shorten transitional periods still in place in some EU countries, as well as a desire to attract foreign workers to the Polish labour market which, not least as a consequence of the large recent labour migration to Western European countries, suffers from labour shortages, especially in some sectors. In order to be legally employed in Poland third-country nationals have to obtain a work permit issued by the local authorities. It is the obligation of the employer, not the migrant worker to apply for the work permit. The procedure for obtaining the work permit is rather complicated and consists of the following steps: • • • • • •

an obligation on the employer to check the availability of a Polish worker for the post; a review of the employer’s application by the local authorities, which must consider the situation on the local labour market; the issuing of an official form of prior permission which is to be sent to foreign employees to facilitate their visa application; the employee must obtain a residence permit; provision of information by the employer to the local authorities that issue the permit; the conclusion of a labour contract with the foreign employee.

Furthermore, some groups of workers are exempt from these obligations, including the citizens of bordering countries, Belarus, Russia and Ukraine. They may perform work without a work permit for up to six months during a twelve-month period and subject to registration by the employer at the Labour Office, including a statement on his or her intention to conclude a labour contract (which is needed for the visa application). Other groups of workers who do not need permission to work include refugees, foreign family members of Polish citizens, persons granted permission to settle or reside for a definite period, persons performing certain tasks such as teaching, military service in international military forces, press correspondents, artists, lecturers, sportsmen, clergy, students, posted workers in certain jobs, doctors and – under certain conditions – citizens of Turkey. According to the Act on the Karta Polaka – ‘Pole’s Card’ – of 7 September 2007, also citizens of former Soviet Republics – Armenia, Azerbaijan, Belarus, Estonia, Georgia, Kazakhstan, Kirghizstan, Lithuania, Moldova Russian federation, Tajikistan, Turkmenistan, Ukraine, Uzbekistan – may be exempted  If the work is to be performed for a longer period of time, a work permit is necessary.  Some of the privileges offered by the ‘Pole’s Card’, such as facilitation of starting up a business in Poland, cheaper rail tickets and museum entrance are more favourable

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from the obligation to obtain a work permit if they can prove that they have Polish ancestors, as well as a basic knowledge of the Polish language, culture and traditions. 2.2 Labour Law and Social Security Labour standards All the core labour rights and principles are applicable to all persons employed on the basis of employment contracts as defined in the Labour Code, including teleworkers, agency workers and fixed-term workers. However, groups of workers who are exempt from the Labour Code, especially workers employed on the basis of civil contracts and the self-employed, are not covered by basic labour rights, except for the right to health and safety at the work place. The basic tool to ensure equal working conditions for all employees is a ban on discrimination on the grounds of sex, age, disability, race, nationality, religion, political convictions, trade union membership, ethnic origin, confession or sexual orientation. There are also explicit provisions to guarantee equal treatment to part-time and fixed-term workers, as well as teleworkers or those employed by temporary work agencies. In case of discrimination the burden of proof is on the employer. Employees of foreign nationality generally enjoy the same working conditions as Polish nationals performing the same or comparable jobs. The minimum wage is subject to negotiations every year in the Tripartite Commission, which includes representatives of employers’ and employees’ organizations and the government. If no agreement is reached within the Commission, the minimum wage is laid down by the government. The annual minimum wage increase should reflect increases in prices. No employee employed full time – regardless of nationality – may earn less than the minimum wage. Moreover, the rules of remuneration deriving from specific work regulations at the company level or collective agreements are applied to all workers covered by the regulation or agreement, irrespective of nationality. Non-payment of wages, as well as other serious forms of breach of labour law, constitute a misdemeanour under Polish law and the Labour Inspectorate may impose a fine or initiate proceedings before the court against the employer. Although there are no specific data on the wages of foreign workers in the establishments inspected by the than EU regulations, which explains why these provisions also cover citizens of such EU member states as Estonia and Lithuania.  The privileged legal status of these foreigners is connected to the Polish history and the fact that many Poles were deported to the territories of the Former Soviet Union against their will, but despite geographic distance, they tried not to lose connection to their ethnical roots.   In 2008 the minimum wage is PLN 1,126 or €320 a month.   The fine stipulated in the Labour Code which can be imposed by the court is PLN 1,000–30,000 or €300–8,850, while the fine which can be imposed directly by the Labour Inspectorate is PLN 2,000 or €600.

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Labour Inspectorate, the percentage of employers who failed to pay the due wages decreased by half in 2007 as compared to 2005. In a typical situation, in case of a legal claim a foreigner performing work in Poland may sue an employer before the Polish labour court, which may, however, be difficult in practice because of the language barrier. Worker representation Trade union participation in Poland is based on membership of an enterprise trade union organization. It is also at the enterprise level that most trade union rights of vital interest to employees are applicable. It is for each trade union to regulate the rules of membership in its statutes. There are no legal obstacles to foreign citizens becoming trade union members in Poland and enjoying all the rights related to trade union membership (for example, the right to prior consultation before termination of the labour contract). Other forms of employee representation are works councils, which must be set up in all establishments of at least 50 employees. The system of election to works councils does not discriminate against employees according to nationality. The same can be said of European Works Councils, which exist in some transnational companies in Poland. In practice few foreigners become trade union members. There are two main reasons for this: first, the low membership rate in general (about 12 per cent of workers), and second, the fact that many foreigners are still employed in the shadow economy. Social security and health insurance Applicability of social security, including health insurance for workers, is on a territorial basis; that is, the fact that the work is performed on the territory of Poland or for a Polish employer. Therefore, all persons performing work on the basis of either an employment contract or a civil contract are – or in the second case can be – covered by the provisions on social security. As far as retirement benefits are concerned, the rules governing this area are covered by the system of coordination within the EU. According to the Act on Health Benefits Financed by Public Resources of 27 July 2004 (Journal of Laws, No. 210, Item 2135), all employees, including those of foreign (EU) origin – explicitly mentioned by the Act – are both entitled to benefits and obliged to pay health insurance contributions while employed. EU citizens not employed in Poland may benefit from health services on the basis of the rules on the coordination of social security systems.  In 2007, the proportion of inspected employers who infringed wage payment provisions was 26 per cent, while in 2005 it was over 50 per cent (Report of the Chief Labour Inspector on the activities of the Labour Inspectorate in 2007).  According to the Act on International Private Law of 12 November 1965, parties to labour relationships may choose the legal regime to be applied to that relationship. If no legal regime is chosen, and the parties are not residents of the same country, the legal order of the country in which the work is performed is applicable.

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Citizens of the EU and the EEA, as well as their family members and some other groups of migrant workers – for example, refugees and those who have obtained permission for permanent residence – are fully covered by the provisions of the Employment Act. This means that they are entitled to benefit from all the instruments provided for unemployed persons, such as vocational training and counselling, instruments for employers consisting of financial incentives for the employment of such workers and of course unemployment benefits. Periods of employment in another EU or EEA country are included in the conditions laid down in the regulations governing the coordination of social security systems. 2.3 Government Activities concerning Migrant Workers Abroad Information and assistance campaigns  Poland’s accession to the EU and the increase in migration by Polish citizens to EU countries – especially Germany, the UK and Ireland – has strongly influenced the work of Polish consulates. Both the amount and the character of activities has changed: more information and assistance are needed for Polish citizens working and living abroad. In 2006, therefore, the Ministry of Foreign Affairs presented a programme aiming to improve the assistance and information provided to Polish citizens in countries where the level of migration is especially high. The programme, which is called ‘Bliżej pracy, Bliżej Polski’ – ‘Closer to work, closer to Poland’ – consists of the following elements: restructuring of consulate offices, including longer working hours, employment of new staff, modernization or opening of new offices. The second element consists of information on living and working conditions in the countries where the consulates are situated, as well as information about employment opportunities in Poland (MSZ 2006). Activities of consulates  The Polish government attributes considerable importance to maintaining contacts between migrants and their motherland as regards Polish culture and language. In order to enhance and coordinate the efforts of Polish embassies and consulates a ‘Government Programme of Cooperation with Polonia10 and Polish Citizens abroad’ was developed. The programme, launched in October 2007, is coordinated by the Ministry of Foreign Affairs and implemented mostly by the network of consulates and embassies. Polish Consuls are responsible for developing contacts between new organizations of Polish migrant workers in EU countries, as well as supporting the integration of these new organizations with those deriving from the so-called ‘old emigration’. Contacts with Polish Catholic missions have also been intensified, since the Catholic Church is often one of the primary institutions assisting Polish migrants.

10 The term ‘Polonia’ is traditionally applied to Polish immigrants in other countries – especially in the USA, the UK and France – who emigrated before 1989.

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The consulates concentrate their activities on maintaining cultural identity and other links with Poland by teaching the youngest generations the Polish language and implementing cultural projects. The first group of activities includes: promotion of the accessibility of Polish language classes in public schools in communities with significant numbers of Polish migrants (on the basis of Council Directive 77/486/EEC on the education of migrant workers’ children); initiatives aimed at establishing chairs and lectureships in Polish language and literature in local universities; cooperation with other organizations involved in teaching the Polish language; funding grants for young Poles and persons of Polish origin; organization of Polish schools. Cultural activities include: donations to and assistance in the organization of Polish film festivals, concerts and exhibitions; financial help for Polish libraries and clubs; support for groups performing traditional Polish music and dance. The Ministry of Foreign Affairs also provides information about living and working conditions in EU countries and warns against possible forms of abuse of migrant workers in various forms (written, electronic and multimedia). Programs for returning workers  The Programme ‘Powrót’ (Return) was launched by the Polish government in October 2007 (MPiPS 2007). It is aimed at ‘creating the best possible conditions for return for those who in recent years have decided to leave the country and migrate to more developed EU countries’. The activities within the framework of this programme encompass a number of different ministries. The Ministry of Finance is responsible for proposing regulations for migrants returning to Poland and establishing businesses, including tax privileges and reduced social security contributions for a limited period. The Ministry of Foreign Affairs is supposed to engage in activities aimed at improving the image of Poland among emigrants, as well as promoting business. It also provides information and advice on the law in this area. The Ministry of Labour and Social Policy was made responsible for providing information concerning job offers in Poland online in consulates. Employees of the Ministry acquainted with the Polish labour market are delegated to consulates on a permanent basis. Furthermore, a website – www.powroty.gov.pl – has been launched by the Ministry. The information presented on the website includes specific issues of social security and taxation relevant to returning workers, as well as information on establishing new businesses. The website should also serve as a tool for building a positive image of the country and advertising the benefits of returning home. The Ministry also organizes job fairs in London and Dublin to encourage workers, especially in the most in-demand professions, to take up a job in their home country. The Ministry of Education and the Ministry of Science are supposed to work together to launch e-learning opportunities at all levels: both for children of Polish workers living abroad and for those who wish to continue education in Poland. The Ministry of Education is also responsible for introducing classes in Polish as a foreign language in schools abroad.

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Another programme, entitled ‘POWROTY/HOMING’11 is aimed at young scientists working abroad. Its aim is to encourage this group of persons to return to Poland and continue their research there. Within the framework of this project young scientists may obtain a two-year scholarship comparable to basic university remuneration, as well as financial resources to continue international cooperation and carry out a research project in the amount of about €11,500 per year. Taxation A major problem facing migrant workers is taxation. In many cases migrant workers receive income both in the receiving country and in Poland, especially if a period of work abroad is shorter than a year or a person is still a Polish resident. To avoid extensive financial burdens bilateral agreements on avoiding double taxation of income have been concluded between Poland and other countries. Such agreements were concluded with all the EU countries, as well as Norway, Switzerland, Ukraine, Belarus, Russia and many others. There are two methods of calculating tax due in Poland depending on the provisions of a specific agreement. The first is the ‘method of exclusion with progression’, which means that income obtained and taxed abroad is excluded from the tax base. However, the tax liability of the home income is calculated using the tax code relevant to the whole income, including the foreign income. In practice, the workers are usually pushed into a higher tax bracket.12 The second method of calculating tax is the ‘method of proportional deduction’, which means that an income obtained abroad is subject to taxation in Poland, but the tax paid abroad is deducted.13 This method also applies to income earned in countries with which Poland has a double taxation agreement. In this case a tax declaration has to be submitted if the Polish citizen’s place of residence for the purpose of taxation is Poland. The second method may be less favourable for workers. In this case an amount of income gained abroad equal to subsistence allowances for posted workers may be deducted from the income. Double taxation problems do not affect these workers who are no longer – at least for a certain period of time – Polish residents, since income tax is based on place of residence and not citizenship. In August 2008 an act on particular 11  More information about the programme is available on the website of the Foundation for Polish Science (Fundacja na rzecz Nauki Polskiej), . 12 This method applies to the following EU countries: Cyprus (agreement concluded in 1993), Czech Republic (1993), Estonia (1994), France (1975), Greece (1987), Ireland (1995), Italy (1985), Latvia (1993), Portugal (1995), Germany (2003), Romania (1994), Slovakia (1994), Slovenia (1996) and Sweden (2004). In July 2007 a protocol to an agreement between Austria and Poland concerning the avoidance of double taxation of income was signed, which will come into force from January 2009. Unfortunately, there have been no developments on tax agreements with the Netherlands, Belgium and Iceland. 13 This method is provided for in agreements with the following countries: Austria (2004 until 2008), Belgium (2001) Denmark (2001) Finland (1975), Germany (1972) and the Netherlands (2002).

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solutions for tax payers obtaining income outside the territory of the Republic of Poland, commonly called the ‘Tax Abolition Act’, entered into force. The Act covers all those who in the period 2002–2007 worked abroad in a country to which the less favourable international tax agreement was applicable. The list of countries includes Austria, Belgium, Denmark, Iceland, the Netherlands and the UK – one of the most popular destination countries for Polish migrant workers – as well as some non-EU countries, such as Russia and the USA. The Act has been expected for some time by migrant workers, especially those who intended to work abroad only for a short period. Many of them after returning to Poland had to suffer the negative consequences of unfavourable international tax agreements or might face problems in establishing their tax status. Now the Tax Abolition Act provides for reimbursement of additional taxes paid on foreign income or remission of the obligation to pay tax. Tax payers may benefit from abolition if they present a written statement detailing their income, the tax they paid abroad and the country where the work was carried out. Provisions on tax residence have been also simplified since 2007 in order to make them more transparent, although some doubts as to their application may arise regarding the situation of those who migrated leaving their family in Poland. 3. The Social Partners’ Policy towards Labour Migration 3.1 The Trade Unions’ Approach The outflow of workers from the Polish labour market was recognized as a key issue by NSZZ Solidarność, one of three national trade union federations, by the end of 2004, but it was another few months before the federation reacted to the phenomenon. It is important to note that Polish trade unions may undertake activities addressed to migrant workers only before they go abroad; after they leave Poland trade unions may only assist organizations and bodies performing services for migrants in the host countries. Trade unions in the host countries are thus the natural partners for trade unions in Poland; it was mostly their initiative to initiate actions directed towards the incoming migrant workforce. NSZZ Solidarność does not undertake any activities encouraging workers to leave Poland; on the contrary, according to Andrzej Adamczyk, International Secretary of NSZZ Solidarność ‘the right to free movement and employment in any EU country predominantly means the right to work in your own country and this requires the national authorities to create proper conditions and incentives for employment’.14 In terms of practical actions addressed to migrant workers, NSZZ Solidarność focuses on disseminating reliable information on working conditions in the host 14  http://www.solidarnosc.org.pl/praca_ue/index.htm.

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countries. A website15 was launched in 2007 to provide practical information to help migrant workers ensure equal treatment in the labour market of the host country by avoiding abuse, exploitation and degrading working conditions. Therefore, besides labour contracts, social insurance and taxation, Solidarność also provides information about local trade unions and how to contact them. The information on the website complements various brochures and leaflets published in the host countries by the local unions and distributed among migrant workers on the spot, in their new workplaces or at centres of Polish activities, for example, churches. Case by case interventions also take place quite frequently. Migrant workers, individually or in groups, contact Solidarność asking for information on or direct contacts with trade unions in their place of residence. As the language barrier is often an obstacle in contacting trade union organizations, Solidarność becomes the communication link and tries to find not only a specific trade union but also a person which might assist in organizing new union members on the spot. 3.2 Examples of Bilateral Trade Union Cooperation and Joint Actions Several trade unions, such as the Irish SIPTU or the British GMB, now employ full-time Polish speaking organizers, often Polish nationals who have been in the host country for a long time. This is also the case with the Dutch FNV that decided to employ a full-time Polish organizer – primarily in agriculture – though soon he was also helping to create a small network of Polish trade union activists/ organizers in the Netherlands. The Norwegian union Fellesforbundet in 2007 organized a network of interpreters to assist Polish, Lithuanian and Romanian workers employed in Norway, though examples of Polish workers joining the construction or metalworkers’ branch unions of LO go back before 2005. A case in December 2005 attracted much attention in both Poland and Norway concerning a group of about 13 workers who were not paid by a dishonest Norwegian employer near Bergen. The Norwegian trade union Unionen Fagforening established a special fund to enable the workers to return home and also brought a case against the employer in the Norwegian courts. Moreover, the UF declared it would defend the rights of Polish workers provided they are members of Solidarność.16 Many cases of abuse and exploitation of vulnerable migrant workers come to light only when the damage has been done. Such was the case of Polish agriculture workers employed on tomato farms in Italy. Withholding of passports, accommodation in degrading conditions, 16-hour working days, threats and

15 Ibid. 16  The International Department of NSZZ Solidarność was directly involved in this affair.

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physical abuse, and ultimately missing persons were obvious signs of organized criminal activity.17 Posted workers represent a very difficult issue for the trade unions, one which often requires inter-union cooperation. In May 2006 there was a court case in the Labour Court in Mantes La Jolie, France, in which Polish worker Zbigniew Saganski, a member of NSZZ Solidarność employed by Polish company ZREW S.A., decided to fight for equal treatment and working conditions for 36 posted workers in France. They were subcontracted to Alstom Power Service to reconstruct an EDF plant in Porcheville, but they remained ZREW employees. The accommodation conditions were bad and wages were half the French minimum wage. The Polish workers asked the local CGT union for assistance, and CGT unions operating in Alstom and EDF organized a press conference to expose the Poles’ working and living conditions. The effects were immediate. Alstom purchased 40 new beds within 24 hours, and ZREW declared that it would make additional payments to the workers, although these were per diem sums, not part of the regular wage. The local Labour Inspectorate ordered additional payments according to French law, but this was not done and Mr Saganski, with the assistance of legal advisors from NSZZ Solidarność and CGT, decided to bring the case to court and won compensation. A similar platform for bilateral cooperation was established in summer 2007 when an official of the National Commission of NSZZ Solidarność was delegated to the French union FO to assist and organize Polish seasonal workers in agriculture. Many workers arriving in France have little knowledge of working conditions and are convinced they will be treated equally, but the reality is different. Additionally, the language barrier and dependence on employment agencies make this group especially vulnerable to abuse. The Polish official employed by French trade union FGTA FO has been involved in many cases related to working time – sometimes exceeding 55 hours a week, thus increasing the risk of accidents at work – or non-payment of overtime. Several cases reported to local labour inspectorates in cooperation with local trade unions found their way to court, and were related mostly to non-payment of contracted wages or overtime, or to illegal dismissal. Due to media coverage of these cases, an important side-effect of this cooperation has been increasing public awareness of the problems of migrant seasonal workers in the host country, usually employed in agriculture and in hotels and restaurants. Bilateral contacts at the regional and sectoral levels, or at the level of trade union headquarters, are vital. Talks at the level of trade union federations or even agreements on cooperation in the area of migrant workers – for example, between Solidarność and SIPTU, or between Solidarność, OPZZ and the TUC – help to establish communication mechanisms at lower levels, and close crossborder cooperation may also be a platform for joint actions, not only for migrant workers, but also for regular trade union actions defending workers’ rights (for 17 The Polish media, for example Gazeta Wyborcza, closely followed developments in this case.

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example, the eastern regions of the German DGB and ver.di, and the western regions of Solidarność organized a joint protest action against a megastore which was violating workers’ rights in 2006). Multilateral exchange of information and practices has perhaps less immediate effects, but it helps to create a more coherent approach. NSZZ Solidarność has participated in a number of seminars, conferences and workshops devoted to the issue of free movement of labour, organized mostly by ETUC and ETUI. These usually focus not only on the technical aspects of migration, but more broadly on accompanying trends and effects. 3.3 Trade Unions and Migrant Workers in Poland Another important issue is the trade union approach to migration into Poland. This is a very new phenomenon: for decades Poland has been principally a country of origin, and in recent years a transit country for migrants and asylum seekers from third countries. However, shortages on the domestic labour market and the visible pressure from workers from the East – be it the ‘near’ East of Belarus, Ukraine or Russia, or the Far East, that is, China and Vietnam – have changed things. The pressing labour market situation and frequent demands from employers eager to employ foreign workers led to the drafting of a bill allowing the employment of foreigners without work permits. When they issued their opinion on the bill the Presidium of the National Commission of NSZZ Solidarność firmly emphasized the need to supervise the working conditions and remuneration of migrant workers, and also stated that they should be the same for both Polish nationals and foreign workers.18 According to the union the work of migrants in Poland should be absolutely legal, preferably covered by the Labour Code and complementary to local demand. This opinion was a reaction to information from various sources that lower wages are offered to foreign manual workers, for example, from Asia or Ukraine.19 Although migration to Poland is becoming more and more visible, the trade unions still do not have a general strategy for organizing migrant workers, only general declarations on the need for equal treatment and protection. The problem will only become more urgent as recent changes in the law allow migrant workers from non-EU Eastern European countries to be employed for six months without work permits. According to official statistics – based on the number of work permits granted – there were 23,000 workers from Ukraine, Belarus and Russia in Poland in 2007, although it is obvious that the number is significantly 18  Decision of the Presidium of the National Commission of NSZZ Solidarność, No. 97/07. 19 Statement of M. Bieniecki, expert at the Institute of Public Affairs, during a debate on Polish migration policy reported by Gazeta Prawna (Jakubczak and Marczuk 2008); statement of S. Szafarz, Director of the Polish– Chinese Economic Chamber, cited by Janczewska (2008); S. Mirecki, Vice-President of the Polish Association of House Builders, cited by Jakubczak (2008).

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underestimated and the firms’ demand for labour will increase further, especially in construction and agriculture. In this context, the trade unions not only address the issue of equal treatment, but also emphasize the need to activate the Polish unemployed through local initiatives and incentives. Also, the trade unions believe that employing workers in the informal sector – the so-called ‘grey zone’ – should be more strictly prosecuted and treated not as a transgression but as a crime. 3.4 Employers’ Problems and Reactions Recent labour movements have taken out of the labour market skilled workers and mid-level professionals – for example, nurses – but shortages have also been caused by reform of the education system since 2001, when many vocational schools were closed. Skilled specialists in production and experienced skilled manual workers – for example, welders or seamstresses – are among those most in demand. According to the report prepared by Jagiełło and Węsierska (2007) before the first Employers’ Congress in 2007, almost 50 per cent of Polish companies claimed that they had lost revenues due to labour shortages; this number had doubled since 2006 when about 25 per cent of companies had considered the shrinking labour supply a problem. As the most urgent issues the employers mentioned difficulties in finding skilled workers and professionals. Most employers think that a 10–30 per cent wage increase will keep most workers in Poland. However, wage increases are only one thing that human resources managers must do in order to meet their labour force needs. A follow-up study was conducted in autumn 2007 among 300 medium-sized and large companies representing several sectors, for example, energy and fuel, trade, services and industrial production (Jagiełło and Węsierska 2007); 60 per cent of companies confirmed difficulties in recruiting workers, especially in trade and services. As a direct effect of the shortages, apart from problems in basic operations, the employers mentioned the need to pay for overtime work and even to reduce production, leading to loss of revenue and a weakened market position. Twenty five per cent of companies also reported shortages in administrative employees, for example, human resources and accountancy specialists. Increased demand for management employees was also reported, but in this area the shortages are caused not only by migration, but also by the dynamic development of companies in Poland. In this context, visible shortages of, for example, IT engineers in 2006 made employers offer more competitive working conditions and, as a result, the demand for this specialization has recently decreased. From the employers’ perspective, workers have considerable bargaining power in almost all branches of the labour market in Poland. Migration – reduced labour supply – is only one reason for this; Polish companies have experienced significant development and the demand for labour has increased despite parallel increases in labour costs – according to Eurostat, labour costs in Poland have increased by 12 per cent since 2005, though comparatively less than in several other CEE countries,

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for example, Latvia (30 per cent) and Romania (over 20 per cent). In 2007 alone the national average wage increased by 9 per cent, with several sectors – for example, construction – soaring well above 17 per cent. Thanks to internal economic growth, especially after EU enlargement in 2004, increased demand for labour and the possibility of legal migration the unemployment rate in Poland fell from 18 per cent in 2002 to slightly over 10 per cent. It is worth noticing that for almost 15 years the labour market was entirely under the thumb of the employers, but now the situation has shifted dramatically. Employers more and more frequently emphasize increasing labour costs as a factor undermining their competitiveness, although differentials between the EU-15 and the A8 in this respect remain huge: hourly labour costs in Germany oscillate around €28, whereas in the Czech Republic they are €8, in Poland €7.50 and in Romania only €4. Employers are trying to provide incentives to keep workers in Poland – for example, they offer additional training and present a clear career path in the company, or sometimes offer family-oriented social facilities. Moreover, internal migration between companies and staff turnover is still high, therefore loyalty bonuses or company cars have become more and more frequent methods of maintaining workforce stability. However, many employers still underestimate the importance of non-pecuniary elements in motivating workers. In this regard, highly developed human resources policies may be more efficient than the somewhat traditional approach of Polish employers. 4. Future Developments of Polish Migration Policy Four years after EU accession Polish migration policy still needs development, especially as far as the policy towards Polish emigration is concerned. The existing programmes aiming to facilitate the reintegration of returning workers do not yet seem fully functional. However, some steps have already been taken, especially in the area of tax regulations. Besides some bilateral agreements that aim to avoid double taxation another major step towards improving the situation of migrant workers in the tax area is the so-called Tax Abolition Act of August 2008. The Act covers all those who in 2002–2007 worked abroad in a country to which the less favourable international tax agreement was applicable. It is hoped that the Act will help to regularize the tax status of migrant workers and encourage some to return who might previously have been afraid of the consequences. Provisions concerning tax residence have been also simplified since 2007 in order to make them more transparent, although, as already mentioned, some doubts as to their application may arise concerning those who migrated leaving their family in Poland. Nevertheless, it should be borne in mind that for a large group of migrants it is not only the level of income that keeps them abroad. Other factors such as the standard of living or the conditions pertaining to running a business may also play a role. Therefore it would seem necessary to revise a large range of provisions not

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usually associated with migration, including the procedures and costs of setting up businesses, access to health and child care services, the functioning of the public administration, and so on. It would also be worth comparing the incentives offered to migrants by other EU countries with those offered in Poland in order to discover new ways of encouraging migrants to return (Iglicka 2007). One important legislative initiative is the bill amending the Employment Act, covering also regulations on the employment of migrant workers. Consultations on the bill have already been held with the social partners and other stakeholders. One change that was approved by both employers’ organizations and employment services is a simplification of the procedure for issuing work permits. Work permits, which will be issued for longer periods – up to three years – will be valid if a foreigner changes his or her workplace and there will be no need to renew the permit in case of restructuring. Workers from Belarus, Russia and Ukraine will be allowed to work without permits for a longer time: up to nine months. It is also planned to include citizens of Moldova and Georgia in this group. At the same time, the Ministry of Labour intends to protect workers from wage dumping by introducing a requirement to provide foreign workers with wages comparable to those offered to Polish workers for a similar job. Currently the requirement relates only to the national minimum wage and to specific work regulations at the firm level or collective agreements, if they exist. These changes have been welcomed by Polish employers, who are willing to employ foreign workers, especially from neighbouring countries, to fill vacancies for various unskilled jobs in building and agriculture (Jakubczak 2008). Nevertheless, the employers’ organizations propose further simplification of employment procedures regarding foreigners (PKPP Lewiatan 2008). Despite relatively high standards of protection for migrant workers in Poland, the Polish government still refuses to ratify ILO Convention No. 97 on Migration for Employment, stipulating basic standards for migrant workers, arguing that all its provisions are already incorporated in Polish law. Nevertheless, the trade unions are campaigning for ratification of Convention No. 97, hoping that it will be beneficial for migrants’ rights and at the same time prevent a lowering of labour standards in general (Presidium of the National Commission NSZZ Solidarność). The projected and recently introduced changes in legislation show a tendency to further open up the Polish labour market and to counteract social dumping; on the other hand, the attempts to facilitate the return of migrants do not go very far. It should also be noted that the public debate is concentrated on immigrants – especially those from the bordering countries and the Far East – rather than on Polish workers employed abroad. Finally, in order to further develop Polish migration policy it is essential to gather more comprehensive information both on emigrating Polish workers and on immigrants – including students – seeking work in Poland.

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References Iglicka, K. (2007), Strategies of Development of Polish Migration Policy concerning Legal Labour Migration for 2007–2012, Center for International Relations, Reports and Analyses 2/07. Jagiełło and Węsierska (2007), Migracja pracowników – szansa czy zagrożenie. Raport KPMG [website], Jakubczak, P. (2008), ‘W Polsce może pracować nawet 200,000 Ukrainców’, Gazeta Prawna 77 (18 April). Jakubczak, P., and B. Marczuk (2008), ‘Jaka polityke zatrudnienia powinna prowadzic polska. Polskich autostrad nie będą budować pracownicy z Dalekiego Wschodu’, Gazeta prawna 143 (23 July). Janczewska, M. (2008), ‘Chińczyk jest tani i je raz dziennie’, Dziennik (14 August). Ministerstwo Spraw Zagranicznych (MSZ) (2006), Program działań na rzecz zwiększenia opieki nad polska migracją zarobkową ‘Bliżej pracy, Bliżej Polski’ [website], Miniterstwo Pracy i Polityki Społecznej (MPiPS) (2007), ‘Program Powrót’ (koncepcja) [website], Państwowa Inspekcja Pracy (PIP) (2007), Efekty kontroli legalności zatrudnienia 2007 [website], PKPP Lewiatan (2008), Opinia do projektu zmian ustawy o promocji zatrudnienia i instytucjach rynku pracy [website], , accessed 23 July 2008. Report of the Chief Labour Inspector on the Activities of the Labour Inspectorate (2007), [website], Weinar, A. (2005), Polityka migracyjna Polski w latach 1990–2003 – próba podsumowania, Center for International Relations, Reports and Analyses 10/5.

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Chapter 12

Dimensions and Effects of Labour Migration to EU Countries: The Case of Hungary Ágnes Hárs

1. Introduction In the present chapter we shall discuss the emigration experiences of Hungary following the democratic transition to a market economy, focusing on emigration to the ‘old’ member states of the European Union – the EU-15 – and in the post-accession period. The case of Hungary as a sending country is somewhat controversial, with moderate emigration throughout the period. Moreover, although Hungary has developed into a net immigration country since the late 1980s we shall not deal with emerging immigration here. We shall discuss the trends and characteristics of emigration and both the promoting and impeding factors that have resulted in low emigration as compared to other new member states. 1.1 Historical Context To step back a century, at the turn of the nineteenth and twentieth centuries, similar to other countries in Central and Eastern Europe, Hungary was an emigrant country with considerable oversees migration. The main destination was the USA and the people involved were overwhelmingly from agricultural regions. After the First World War borders became subject to greater control and for decades migration intensity was low, involving mainly political and forced emigration. Following the Second World War movements of displaced persons and forced resettlements took place and politically driven emigration emerged. With the communist takeover in 1948 the post-war migration period was followed by strictly controlled borders, except during the aftermath of the uprising in 1956. In the following decades – up to the late 1980s – emigration was moderate, estimated at about 100,000 persons (Illés and Hablicsek 1996).

  Emigration from Hungary was controlled through the introduction of passports, while on the other, from the early 1920s immigration from Central and Eastern Europe to the USA was controlled by the quota system. In addition, the pre-war economy resulted in labour shortages that reduced the push factor as regards migration (Puskás 1991, 1996).

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1.2 Definition and Data Availability No systematic data are available concerning contemporary Hungarian emigration. Similar to other countries emigration figures are, by their nature, limited and barely reliable (Fassmann et al. 2009). Published statistics are based on the Central Population Register. However, since there are no incentives for deregistration, emigration is usually significantly underreported. Mirror statistics may help, nevertheless, due to the moderate emigration, such statistics also provide poor and incomplete data on Hungarian outflows in recent decades. Moreover, the immigration and emigration of temporary residents are not covered at all (Kupiszewska and Nowok 2006), although circular migration is significant. In addition, irregular migration is not covered by the data. 2. Trends and Patterns of Emigration 2.1 Emigration from Hungary Prior to Enlargement As a result of historical trends Hungarian communities were formed overseas – USA, Canada, Australia – but also in Europe. We may suppose that the moderate emigration flows of recent decades were not strong enough to establish new and effective migration networks in Europe. The main destination countries for Hungarians are Germany and Austria. The former has been by far the largest destination country over recent decades. Well over half the total emigrant Hungarian population – by citizenship – is resident in Germany and the number is increasing. The second most important destination country, Austria, has experienced a considerable increase since the fall of the Berlin Wall. Switzerland was once an important target country for Hungarians – mostly due to political emigration – but its importance has diminished and has been replaced by other destination countries. Table 12.1 shows the main trends in the stock of the Hungarian emigrant population resident in Europe, based on mirror statistics of the destination countries, for the pre-enlargement period in a long-term perspective.

 Those leaving the country for more than 90 days should inform their municipality of this fact. Those leaving temporarily remain in the register and their place of temporary residence abroad is recorded, but there is no information on the destination of those leaving for good. Returning residents have to notify their municipality within three days if they have no permanent address in Hungary.

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Table 12.1 Hungarian citizens in European countries (persons) 1971

1981

Country Austria Denmark Finland France Germany Iceland Lichtenstein Luxemburg Netherlands Norway Portugal Sweden Switzerland

1991

2002

13 1041 445 708 2 9612 55 978 49 14 1433 1 719 308 134

1 January 2 691 204

2 526 212 81

18 151 3

1 065

20 144 1 15 35 840

10 556 294 308 2 736 31 627 17 16 56 1 037

31 11 561

80 6 213

205 4 722

3 646

Note: Eurostat data for 2002; data for 2000; data for 2001. Source: Recent Demographic Developments in Europe country reports (latest available 2003) online data [website], . 1

2

3

The composition of target countries has not changed much over time; Germany remains the main destination country for Hungarians. Although half of the Hungarians who live in Germany have lived there over 10 years and an additional 20 per cent for four to ten years, nearly every third Hungarian is a newcomer who has arrived in Germany in recent years, like Polish or Romanian immigrants (Bundesagentur 2004). This means that, in addition to the previously accumulated stock, the pattern of Hungarian emigration flows to Germany is continuous and migration is partly short-term. Emigration from Hungary has been moderate in quantitative terms, even if one looks beyond official data. Surveys on migration potential also underline the fact that recent Hungarian emigration, measured in terms of intentions, lags behind other countries of the region, both in the 1990s and subsequently. Comparative data illustrate Hungarians’ low migration intentions compared to other new member states, in most of which migration intentions increased in the 2000s. Such intentions have indeed increased in the case of Hungarians, but they remain behind those of other countries, especially those experiencing strong migration pressure, such as Poland and Lithuania, but also Slovakia.

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Table 12.2  Migration intentions in the EU-25 and other countries, 1995–2005 (%)1

Hungary Czech Republic Slovenia Lithuania Poland Slovakia Latvia Estonia Cyprus Malta

1995 (%)

2001–2002 (%)

2005 (%)

3.2 3.9 3.9 3.4 9.6 10.2 4.9 2.8 2.9 0.4

1.3 1.7 1.5 3.2 2.5 3.3

3.0 1.4 4.1 9.6 9.9 5.4

Note: 1 Data for 1995 and for the 2000s are from different surveys and not comparable. Source: Data for 1995: ISSP (1995); data for 2001–2002 and 2005: Eurobarometer 2001– 2002 and 2005 (published in Fouarge and Ester 2007: 14).

Table 12.3  Composition of target countries by type of gross and combined migration potential in 2002 (%) Gross migration potential Destination country

Short-term employment abroad

Long-term employment abroad

Germany 35 Austria 18 UK 11 Australia 0 France 4 Italy 6 USA 7 Other 19 Total 100 Source: László, Sik and Simonovits (2003).

32 15 10 0 5 4 9 25 100

Emigration

Combined migration potential

22 19 10 2 7 7 14 29 100

31 15 10 0 5 6 10 23 100

96 45

3 570 360 2 954 1 400 2 961 1 022 508 377

49

654 391

49

708 445

1 343

3 816

1 564 687 447 341 161 54

3 186

6 599

55 953 13 824

2003

1 089 597 406 254 112 52

3 066

55 978 13 104

2002

2 463 1 832

7 133

5 879

54 437

2001

2 817 3 613 424 2 992 1 385

53 152

51 905

2000

53

678 463 336

3 847 1 711 2 303 1 886

3 620

6 021

54 714 14 375

2004

46

634 527 360

6 355 3 734 3 849 2 298 2 309 2 029

47 808 15 455

2005

48

687 624 395

7 060 4 051 3 833 3 044 2 349 2 271

49 472 16 763

2006

724 724 484 251

8 720 4 389 3 972 4 704 2 560 2 386

56 075 18 135

2007

Note: * As for the UK no data from the same source and methodology were available for 2006 and 2007 data on foreign workers in the UK from the Home Office (2007) were used to illustrate the trends. Source: EU online data on population by citizenship by countries, own calculations [website], .

Germany Austria United Kingdom UK employed* Italy Switzerland Spain Sweden Netherlands France Belgium Finland Denmark Norway Portugal Iceland

1999

Table 12.4  Hungarian citizens in European countries prior to and after enlargement

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EU Labour Migration since Enlargement

Data concerning emigration potential also confirm the stable destination orientation of Hungarians that is probably due to strong historical and geopolitical inertia. As regards both short- and long-term employment intentions abroad, data show that the German and Austrian domination holds firm in respect of all migration types, while the UK now ranks third as a target country for all types of emigrants (cf. Table 12.3). 2.2 Emigration after EU Enlargement Germany and Austria, the main destination countries for Hungarians, took a strict line on maintaining control over their labour markets from the beginning of the enlargement negotiations. Following the accession of ten new member states on 1 May 2004, however, a number of other European countries gradually opened their labour markets, fully or partially, to workers from the new member states. One might have supposed that the orientation of Hungarians – similar to the citizens of other new member states – would also have changed, but this was not the case, as Table 12.4 clearly shows. Even after enlargement, Germany and Austria remained the main destination countries, while the role of the UK did not change substantially. As regards the major destination countries, Hungarians make up the second largest population from the new member states in Germany. However, beyond a small increase in the number of Polish migrants, there was little change in the share of A8 migrants among all foreign workers on the German labour market (see Steinhardt in this volume). At the same time, in Austria, the second main target country of Central and Eastern Europeans, the share of Hungarians has grown among the continuously increasing immigrant workforce (see Walterskirchen in this volume). Although the UK was the first and most important labour receiving country that opened the gates to labour migration from the new member states, the share of Hungarians among A8 migrants to the UK has remained comparatively low and did not show a spectacular increase after enlargement (Table 12.5). From another perspective the UK’s share of Hungarian labour migrants among different destination countries remained equally low (Table 12.4). Nevertheless, the absolute number of Hungarian migrants to the UK increased steadily in the period 2004–2007.

 Throughout the 1990s easily the most important destination countries from Central and Eastern Europe were Germany and, at a lesser extent, Austria: 70 per cent of the emigration arrived in these countries in 2000. Somewhat unexpectedly and despite previous expectatons, only about 40 per cent of the emigration increase was to the traditional main destination countries following enlargement, while the UK and Ireland proved to be strong employment magnets (Boeri and Brücker 2005, 5–6).

Dimensions and Effects of Labour Migration: The Case of Hungary

235

Table 12.5  Labour immigration from the EU-8 countries to the UK, 2004–2007 (approved applicants from the EU-8,��� %) �� 2004 1 May – 31 December

2005

2006

2007

1 January – 31 December

Poland Slovakia Lithuania Hungary Czech Republic Latvia Estonia Slovenia Total

56.4 10.3 15.3 2.9 6.6 6.9 1.5 0.1 100.0

62.1 10.8 11.2 3.1 5.2 6.3 1.2 0.1 100.0

71.3 9.5 7.5 3.1 3.7 4.2 0.6 0.1 100.0

71.3 10.6 6.8 4.2 3.6 3.0 0.5 0.1 100.0

Total (persons)

125 880

204 970

227 875

206 965

Source: Home Office (2007).

3. Socio-demographic and Labour Market Characteristics of Emigrants Detailed data on the composition of emigrants are sparse. According to data on resident populations the structure of the emigrant stock has changed somewhat; the share of women migrants has increased in Germany, where the proportion of men previously dominated. In Austria the share of men was somewhat higher than that of women; it has gradually changed and the share of women has become slightly higher recently. In other destination countries the size of the emigrant population was low and the share of women was mostly higher in the previous decade (especially in Italy, but also in the Netherlands and the UK). The reason for increased women’s emigration may to some extent be due to marriage. The share of women in these countries with mainly women dominated emigration has somewhat decreased recently in favour of other types of migration, such as that of men. In general, the emigrant stock shows a higher ratio of women except in Germany (Table 12.6). The trend partly coincides with common migration experiences in Europe, including an increasing demand for services carried out by women.

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Table 12.6  The ratio of women to men in the resident Hungarian emigrant population

Germany Austria United Kingdom Switzerland Spain Italy Netherlands Finland Portugal Sweden Norway Denmark Belgium France Greece

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

0.6

0.6

0.6

0.6

0.6 0.9

0.7 1.1

0.7 1.1

2.4 0.9 1.4

1.3 1.0 1.7 3.0 2.2 0.8 1.2 1.5 1.8 1.2 1.4

0.7 1.0 2.6 1.3 1.5

0.7 1.1

1.3 0.9

0.6 1.0 2.1 1.2

1.6 0.9 1.5 1.4 2.2 1.4 1.0

1.5 1.0

1.3 1.5 3.9 1.8 1.1

1.4 1.4 3.9 1.7 1.1

1.4 1.2 3.7 1.8 1.1

1.4 2.4 1.4

1.3 2.3 1.3

1.3 2.0 1.2

1.2 1.8 1.2

2.2 0.9 1.0 1.4 1.4 1.2 1.3

2.2 0.8 1.0 1.5 1.2 1.4 0.8

3.2

1.5 4.8

0.8

0.9

1.3

1.3

2.6

Source: EU online data source.

In addition to the legal and resident population – covered by the data in Tables 12.4 and 12.6 – circular labour migration and irregular migration are on the increase (for a recent overview see Hönekopp and Matilla 2008). Migration plans also take into account the latter forms of migration. According to surveys on migration potential (Sik and Simonovits 2003; Sik 2005, 2006), despite the increasing share of women in the migrant stock the inclination towards migration among men is still far above that among women. Potential migrants tend to be found in younger age groups, students and also some unemployed. Migration potential is low among people with a lower educational level. The level of higher education, on the other hand, does not affect migration plans significantly, although the existence of migration-specific human and social capital is an important precondition, especially knowledge of a foreign language. As for family status, the overwhelmingly young and male potential migrants were mostly single and half of them still lived at home. Those with stronger migration intentions were more likely to be married, however. The unemployed had a stronger intention of working abroad, although their intentions were not strong. And even if the unemployed were willing to migrate, migration is extremely difficult for those living in the poorest regions. Potential migrants – unemployed and others – tend to be inhabitants of the more developed western or central regions of Hungary (Hárs 2004; Hárs, Sik and Simonovits 2004). Sporadic research evidence confirmed the correspondence between migration plans and experiences. A follow-up survey (Hárs 2008) in 2007 studying the fulfilment of expectations of the potential migrants questioned in 2003 (Hárs 2004)

Dimensions and Effects of Labour Migration: The Case of Hungary

237

proved that, although women’s intentions to migrate are considerably lower, their plans were more likely to be realized. Other research among the participants of the bilateral programmes that used to be an important channel of labour migration, mainly to Germany and Austria but also to other destinations since the 1990s, showed that few migrants were recruited from the less developed north-eastern part of Hungary, and mainly from the more developed central and north-western regions; this applies to both skilled and unskilled manual industrial and seasonal labour (Hárs 2003). Besides higher earnings working abroad usually entails sacrifice, more intensive work and higher material and non-material costs. People who intend to migrate tend to be more devoted to their work and to be prepared to sacrifice more for it on the home labour market too (Hárs 2004). Those who are ready to migrate would accept longer working hours on the national labour market, and similarly they are more flexible and more mobile there too. Previous migration experience is important for future migration plans. A person who has already experienced some form of migration is more likely to seek new opportunities. Following the work history of skilled manual labourers working within the framework of bilateral labour programmes we can recognize successive work experiences. Those who, for example, once worked in Germany would at a later date work in Austria and then perhaps in Switzerland (Hárs 2003). Those with successful migration experience tend to work abroad also in the future (Hárs 2008). Table 12.7  The rate of short- versus long-term migration potential,1 1993–2006 (%) Time of the survey 1993 1994 1997 2001 2002 2003 2005 2006

Short-term foreign employment

Long-term foreign employment

Emigration

4.3 3.8 3.7 8.8 7.6 9.4 13.0 6.2

2.7 2.7 2.8 6.8 5.6 6.1 6.0 6.1

1.4 1.3 1.5 3.4 3.4 3.0 3.2 4.1

Note: 1 Gross migration potential indicates the proportion of the population with plans to work abroad for the short term (some weeks or months) or long term (some years), or with plans to emigrate. Sources: László, Sik and Simonovits (2003), Simonovits (2004) and Sik (2005, 2006).

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EU Labour Migration since Enlargement

3.1 Short-term versus Long-term Migration and Cross-border Commuting We do not know, generally speaking, how long foreign employment lasts. We know the expected duration of potential migration spells, however, which gives us an overview of the reshaping of migration plans. As regards the trend of migration potential, compared to the 1990s the rate of those who would go abroad to work for a short period roughly doubled after 2000, reaching its peak in 2005. This high level of intention to engage in short-term emigration fell back considerably in 2006. The rate of potential long-term labour migration and emigration increased at the end of the 1990s, however, and has remained more or less constant ever since (Table 12.7). Short-term and seasonal labour also exist both in the border region and to farther destinations (to Germany, but also to new destination countries; no data on the size of this phenomenon are available). Daily commuting is common in the border region and also for longer periods; in some cases people have jobs in the home country and recurrently – for a certain period – abroad, whether regular or irregular. Short-distance or even cross-border commuting has lower costs and risks for those living near or in the border region, while still offering the economic gains of migration. In addition, the EU has support programmes that encourage the revitalization of regional labour markets across borders. The Austrian programme based on bilateral agreements attracted considerable interest; the quotas of the cross-border labour commuting programme between western Hungary and Burgenland were always filled. Those who entered the programme have worked in the Austrian border region for years; generally speaking, new candidates could enrol in the labour commuting programmes only if the quotas were increased. Not only are earnings higher than in Hungary, but according to estimates the commuting distance to workplaces over the border in Austria are similar to the average commuting distance to Hungarian workplaces in the region (Hárs 2005). Nevertheless, the bilateral programme is only part of commuting cross-border labour migration. According to everyday experience and research evidence Hungarians often find jobs through private networks or on their own as skilled manual workers (Wasserbacher and Michenthaler 2007). Research indicates the permanent character of short-distance migration: the average period people worked in Austria near the Hungarian border was over five years. 3.2 A Special Case: The Migration of Doctors The emigration of doctors exhibits a peculiar pattern that applies not only to Hungary but also to the other A8 countries. Not only is there high demand for   PHARE, INTERREG and more recently, in the new planning period, the European Territorial Cooperation Objective programme, that has replaced INTERREG.  The quota was about 1,200 persons in 2001, but it had been doubled by 2007, according to Public Employment Service information.

Dimensions and Effects of Labour Migration: The Case of Hungary

239

doctors in the EU-15 countries, but the average income in these countries is far above the home average. This has given rise to strong interest and shortly after accession doctors had already begun to express a readiness to migrate and had registered with mediation centres in Hungary for work as doctors in the UK. According to one recruiting agency – as reported by Mészáros (2006) – in Hungary about 15–20 doctors a day inquired about UK employment possibilities and 800 were registered for work. In 2005, about 160 doctors were sent to the UK. Most of the applicants were young doctors at the start of their career, but jobs were usually advertised for experienced doctors, few of whom were ready to go abroad. The strong mismatch between the huge general migration pressure among doctors and demand in the receiving market hindered strong emigration. In addition, language was a serious barrier that often limited job opportunities to positions with only limited contact with patients. The reform of Hungarian health care in 2007, together with hospital closures and job losses, however, resulted in increasing migration pressure even among doctors aged 30–39 or even older, for shorter or longer periods (Lóránth 2007). The mismatch between job expectations and the poor jobs and working conditions on offer is considerable. Medical students and young doctors also hope to find a foreign job: three out of four junior doctors declared at least weak migration intentions in 2004–2007, mainly for financial reasons, although gaining professional experience was also important (Eke et al. 2007). Desired destinations are mainly the UK, Germany and the Scandinavian countries. While there have been some success stories, the emigration pressure among doctors is mostly not realized. Some accept weekend work abroad, however, while keeping their jobs at home. 3.3 Emigration of the Poor: Roma Migration The migration pressure of the poorest has a distinct profile. There is a considerable Roma population in Hungary, mostly living in the most depressed regions of the country in poor living and working environments and with little hope of getting a job or of better living circumstances. They were badly hit by the economic transition. There has been some emigration of Hungarian Roma, similar to other countries in the region with a large Roma population (for example, the Czech Republic and Slovakia). Stewart (2001) considers them as the ‘underclass’ of the post-socialist era and Roma difficulties with integrating into society are one cause of their migration and their efforts to apply for refugee status elsewhere in Europe. The main target country has been Canada, however; the number of applicants rose into the thousands at the end of the 1990s and resulted in the re-establishment of the visa requirement between Hungary and Canada (Hajnal 2002). During the 2000s new waves of Roma emigration took place from Hungary to EU countries, mostly  The data may be overestimated because the survey was conducted by the Doctors’ Federation, a professional body.

240

EU Labour Migration since Enlargement

to France and also Sweden, generally following particular cases of harassment of Roma communities. Emigration was also regarded as a chance for better job and social security opportunities as refugees (Bognár and Kováts 2002). A considerable proportion of Roma emigrants were disappointed or were subject to compulsory repatriation to Hungary, however. Now that Hungary is an EU member state, of course, recognition of refugee status is no longer an option. Nevertheless, their strong migration drive is an important phenomenon and differs from those of other economic migrants in the region. They live in deprived communities characterized by segregation and endured sharply worsening economic and social conditions during the transition period. The Hungarian state was perceived as not caring about them at all (Kováts 2002). Although labour migration among the low educated is limited and Hungarian Roma cannot obtain refugee status in the EU, migration pressure remains. When the visa requirement for Hungarians entering Canada was removed once more Roma emigration inclinations revived and the first signs of preparations to go abroad emerged (NOL 2008). 4. Analysis: Push and Impediment Factors in Migration Although strong emigration was expected from the less developed EU-8 countries to the more developed EU-15, unlike in some other new member states labour migration in Hungary remained comparatively low after accession, although Hungary was not unique in this respect. Similar low migration trends were observed in Estonia, Slovenia and the Czech Republic, in contrast to the high emigration witnessed from Poland, Latvia, Lithuania and, recently, Slovakia. 4.1 Macroeconomic Factors in Migration What are the reasons for the lack of significant emigration from Hungary while there have been sizeable outflows from other new member states? According to the literature (Harris and Todero 1970; Borjas 1989, 1995; Barro and Sala-i-Martin 1991; Layard et al. 1992) the main factor that drives migration is the difference in expected economic gains; that is, a sufficiently large wage difference between the sending and receiving countries. This can be measured in terms of wage or GDP differences per inhabitant as a macroeconomic proxy for the expected economic gain. In addition, the prospects of the home economy and labour market are also important. Expected employment opportunities in the home country affect the intensity of migration even in case of significant wage (GDP) differences: the greater the stability and future prospects of the home economy, the less the migration pressure. Hungary’s economic achievements were promising during the 1990s compared to other countries in the region and were probably one of the main reasons for the low level of emigration (Hárs, Sik and Tóth 2001). The situation has changed recently, however. Hungary has lost its favourable position and its convergence

Dimensions and Effects of Labour Migration: The Case of Hungary

241

with the EU-15 has slowed down markedly. At the same time, other countries in the region have experienced a rapid increase in GDP per capita and have overtaken Hungary or at least have diminished the gap (see Figure 12.1). Nevertheless, little has changed in Hungarian emigration trends. 













 











(8 (VWRQLD +XQJDU\ 6ORYHQLD









%XOJDULD /DWYLD 3RODQG 6ORYDNLD

I I

&]HFK5HSXEOLF /LWKXDQLD 5RPDQLD

Figure 12.1  GDP per capita (PPS, EU-27=100%)

 



 















 















HPSOR\PHQWUDWH SDUWLFLSDWLRQUDWH XQHPSOR\PHQWUDWH



XQHPSOR\PHQWUDWH





HPSOR\PHQW SDUWLFLSDWLRQUDWH

Source: Eurostat online database.

Figure 12.2  Employment, unemployment and participation rate in Hungary, 1998–2007 Source: Hungarian Labour Force Survey.

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Little change is discernible in labour market indicators in connection with the economic changes. The economic slowdown resulted in a moderate increase in unemployment, while the employment level stagnated. The labour market participation rate is low by international comparison and the share of those outside the labour market is high, with some fluctuations, depending on the labour market situation (Figure 12.2). The moderate unemployment rate at a low employment level is due to the institutional structure of the labour market and the social benefit system (Köllő 2008). Although economic and labour market trends have not been promising in recent years unemployment has not increased strongly nor have migration patterns changed dramatically. Hungary’s worsening economic position did not result in an increasing outflow of labour nor in a change in destination countries, even if the expected wage gain on average was possibly higher in the new destination countries. Figure 12.3 shows the relations between net wages in four sending and four receiving countries for wage earners earning 67 per cent of the average wage, calculated on the basis of PPS and for a single earner without children. The figure shows that the highest gains can be achieved by Polish migrants working in the UK (3.7 times), and the lowest gains by Czech migrants in Ireland (2.1 times). Hungary is placed third among the four sending countries with regard to expected wage gains in the four receiving countries (the highest wage gain is in the UK, with wages 3.3 times higher than at home, and the lowest in Ireland with a wage ratio of 2.4).



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4.2 Cross-border Migration and Internal Labour Mobility Regional mobility is modest in Hungary by international comparison. It is likely that the low internal mobility and low international migration are connected. Survey data (Eurobarometer 2005) confirm the extremely low mobility of Hungarians across regions. Some other new member states, such as the Czech Republic, or Portugal and Austria among the EU-15, show similarly low internal labour mobility but with higher international migration. Poland shows a relatively higher mobility across internal regions and also higher international migration. Slovenia, in contrast, is among the most mobile countries in internal terms, while migration potential is not high (Fouarge and Ester 2007). In the case of Hungary there is a strong connection between the housing system and regional mobility. Apart from factors determining housing demand – such as demographic conditions, household incomes and expectations – housing mobility is mostly affected by the widely different housing prices across regions and settlements and transaction costs, which comprise a number of elements. Rising housing prices and private rents in flourishing regions, a high housing price/income ratio and transaction costs are significant impediments to mobility. Regional housing mobility is constrained by institutional factors: the lack of private rental housing and the unregulated nature of the rental sector, as well as the role of local councils in subsidizing rents. All these factors contribute greatly to the risk borne by individuals if they move to another municipality, although moving to regions with better job prospects reduces the risks somewhat (Hegedűs 2004). Similarly, the decentralized social benefit allocation system results in regional immobility for beneficiaries of social subsidies. In particular those who live in deprived neighbourhoods, the long-term unemployed who are without a hope of getting a job and other disadvantaged groups are at risk when changing municipalities and withdrawing from the local system of benefit allocation (Szalai 2006). The impediments characteristic of internal mobility differ from those typical of international migration, however. 4.3 Safety and Social Protection The calculations of someone considering migration largely depend on whether overall income differences are sufficiently large. Income differences and costs of migration – including the psychological costs that increase with geographical and cultural distance – form part of the total economic gains from migration (Massey at al. 1993; Stark 1991). Social benefits or country-specific benefits may also impede migration, while a low or sharply decreasing share of the latter may have the opposite effect.

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Figure 12.4 Total social benefit expenditure as a percentage of GDP Source: Eurostat online database. National social expenditure depends on the generosity of the system. In the EU15, the share of social benefit expenditure in GDP, following a period of decreases in the late 1990s and early 2000s, is slowly increasing. In the new member states, on the other the hand, the trend has been downward since the early 2000s, the only exception being Hungary, where the share of expenditure has increased continuously over the 2000s (Figure 12.4). Whatever the trend, social benefit expenditure is still far behind that of the EU15 in all new member states, at best barely half (measured by PPS per inhabitant). The gap is smallest in the more developed countries of the EU-8, namely Slovenia, the Czech Republic and Hungary – in the latter the gap is further diminishing due to increasing expenditure (Figure 12.5). Although factors driving migration are diverse and complex we may suppose that more generous social benefits result in less migration pressure.

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Figure 12.5  Social benefit total expenditure per inhabitant (PPS) Source: Eurostat online database.

Benefits in Hungary are comparatively generous in terms of child care and social or unemployment benefit, as well as pensions. As far as the generosity of the child care system is concerned, tax benefits for Hungarian families with children are among the highest among the OECD countries. Indeed, between 2000 and 2006 Hungary’s position even improved slightly (OECD 2008). Early retirement, old age and disability pensions represent an accessible and extensively utilized exit route from the labour market, providing a limited but secure income flow (Cseres-Gergely 2007). Without going into more detail concerning social protection and social benefit systems, their role in migration cannot be disregarded. We may suppose that impediments are important factors in explaining migration patterns in Hungary. That may also explain why emigration does not increase even if basic economic indicators deteriorate as long as social expenditure remains high. The emigration of highly qualified persons is less influenced by social protection: on the one hand, their wage expectations are higher and the relative share of social benefits in their total income is smaller, and on the other hand, tax and financial benefits are regressive and so they benefit from them less.

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5. Impact of Emigration on the Domestic Labour Market Hungary, as we have seen, has had limited emigration experience during the transition period, as well as since accession to the EU. As a consequence, its impact on the labour market – in terms of labour shortages, remittances or return immigration – is limited. There are some labour shortages in certain regions or professions, but, despite recurrent assertions to the contrary, there is no reason to say that these shortages are due to emigration. They are rather the outcome of labour market mismatches in national or local labour markets (Vári 2002; Hárs et al. 2006). Albeit based on patchy evidence some effects of emigration can be identified. LFS follow-up research (Hárs 2008) found little realized migration. Those who had had an inclination towards migration in 2003 and had returned home after some migration experience were quite discouraged: a considerably higher share of them had become unemployed or inactive compared to those who stayed at home or still working abroad. Those who are working abroad intend to remain there for several more years. Returnees from among contract workers (posted workers) who worked within the framework of bilateral programmes – mostly skilled manual labour for a period of 1–2 years – had little overall effect on the labour market since their number was low and they returned gradually (Hárs 1999). In addition to the skilled manual workers highly educated returnees have also had a marginal effect. Assuming a significant brain drain following the emigration of highly qualified people Csanády and Személyi (2006) carried out a survey – of highly educated persons who have worked abroad for over a year – by means of Internet questionnaires. According to their evidence more natural scientists than social scientists are involved; they also found that fewer medical doctors are working abroad than might have been believed on the basis of press reports. The experiences abroad of highly qualified persons were contradictory. There are three major channels for this course of action: (i) teaching, (ii) EU administration and (iii) other private networks (friends or family relations). The more time people spent in a foreign country the less eager they were to recommend that others take a chance on going abroad. Only 20 per cent of long-term emigrants and about 60 per cent of recent brain drain emigrants would advise those still at home to move abroad. More interestingly, people were unsure about whether they would stay abroad for good; about half of them intended to return. The reasons are partly psychological, although one third of the brain drain emigrants do not have a stable job abroad. On this basis brain drain is perhaps the wrong expression, since emigration is temporary for such people. 6. Conclusions In contrast to other sending countries in the region Hungary has had low emigration in recent decades and has become a net immigration country since the 1990s.

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EU enlargement and the possibility of free movement to a number of EU-15 member states has not substantially changed Hungarians’ low migratory mobility. The destination orientation of Hungarian migrants has also remained remarkably stable irrespective of enlargement and the different labour market regimes of the receiving countries. Emigration decisions are driven by a number of macroeconomic factors, as well as push and impediment factors that are rooted in the home economy, the welfare benefit system and personal and family reasons. For Hungarians, emigration was not a strong alternative to the local labour market and institutional impediments were also strong. Welfare benefit expenditure was high by regional comparison, and child care tax benefits high even by international comparison. Even in the latest state budget consolidation programme only a ‘few steps were taken to tighten the welfare institutions and public spending is still over 50per cent of GDP, the highest in the region’ (The Economist 2008). The latest data point to increasing numbers of Hungarian migrants in a number of European countries, which may be interpreted as a consequence of the worsening home situation; in fact, economic imbalances and stagnation are pressing political issues in Hungary. Nevertheless, future expansion is uncertain. Most A8 countries are still predominantly sending countries, but on the way to becoming net receiving ones, as in the case of Hungary. The pattern of labour migration between the new and old members of the European Union is changing in the medium to long term with the changing character of pull and push effects depending on macro- and microeconomic development, labour market demand, but also social conditions in the respective sending and receiving countries. For a better understanding and control of migration these processes should be studied in more detail. The migration profile of individual countries is changing as part of the emergence of an integrated European labour market. References Barro, R., and X. Sala-I-Martin (1991), ‘Convergence across States and Regions’, Brooking Papers on Economic Activity, 1, 107–82. Boeri, T., and H. Brücker (2005), ‘Migration, Coordination Failures and EU Enlargement’, DIW Discussion Papers 481, Berlin. Bognár, K., and A. Kováts (2002), ‘A roma migráció a magyar sajtóban’ [Roma migration in the Hungarian press], in A. Kováts (ed.), Roma Migráció [Roma migration] (HAS Institute of Minority Research-Centre for International Migration and Refugee Studies.) Borjas, G.J. (1989), ‘Economic Theory and International Migration’, International Migration Review 23 (3), 457–85. Borjas, G.J. (1995), ‘The Economic Benefits from Immigration’, Journal of Economic Perspectives 9 (2), 3–22.

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Bundesagentur (2004), Migration, Integration und Asyl in Zahlen, Bundesagentur für Arbeit [website], Council of Europe (2003) Recent Demographic Developments in Europe country reports [website], Csanády, M., and L. Személyi (2006), ‘Brain Drain. Közelkép a diplomás magyarokról’ [Brain drain. Close-up on educated Hungarians], Századvég 3 (41), 79–122. Cseres-Gergely, Zs. (2007), ‘Inactivity in Hungary – The Persistent Effect of the Pension System’, Budapest Working Papers on the Labour Market 0701 (Budapest: HAS). Economist, The (2008), ‘The Party Is Nearly Over: After a Good Run, Eastern Europe Faces an Economic Slowdown’ (14 August), London. Eke, E., E. Griasek, E. Gaál and M. Szócska (2007), ‘Migrációs potenciál és motivációs erőtér a magyar rezidens orvosok és orvostanhallgató körében’ [Migration potential and motivation surrounding among young doctors and medical students], SE Egészségügyi Menedzserképző Központ és a Magyar Rezidens Szövetség, Budapest. EU online data source on population by citizenship [website], Eurobarometer (2005), Mobility in Europe, Analysis of the 2005 Eurobarometer survey on geographical and labour market mobility. Fassmann, H., U. Reeger and W. Sievers (eds) (2009), Statistics and Reality: Concepts and Measurements of Migration in Europe (Amsterdam: Amsterdam University Press). Fouarge, D., and P. Ester (2007), ‘Factors Determining International and Regional Migration in Europe’ (Dublin: European Foundation for the Improvement of Living and Working Conditions). Hajnal, L.E. (2002), ‘Romák Kanadában. ������������������������������������ Kivándorlás Magyarországról az 1990es évek második felétől’ [Roma in Canada. Emigration ��������������������������������� from Hungary from the second half of the 1990s], in A. Kováts (ed.) Roma Migráció [Roma migration] (Budapest: HAS). Harris, J., and M. Todero (1970), ‘Migration, Unemployment and Development: A Two-Sector Analysis’, American Economic Review 60 (1), 126–42. Hárs, Á. (2005), ‘A magyar munkaerő-migráció regionális sajátosságairól’ [On Regional Peculiarities of Hungarian Labour Migration], Külgazdaság 2. Hárs, Á., K. Nagy, Á. Nagy and P. Vakhal (2006), ‘A szlovák és a magyar határmenti régió a Duna két oldalán. A szlovák-magyar határmenti partnerség (EUREST) régiónak vizsgálatára irányuló megvalósíthatósági tanulmány’ [Slovak and Hungarian border region on the two sides of the Danube. Feasibility study for an EURES-T region] (Budapest: Kopint-Datorg Zrt). Hárs, Á, E. Sik and B. Simonovits (2004), ‘The Labour Market and Migration: Threat or Opportunity?’, in T. Kolosi, I. Tóth and Gy. Vukovich ���������������� (eds), Social Report 2004, 261–78 (Budapest: TÁRKI).

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Hárs, Á. (1999) ‘Die Ursachen und die Folgen der Entsendung von Werkvertragsarbeitnehmer aus ungarrischer Sicht’, in T. Faust, K. Sieveking and U. Reim (eds), Ausland im Inland, 269–89 (Baden-Baden: Nomos Verlag). Hárs, Á. (2003), ‘Channelled East–West Labour Migration within the Framework of Bilateral Agreements’, Budapest Working Papers on the Labour Market 1 (SSRN Electronic Paper Collection) [website], Hárs, Á. (2004), ‘Migrációs elképzelések az Unió küszöbén’ [Migration Plans at the Time of EU Accession] (Budapest: Central Statistical Office). Hárs, Á. (2008), ‘Migrációs tervek megvalósulása a KSH munkaerő-felmérés alapján’ [Realization of migration expectations based on the LFS], unpublished research report (Budapest: National Employment Office). Hárs, Á., E. Sik and J. Tóth (2001), ‘Hungary’, in C. Wallace and D. Stola (eds), Patterns of Migration in Central Europe, 252–71 (Basingstoke: Palgrave Macmillan). Hegedűs, J. (2004), ‘The Housing Market and Residential Regional Mobility in the 1990s – The Case of Hungary’, in K. Fazekas and J. Koltay (eds), The Hungarian Labour Market in Focus, 73–80 (Budapest: IE-HAS). Home Office (2007), The Accession Monitoring Report 2007: May 2004 – December 2007, a joint online report by the Home Office, the Department for Work and Pensions, the HM Revenue & Customs and the Office of the Deputy Prime Minister, London. Hönekopp, E., and H. Mattila (eds) (2008), Permanent or Circular Migration?, Argo 2005 (Budapest: IOM). Illés, S., and L. Hablicsek (1996), ‘A külső vándorlás népességi hatásai Magyarországon 1955-1995 között’ [The demographic effects of migration in Hungary, 1955–1995], KSH Népességtudományi Kutatóintézet kutatási jelentései 3, Budapest. ISSP (1995), National Identity Survey. Juhász, J. (1994), ‘A Magyarországot érintő nemzetközi vándorlás’ [International migration as it affects Hungary], Demográfia 1, 32–59. Key Challenges Facing Europe’s Labour Markets (2007), Businesseurope, UEAPME, CEEP & ETUC. Köllő, J. (2008), ‘Magyarország a régióban – eltérések és közös pontok’ [Hungary in the region – differences and common points], presentation at the joint conference of the Hungarian National Bank and the Ministry of Finance on ‘Productivity, economic growth and labour market challenges’, 29 August 2008 [website], Kováts, A. (ed.) (2002), Roma Migráció [Roma migration], (Budapest: HAS). Kupiszewska, D., and B. Nowok (2006), ‘Country Report: Hungary’, in M. Poulain, N. Perrin and A. Singleton (eds), THESIM: Towards Harmonised

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European Statistics on International Migration, 529–39 (Louvain-la-Neuve: Presses universitaires de Louvain). László, M., E. Sik and B. Simonovits (2003), ‘Migrációs potenciál Magyarországon, 1993–2002 között’ [Migration potential in Hungary, 1993–2002], in A. Örkény (ed.), Menni vagy maradni. Kedvezménytörvény és migrációs várakozások [Stay or go. Status Law and migration expectations], 259–62 (Budapest: HAS). Layard, R., O. Blanchard, R. Dornbush and P. Krugman (1992), East–West Migration: The Alternatives (Cambridge, Mass.–London: MIT Press). Lóránth, I. (2007), ‘Külföldre vágyódó medikusok – körkép’ [Medics longing to go abroad – an overview], MedInform. Massey, D.S., J. Arango, G. Hugo, A. Kouaouci, A. Pellegrino and J.E. Taylor (1993), ‘Theories of International Migration: A Review and Appraisal’, Population and Development Review 3. Mészáros, A. (2006), Az Unió nomádjai [The nomads of the EU], Népszabadság book series, Budapest. NOL (2008), ‘Kanada nem akar újabb magyar kivándorlási hullámot’ [Canada does not want a new emigration wave of Hungarians], Népszabadság online (17 July) [website], OECD (2007), Migration Outlook (Paris: OECD). OECD (2008), Taxing Wages 2006/2007 (Paris: OECD). Puskás, J. (1991), ‘Migráció Kelet-Közép-Európában a 19. és 20. Században’ [Migration in East-Central Europe in the19th and 20th centuries], Regio 2 (4). Puskás, J. (1996), ‘Magyar menekülők, emigránsok – DP-k és 56-osok, 1944– 1957’ [Hungarian refugees, emigrants, (DPs –displaced persons – and 56 emigrants, 1944–1957], Aetas, No. 2–3. Sik, E. (2005), ‘Vándorlási hajlandóság’ [Migration inclination] (Budapest: TÁRKI). Sik, E. (2006), ‘A vándorlási hajlandóság változatlan, sőt…’ [Migration inclination is unchanged, indeed...] (Budapest: TÁRKI). Sik, E., and B. Simonovits (2003), ‘A migrációs potenciál Magyarországon, 1993– 2001’ [Migration potential in Hungary, 1993–2001], in T. Kolosi, I. Tóth and Gy. Vukovich (eds), Társadalmi riport 2002, 207–19 (Budapest: TÁRKI). Stark, O. (1991), The Migration of Labour (Oxford: Blackwell). Stewart, M.S. (2001), ‘Depriváció, romák és “underclass”’ [Deprivation, Roma and the ‘underclass’] Beszélő, No. 7–8. Szalai, J. (2006), ‘A társadalmi kirekesztődés egyes kérdései az ezredforduló Magyarországán. Történeti meghatározottságok, jelenkori kötöttségek és jövőbeni perspektívák’ [Aspects of social exclusion at the Millennium in Hungary; Historical determinants, present constraints and future prospects], in M. Bulla and P. Tamás (eds), Fenntartható fejlődés Magyarországon. Jövőképek és forgatókönyvek. Stratégiai kutatások – Magyarország 2015 [Sustainable development in Hungary. Visions and scripts. Strategic researches – Hungary 2015], 338–57 (Budapest: Új Mandátum).

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Szalai, J. (2007), ‘Nincs két ország…? Társadalmi küzdelmek az állami (túl)elosztásért a rendszerváltás utáni Magyarországon’ [Are there two countries...? Social struggles for state (over)redistribution in post-transition Hungary] (Budapest: Osiris). Vári, A. (2002), ‘A határon átnyúló munkavállalás jelentősége és problémái az esztergom–párkányi régió példáján’ [Importance and problems of employment across the border. The example of the Esztergom-Párkány region], in N. Kovács and L. Szarka (eds), Tér és Terep. Tanulmányok az etnicitás és az identitás témaköréből [Space and field. ��������������������������������������� Essays on ethnicity and identity], 219– 39 (Budapest: Akadémia Kiadó). Wasserbacher, H., and G. Michenthaler (2007), Entwicklung des Arbeitsmarkts im Grenzraum Burgenland/Ungarn Während der Übergangsperiode, IFES.

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Chapter 13

Labour Emigration: Government and Social Partner Policies in Hungary Szilvia Borbély

1. Introduction Since 1990 – in the context of fundamental changes to the political and economic system – emigration and immigration processes have also experienced substantial transformation. By way of background, two features of the Hungarian situation should be mentioned in particular: (i) the low and fairly stable immigration and emigration stocks and flows, and (ii) the large number of ethnic Hungarians living in neighbouring countries. In Hungary both immigration and emigration stocks are relatively low in international comparison, in each case comprising roughly 2 per cent of the working age population (with the immigrant population slightly outnumbering that of emigrants). Hungary has thus become a net immigration country, becoming a transit – and partly a target – country for international migration during the 1990s. Even if inward-oriented migratory movements include considerable employment-targeted migration, the presence of foreign employees on the labour market is important only in certain sectors, such as agriculture – on a seasonal basis – the building industry and commerce. The majority of people with work permits have arrived from neighbouring countries, mostly Romania and, to a lesser extent, Slovakia, both with large Hungarian ethnic minorities, the latter most often in the form of crossborder commuter migration. Moreover, a high number of undeclared migrants, typically from Romania, are also present on the Hungarian labour market. Employment-targeted outward migration from Hungary has been quantitatively less important than immigration in the whole post-transformation period, and EU accession did not change this pattern. In the 1990s about 14,000–16,000 people a year immigrated to Hungary, while the number of those leaving the country was lower (Hungarian National Development Plan 2004–2006). Even if the slight positive balance of international migration has contributed to counterbalancing the loss of population for demographic reasons, outward migration – especially in sectors requiring highly qualified labour – has induced perceptible bottlenecks in some labour market segments, such as health care, and research and development (Social Renewal Operational Programme 2007–2013). In addition, the low regional

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mobility of the workforce, together with the uneven distribution of foreign direct investment and the resulting excess labour demand, is causing further labour market bottlenecks in sectors such as manufacturing and construction. Hungarian workers’ willingness to move abroad has not changed since EU accession. As Ágnes Hárs (in this volume) shows in more detail, since 2004 a total of around 70,000–80,000 Hungarian workers have taken a job in another EU country (EurActive 2008), and this stock of outward migrants has not changed significantly compared to the 1990s. The level of outward migrant stock is around 1.8–2 per cent of the Hungarian workforce and 0.7–0.8 per cent of the Hungarian population. This is not insignificant, but given that the number of inward migrants slightly outweighs the number of outward migrants, the phenomenon is not perceived as a major problem by the government and employer and employee organizations. Despite restrictions on the labour market access of workers from the CEE states, Austria and Germany are the most popular destinations among Hungarian emigrant workers, although there is increasing interest in the UK. Only estimates are available concerning cross-border commuters to neighbouring countries, but their overall number is too low to cause tensions at the level of national labour markets (although they do affect regional economies). As regards some of the characteristics of outward labour migration from Hungary a survey by a Hungarian independent economic research institute GKI (GKInet 2007) found the following. Hungarian workers with low qualifications plan to work abroad only for a short period or to try to find seasonal jobs. Skilled workers, on the other hand, would prefer to work abroad for a number of years. Workers without special job skills living in the border regions prefer to commute. In the border regions the level of illegal employment is high (seasonal work in agriculture or catering jobs). A new phenomenon is the cross-country mobility of managers employed by multinational companies; within this category the number of Hungarian managers is estimated at 1,000–1,500 in Western Europe (Jackson 2007). Besides the low level and stable character of migration flows from and to Hungary, the second feature we should mention as a broad context of migration policy is that there are approximately 2.5 million ethnic Hungarians living in the neighbouring countries due to post-war territorial settlements. For historical reasons a wide range of government policies concerning cross-border mobility have been inspired by their effects on ethnic Hungarians living in neighbouring countries. Nevertheless, we shall not treat this in detail when discussing government policies on labour mobility and cross-border cooperation. Our focus in this chapter will be the policies of the social partners and of government with regard to outward labour mobility from Hungary to other EU member states, with an emphasis on the post2004 period. It is important to note as a general framework that, as a result of the relatively low level and stable pattern of outward migration, this phenomenon has so far not been a priority issue for government and social partners.

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2. Government and Social Partner Responses 2.1 Government Policies The Hungarian government – as well as the Hungarian social partners – have repeatedly emphasized that free movement of persons, including the mobility of workers, is one of the four basic freedoms of the EU. Although this is not a pressing issue, as it concerns less than 1 per cent of the population, the government has tried to keep the issue on the political agenda. During preparations for EU accession there was recurring public debate on the positive and negative effects of the free movement of labour. In summary, Hungary – like other new EU member states – officially supports free mobility of workers in the EU. As a general principle in regard to transitional arrangements, Hungary – as well as Poland and Slovenia – applies restrictions to EU-15 member states on the basis of reciprocity, to be lifted also on the basis of reciprocity. During the first phase of the transitional arrangements, between 1 May 2004 and 30 April 2006, Hungary thus applied reciprocal restrictions to the relevant EU-15 member states, but did not apply restrictions to workers from other EU8 new member states. Since the start of the second phase of the transitional arrangements – 1 May 2006 to 30 April 2009 (the deadline when EU member states must declare whether or not they will remove restrictions on the free movement of labour) – Hungary’s Labour Minister has engaged in a series of bilateral consultations with EU-15 members in order to help ease restrictions. This has not had tangible results so far as the opening up of major EU-15 countries, such as Spain or France, was not attributable to Hungarian lobbying efforts, and the most important countries – from the Hungarian point of view – Germany and Austria did not respond positively. In the latter two cases, however, the Hungarian government was able to achieve some concessions on the quota regulations of labour market access within the framework of bilateral relations. In the context of granting access to the Hungarian labour market for Romania and Bulgaria we should mention that in 2001 the Hungarian Parliament passed a bill on promoting the mobility of ethnic Hungarian minorities in six neighbouring countries – with the exception of Austria – with a view to encouraging them to work and study in Hungary. Against this background, a restrictive approach concerning the access of Romanian citizens – whether ethnic Hungarians or not – to the Hungarian labour market was not realistic and the liberal approach was extended to Bulgaria. Since 1 January 2007 the Hungarian labour market has been partially open to Romanian and Bulgarian workers; in the first two years they are allowed to work in 219 professions. A work permit is granted automatically. From the point of view of immigration the only country of real interest for Hungary is Romania. According to the National Association of Citizens Advice Bureaux survey of February 2005 Hungary was the fourth most important target country for Romanian migrants.

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With a view to creating more transparency and assuaging unfounded fears in the EU-15 of uncontrolled mass migration from the East, in March 2006 the Hungarian government proposed to the Council of Labour Ministers that EU members should introduce a strict labour market monitoring system to keep track of the changes in cross-border labour mobility within the EU (EurActive 2006). Another Hungarian proposal was that, instead of restrictions, foreign workers should merely be required to register (on the UK model). As regards employment the rules of the receiving countries should be implemented. Furthermore, it was suggested that the EU member states coordinate and harmonize their registration, monitoring and statistical systems, as reflected in the conclusion of the Commission Communication on the Functioning of the Transitional Arrangements (1 May 2004–30 April 2006) (COM/2006/0048 final). Moreover, the member countries would have the right to intervene if development processes in some professions, sectors or areas turned out to be detrimental to their own workers. Although major elements of the Hungarian proposal were reflected in the Commission Communication, its effects on member state policies remains unclear. 2.2 Monitoring of Migration Flows The main source of information on migration (stock and flow) in Hungary is the Office of Immigration and Nationality. The Office acts under the direction of the Ministry of Justice and Law Enforcement and is responsible – among other things – for tasks related to home registration. On 29 May 2001, the Hungarian Parliament adopted a new Act regulating the entry and stay of foreigners in Hungary (Law XXXIX of 2001). Foreigners are registered in the Central Alien Register (CAR). It is electronically connected with the CPR (Central Population Register), guaranteeing the automatic transfer of relevant data. The CPR registers those Hungarian citizens who have permanent residence in Hungary or abroad if they have requested registration; the Central Alien Register (CAR) registers foreigners with permanent residence permits (including refugees) and EEA citizens with a residence permit. Citizens and persons with permanent residence wanting to leave Hungary to live abroad for more than 90 days (should) report to the Registry Office in their municipality. Data on next country of residence are not available as the country of destination is not asked about in the form for reporting departure. The authority in charge of producing statistical data on population stocks is the Hungarian Central Statistical Office (KSH) (refugees and asylum seekers are not included). The KSH uses two sources: the CPR for nationals and the CAR for nonnationals. Immigration and emigration statistics are published in separate tables on Hungarian nationals and on foreigners. Data are disaggregated by citizenship, age and sex, but do not include information about the country of next or previous residence (Kupiszewska n.d.).

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2.3 Cooperation between Governments of Sending and Receiving Countries Based on the European Territorial Cooperation Objective, several operational programmes have been created, promoting among other things (directly and/or indirectly) cross-border labour mobility. Austria–Hungary The Austrian–Hungarian border region covers the Austrian Länder of Burgenland and Wien, and on the Hungarian side, the counties of GyőrMoson-Sopron, Vas and Zala. The employment rate in the Austrian part of the border region exceeds the European average by 3–10 per cent, while that of the three West Transdanubian regions of Hungary is 2 per cent below the European average (Eurostat 2008). Unemployment rates are similar in the Austrian and Hungarian border regions. A number of cooperation programmes are running between the public authorities of Hungary and Austria, on several levels. For example, a bilateral Working Group for Programming Territorial Cooperation Austria–Hungary was set up and the Territorial Cooperation Operational Programme Austria–Hungary 2007–2013 has been drafted. The overall strategic goal of the programmes is to foster economic, social, environmental and cultural development in the border region and to reduce regional disparities by means of cross-border cooperation. This also implies strong cooperation between the labour offices on the two sides of the border that in fact goes back decades. Among other things a joint labour market strategy with the aim of increasing employment in the region was set up. Labour market effects of cross-border labour mobility are being monitored and regulatory proposals for the central governments – revisions of commuter quotas from the Austrian side – are being made. Slovenia–Hungary  The Territorial Cooperation Operational Programme Slovenia–Hungary 2007–2013 is geared to Vas and Zala counties in Hungary and the Pomurje region in Slovenia. This region is characterized by a high level of commuting from villages and rural communities to larger towns for work and a lack of jobs for highly educated people. The programming phase was initiated in 2005, when a bilateral working group with the participation of the regional authorities of the two sides was established with the object of employment creation, primarily by developing rural tourism, environmental protection and bio-agriculture. Romania–Hungary  The Hungary–Romania Cross-border Cooperation Programme 2007–2013 covers the South-Eastern part of Hungary and the North-Western part of Romania. The number of inhabitants of this region exceeds 4 million, 2 million in one country and 2 million in the other. The eight counties – four of them in Hungary and four in Romania – in general exhibit fairly similar economic and social circumstances. As a matter of fact the South-Eastern Hungarian regions are among  ��������������������������������������������������������������������������� As part of the objectives of the European Regional Development Fund (ERDF).

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the most underdeveloped in Hungary, whereas the Romanian border regions are among the more developed and dynamic regions in Romania. Even so, wage differences in favour of the Hungarian regions are still substantial (Fihel 2007). The strategic goal of the Cooperation Programme is to bring the people, communities and economic actors of the border area closer to each another in order to facilitate joint development and cooperation. Specific objectives include developing transport infrastructure to facilitate improved access within the border area and better flow of information on joint opportunities in the border regions. 2.4 Programmes for Returning Migrants Despite the low outward migration, all Hungarian stakeholders are well aware of the negative consequences of the outflow of highly educated and mostly young professionals. Recognizing that the return of scientists and other professionals with new skills is particularly useful for the country, several programmes have been launched to promote the return of expatriate students, scientists and engineers (for lower qualified migrant groups no similar return-migrant programmes exist in Hungary). For example, the National Office of Research and Development (NORD) has announced the so-called ‘Polányi Mihály’ Programme to support the return of expatriate scientists. Different civil organizations support the return of students and researchers such as the Association of Hungarian Researchers in Germany, the Association of Pelegrins in Sweden and the Hungarian American Foundation in the US. The Hungarian Academy of Science has announced a programme geared towards Hungarians living in Western countries. It aims to map and contact them and to create better prospects for their return. There are also specific programmes such as the ‘Szent-Györgyi’ Fellowship (offered by the Ministry of Education) to enable outstanding researchers living abroad to contribute to scientific work being carried out in Hungary; the ‘Magyary Zoltán Fellowship’ (Ministry of Education) to attract post-doctoral researchers back to Hungary; the ‘Domus Hungarica Fellowship’ (Ministry of Education and Hungarian Academy of Science) to enable researchers to represent Hungarian science abroad and to participate in Hungarian scientific life. The ‘Marie Curie Reintegration Grant’ (European Union) is to cover the costs of undertaking reintegration projects on the part of former Marie Curie fellows. Despite the large number of programmes little evidence is available concerning their quantitative impact. 2.5 Minimum Wage Legislation One of the more indirect ways in which governments seek to limit outward migration is to narrow the gap in terms of pay and employment opportunities between the domestic economy and potential receiving countries. One useful instrument for this purpose is minimum wages. Although the activist role of Hungarian governments in two different cycles in the first half of the 2000s in boosting the minimum

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wage and the wages of public employees was not directly motivated by migration trends, the impact of these measures on migration intentions can be confidently assumed. There is a mandatory minimum wage in Hungary, introduced in 1989 just before the change of system. Since 1990 the mandatory minimum wage rate has been periodically negotiated in the cross-sectoral Tripartite Interest Reconciliation Council. Although the social partners are autonomous in agreeing on the level of the national minimum wage at the annual negotiations, if no agreement is reached within a certain deadline the government has the right to take the initiative. This it did in the case of the spectacular consecutive minimum wage rises in 2001 and 2002, as a result of which the minimum wage almost doubled, reaching around 43 per cent of the average wage. The trade unions had been demanding higher minimum wages for a long period beforehand – arguing EU harmonization – but were unable to realize their demands. In June 2005 the Prime Minister, Ferenc Gyurcsány, announced a reform of minimum wage regulations, introducing a three-tier minimum wage system proposed long before that by one of the biggest Hungarian trade union confederations, MSZOSZ (National Confederation of Hungarian Trade Unions). Despite this progress, the Hungarian minimum wage has remained far below minimum wages in the EU-15. Calculated at exchange rate parity, in early 2008 the Hungarian monthly minimum wage constituted only 27 per cent of the minimum wage in Austria, for example. At the same time, it was roughly double the minimum wage in Romania and Bulgaria (Federation of European Employers 2008). When taking into account differences in the cost of living and calculating wage levels at purchasing power parity (PPP), the wage gap with EU-15 countries appears smaller, though still substantial. The Hungarian minimum wage at PPP is approximately 40 per cent of that in Austria, for example. Similar processes took place in the wage setting of public service employees in the mid 2000s. As in this sector the state is the employer its competence in setting wage levels was even more pronounced. In two rounds, the wages of health care employees and teachers were raised by 50 per cent. It seems clear that wage/income disparities – together with employment opportunities – constitute a key push factor behind the (limited) cross-border mobility of workers from Hungary to EU-15 member states. At the same time, Hungarian wages are attractive for Slovakian and Romanian workers. It seems therefore that minimum wage and public sector wage adjustments were made primarily in response to domestic economic and political conditions and that migration pressures worked only indirectly through this labour market mechanism. The effect of these measures on migration intentions and actual trends can be confidently assumed, however.

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3. Policies, Attitudes and Practices of the Social Partners Related to Labour Mobility 3.1 Joint Social Partner Initiatives Hungarian employer and employee organizations, in agreement with a broad spectrum of stakeholders – as expressed at a meeting of the high-level group on free movement of persons convened by the Commission in 2005 – expressed their support for lifting cross-border labour mobility restrictions. They stressed that restrictions might have had the effect of delaying indispensable structural reforms in both EU-15 and EU-8 labour markets. In a joint statement, the Hungarian social partners emphasized that an erosion of labour standards and social dumping should be avoided. They also pointed out that restrictions on legal work may lead to a proliferation of informal work, bogus self-employment or fictitious service provision and subcontracting. They also called for a reduction in the bureaucratic burden on the employment of foreign workers. The social partners also called upon the government to consult them regarding its position on the second period of transitional arrangements (Report on the Functioning of the Transitional Arrangements Set Out in the 2003 Accession Treaty 2006). 3.2 Policies and Views of Hungarian Employers’ Organizations There is a great deal of pluralism among employers’ federations in Hungary: there are nine bodies representing, for example, large and SME employers in industry, foreign or domestic employers, and employers in trade and services. The Confederation of Hungarian Employers and Industrialists (MGYOSZ) represents domestic large enterprises in industry and has its own particular standpoint and demands as regards labour migration. MGYOSZ emphasizes that business and employers’ associations are prepared to play a more active role in migration and integration policy concerning foreign workers, as the importance of both topics will undoubtedly increase over time. MGYOSZ fully supports the free movement of labour and the Lisbon objective of greater mobility. However, it also underlines the fact that free movement of itself does not solve the structural problems of the labour markets in Central and Eastern Europe. MGYOSZ emphasizes that worker emigration has not created problems for labour markets in general because workers from the new member states who leave for better-paid employment in the EU-15 are replaced by workers either from other new member states or from outside the EU. The problem is that these workers often are less qualified than those leaving the country. The position of MGYOSZ appears to be representative of employers’ organizations in the new member states, as reflected in a common document of Central and Eastern European employers’ federations. The key demands on labour migration include the abolition of all transitional restrictions on free movement and the granting of full and free movement for

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workers from Romania and Bulgaria (‘Workers’ Mobility’, Position Paper of Employers’ Associations of Central and Eastern Europe). 3.3 Trade Union Policies and Practices At the beginning of 2000 the European Integration Commission of the Hungarian Trade Unions (NIC) drafted a joint position of the six national trade union confederations and adopted an action plan. The draft was debated and finalized by the representatives of the six confederations but not ratified (IntegRáció 2001). Nevertheless, it reflects the common opinion of the Hungarian trade unions and may serve as a cornerstone for the foreseeable future. The Hungarian trade unions insisted that the four freedoms of the Union – including the free movement of labour – should be implemented when Hungary obtained full EU membership. According to the trade unions, ‘the citizens of new member states will have to be granted the right of free movement once a particular country meets the EU accession criteria’ (IntegRáció 2001). The Hungarian trade unions share the view of the European Commission that once a worker has obtained access to the labour market of a particular member state, Community law on equal treatment as regards remuneration and other employment-related matters, such as access to social and tax benefits, should apply (COM(2006) 48 final). Besides the free movement of labour, the major concern of the Hungarian trade unions is decent wages in the home country, as decent wages are an important workers’ right and also a means of preventing a brain drain. The trade unions also demand decent wages for migrant workers in the receiving countries: wages and non-wage benefits must be the same for migrant and non-migrant workers, also as a means of preventing social dumping. Cross-border labour migration is not a particularly pressing issue for the Hungarian trade unions since neither inward nor outward labour migration is substantial. Nevertheless, in certain geographical areas, sectors and professions employers and potential investors are already experiencing labour shortages, which in some cases serves as an obstacle to further investment. This means that crossborder labour migration in Hungary is a matter of interest for some sectoral trade union organizations and regional trade union delegations, primarily in border areas. 3.4 Trade Union Practices at Regional Level Trade unions dealing with cross-border labour migration in the Hungarian– Austrian border area Given that, on average, 8,000 Hungarian workers are employed annually in Burgenland, Austria – mostly in agriculture, hotels and  ���������������������������������������������������������������������������������� There are six (representative) national trade union confederations taking part in national tripartite social dialogue: MSZOSZ, Autonomous Unions, Liga, Workers’ Councils, SZEF and ÉSZT, all members of the European Trade Union Confederation.  ����������������������������������������������������������������������������� This section is based on interviews by the author with trade union officials.

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catering – active cooperation has developed between the Hungarian and Austrian trade union organizations operating in the border regions. An Interregional Trade Union Council (IRTUC) for Burgenland–Western Hungary had been established and operated from July 2002 until December 2007; it is planned to continue it. IRTUC programmes bring together regional trade union organizations of national ETUC-affiliated confederations in cross-border regions, in this case comprising the regional/county representatives of the Austrian ÖGB and Hungarian MSZOSZ trade unions. The objective of the project carried out within the framework of the IRTUC was to bring about positive inputs to the cross-border regional labour market following Hungarian EU accession in 2004 and to reduce the possible negative effects. In order to counter wage dumping, several cross-border measures were taken: in the period 2004–2007 legal advice was provided in Hungarian and German for 12,000 Hungarian workers working in Burgenland. Most such advice was provided in sectors characterized by low wages and/or in workplaces where the language skills of the Hungarian workers were not adequate. Bilingual manuals, legal compendia, information bulletins and leaflets were published to inform workers in different sectors about questions of Austrian labour law. In 2007 several information events were organized for different groups of workers. As a consequence, the membership of Hungarian trade unions among cross-border migrants in Austria is increasing. South-East Hungary border area  South-East Hungary, which has a border with Romania and Serbia, is characterized by high unemployment and labour shortages occur only seasonally, mainly in agriculture and construction. Due to the high unemployment rate (9–10 per cent) and the very low level of trade union organization, workers on both sides of the border are in a weak bargaining position. This is aggravated by the fact that migrant workers from neighbouring Romania and Serbia find work mostly in SMEs, in which trade union organization is particularly weak. Furthermore, in most cases migrant workers are not generally trade union members in their home country either. It is thus not surprising that the sending countries’ trade unions have no organized relations with migrant workers in Hungary. To fill this gap – on the basis of individual requests – the MSZOSZ legal counselling service offers help to migrant workers in the three major Hungarian cities of the region, even to non-union members. The only interregional trade union cooperation in this area – the DanubeKörös-Maros-Tisza Trade Union Cooperation – plans to present a project with the purpose of institutionalizing such counselling services (in 2007 the Cooperation was registered as a Euro-regional cooperation by the ETUC). North-East Hungary border region Szabolcs-Szatmár-Bereg county in NorthEast Hungary has borders with three countries: a short border with Slovakia and longer ones with Romania and Ukraine. In Szabolcs-Szatmár-Bereg county

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unemployment stands at 22.5 per cent and more than half the registered unemployed are unskilled workers. Youth unemployment and the unemployment rate of graduates are also exceptionally high. As a result, the outward mobility of young and graduate jobseekers to Germany and the UK, for instance, is growing. Despite the high unemployment rate, there are some professions in which labour shortages are appearing – for example, turners, locksmiths, bricklayers and tinsmiths. The labour authorities therefore speed up work permit applications from immigrants in these professions. As early as 1995 MSZOSZ officials in Szabolcs-Szatmár-Bereg and Hajdú counties renewed and widened their cooperation with trade unions in the bordering countries. In 1998 trade union cooperation was established in the Carpathian Euroregion. This covers the MSZOSZ organizations in Szabolcs, Hajdú, Borsod and Heves counties in Hungary, trade unions in Bihar, Satu Mare and Maramures counties in Romania, trade unions from Ukraine beyond the Carpathians and trade unions from Kosice, Slovakia. In recent years cooperation has been intensive primarily between the Hungarian and Romanian trade unions, but has not gone much beyond regular information exchange and joint seminars. The organizations from the Ukrainian and Slovakian border regions take part in cooperation only occasionally. Trade union cross-border cooperation is limited by a lack of financial resources, and the current forms of cross-border activity do not make it possible to provide continuous counselling services and information for migrant workers. The employees are given information in the form of joint training for trade union officials and in press conferences following seminars. The trade unions try to convince migrant workers of the disadvantages of illegal employment. Trade union practices at sectoral level: metalworkers As the migration-related activities of trade unions are rather limited at the sectoral level, we shall look at the Hungarian Metalworkers’ Federation (VASAS), which has perhaps been most active in this area. This activity was encouraged by the European Metalworkers’ Federation (EMF); VASAS, as a member of EMF, signed the EMF Solidarity Pact adopted by the EMF Executive Committee in 1999. This pact has the objective of increasing the protection of and support for EMF-affiliated union members across borders. Among other things the agreement means that, when working abroad, a member of an EMF-affiliated organization is entitled either to the services set out in the guidelines on the practical use of the EMF Solidarity Pact (see below) or to become a member of the EMF-affiliated union in the host country. In the case of more than one year’s employment abroad, workers are required to join an EMF union in the host country in order to benefit from services. The following services will be provided by the host union to the members of other EMF-affiliated organizations: inclusion in collective and other agreements; information (trade

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union press, documentation, info service); consultation with regard to labour, social and employment matters, and so on. VASAS has developed its migration-related activities on the basis of the Pact guidelines, though the extent of these activities has remained limited, given the magnitude of cross-border migration and the attitudes of partner organizations. In this regard VASAS has a bilateral agreement with the Romanian metalworkers’ union UNIREA, within the framework of which it applies the principles of the EMF Solidarity Pact. VASAS and its Romanian counterpart have also signed an agreement on mutual representation of migrant workers’ interests. As a basic principle, however, the leading personalities of the Hungarian VASAS and the Romanian metalworkers’ unions have laid down that workers should try to find a job in their native country that corresponds to their ability and skills, and that secures them a fair wage. When workers see no alternative to crossborder migration, the aim is that they should do so on equal terms. The agreement contains measures such as providing employees with detailed information on corresponding regulations, labour contracts, preconditions of employment, level of earnings, types of benefits, and so on, in the host country. VASAS provides information and help on employment rights for migrant workers for those with a Romanian trade union membership card. 4. Conclusions Neither inward nor outward labour migration have been on a large scale in Hungary so far and the willingness of workers to move abroad did not increase significantly after EU accession. Consequently, cross-border labour migration is not among the most pressing issues for the government or the social partners. As regards cross-border commuter migration to neighbouring countries, its extent can only be estimated. Nevertheless, it is not large enough to cause major tensions in host country labour markets, although the presence of Hungarian workers is substantial in some branches of the East Austrian regional labour market. The Hungarian social partners repeatedly emphasize that free movement of persons, including the mobility of workers, is one of the four basic freedoms of the EU and must be observed. Hungary – like other new member states – officially supports greater worker mobility within the EU. Wage/income disparities – together with employment opportunities abroad – are seen as the major push factors in respect of the cross-border mobility of Hungarian workers to EU-15 countries. As concerns inward-oriented labour mobility, Hungarian wages are attractive to workers in some new EU member countries, such as Slovakia and Romania. In the regions bordering Austria, Slovakia, Romania and Ukraine cross-border labour mobility is a direct and everyday concern of local trade union officials. In some sectors – such as metalworking – cross-country trade union cooperation on labour mobility is on the agenda, and the Confederation of Public Employees – the Cooperation Forum of Trade Unions – has expressed similar aims.

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The question is whether Hungarian cross-country labour migration will remain slow or accelerate. We may assume the latter, for a number of reasons. Among other things, the transitional period will irrevocably come to an end on 30 April 2011 for all countries, including Germany and Austria. As a pull factor, the labour demand for skilled and highly educated specialists in target countries – such as the UK – is expected to continue to increase. There are several new push factors, such as the slowing down of the Hungarian economy and deteriorating prospects for young professionals in terms of income and working conditions. There are psychological factors as well: young professionals are much more mobile than their parents were, not least because of the diverse possibilities that opened up for them in the context of EU accession (for example, different EU mobility programmes for students, such as TEMPUS, ERASMUS, and so on). These enable them to adapt to a different working environment abroad and not only to learn about their profession and a foreign language but in some degree to become multicultural in outlook. The young generation is also not bound by the ‘house trap’ in which their parents often find themselves, for whom house prices and the sluggish real estate market impede mobility even within the country from one region to another. Clearly, the very limited policy response to date is unlikely to be sufficient in the future. The major stakeholders have to acknowledge reality and adopt a much more active stance towards labour migration. To take the right decisions and work out a strategy, it is necessary to obtain a clear view of the scope and nature of Hungarian outward migration. This is not easy as there is no obligatory registration for those who go to work abroad and the exact number and characteristics of migrant workers are not known. Not coincidentally, in June 2008 the National Employment Foundation (OFA) offered research grants for the purpose of gathering more detailed information on the scale and character of current Hungarian crosscountry labour migration. The growing number of migrant employees will oblige Hungarian interest representation organizations to put the issue higher on their agenda and to develop sound strategies to cope with future challenges. Establishing closer relationships and cooperating more with their counterpart organizations in the main receiving countries will also be a must. It is important that increasing cross-border labour mobility within the enlarged EU offers a win–win situation for all, both the EU-15 and the new member states. This requires greater awareness and conscious policy-making on the part of every stakeholder. References EurActive (2006), ‘New EU Citizens See Both Benefits and Drawbacks to Mobility’ [website],

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EurActive (2008), ‘Member States Ponder Lifting Labour Market Restrictions’ [website], Eurostat (2008), Data [website], European Commission Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions – Report on the Functioning of the Transitional Arrangements set out in the 2003 Accession Treaty (period 1 May 2004–30 April 2006), COM/2006/0048 final. Federation of European Employers (2008), ‘FedEE Review of Minimum Wage Rates’ [website], Fihel, A. (2007), ‘Labour Migration and Its Consequences, Institutional Determinants of International Migration from Central and Eastern Europe’, Journal of Identity and Migration Studies 1 (1). GKInet (2007), Kutatás a munkavállalók mobilitásával kapcsolatban Magyarország [Research on employee mobility in Hungary] (Budapest: Economic Research Institute). Hungarian National Development Plan 2004–2006 (2003). Hungary–Romania Cross-border Cooperation Programme 2007–2013 (2007). IntegRáció (2001) ‘Position Taken by Hungarian Trade Unions on Hungary’s Accession to the European Union’, Integ-Ráció 5 (1) (February–March). Jackson, K. (2007), ‘Managing Labour Mobility’, The Budapest Times (25 October). KSH STADAT (Central Statistical Office) (1998–2007), STADAT tables [website], Kupiszewska, D., and B. Nowok (n.d.), Country Report, Hungary [website], <www.cefmr.pan.pl/docs/thesim_report_hu.pdf> OECD (2005), ‘Evaluation of the Hungarian Cooperative Research Centre Programme’ [website], Operational Programme (2007), Territorial Cooperation Operational Programme Austria-Hungary 2007–2013, Final Draft (27/02/2007), CCI: 2007CB163PO010. Report on the Functioning of the Transitional Arrangements Set Out in the 2003 Accession Treaty (1 May 2004–30 April 2006) (2006), COM (2006) 48 final. Social Renewal Operational Programme 2007–2013 (2007), 2007HU05UPO001 Commission Decision No. C (2007)4306. Workers’ Mobility (n.d.), Position paper of employees’ associations of Central and Eastern Europe signed by the Association of Employers of Slovenia (ZDS), the Confederation of Austrian Industry (IV), the Confederation of Hungarian Employers and Industrialists (MGYOSZ), the Confederation of Industry of the Czech Republic (SP) and the National Union of Employers of Slovakia (RUZ).

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Other Relevant Regulations and Documents Council Directive on the Conditions of Entry and Residence of Third-country Nationals for the Purposes of Highly Qualified Employment (COM 637). Government Decree No. 106/1991 (VIIII.6). Government Decree No. 216/1996 (XII.23). Government Decree No. 37/1998 (III.1). Government Decree No. 38/1998 (III.1). Government Decree No. 8/1999 (XI.10) Ministry of Social and Family Issues on work permits for foreigners in Hungary. Government Decree No. 245/2001. Government Decree No. 246/2001. Government Decree No. 12/2002 (I.31). Government Decree No. 3/2004 (IV.27) on labour market regulation following EU accession. Government Decree No. 354/2006 (XII.23) on the employment in Hungary of Romanian and Bulgarian citizens. Hungary–Romania Cross-border Cooperation Programme 2007–2013 (27/07/2007). Presentation of the Social and Labour Ministry to the National Interest Reconciliation Council on the modification of Regulation 8/1999 (XI.10.) of the Ministry of Social and Family Issues on transitional regulations in respect of restrictions on the free movement of labour and permission for foreigners to work in Hungary (December). Regulation (EC) No. 862/2007 of the European Parliament and of the Council of 11 July 2007 on Community Statistics on Migration and International Protection and Repealing Council Regulation (EEC) No. 311/76 on the Compilation of Statistics on Foreign Workers. Territorial Cooperation Operational Programme Austria–Hungary 2007–2013 Final Draft (27/02/2007).

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Chapter 14

Dimensions and Effects of Labour Migration to EU Countries: The Case of Latvia Pārsla Eglīte and Zaiga Krišjāne

1. Introduction and Historical Background The aim of this chapter is to describe the major labour migration processes in Latvia, focusing particularly on changes since Latvia’s accession to the European Union. Migration processes in Latvia after the Second World War can be divided into three periods: (i) migration under Soviet rule, (ii) the transition period – after regaining independence and before EU accession – and (iii) the period since EU accession. Each stage is characterized by different migration volumes, intensity, flows and main destination. For 40 years after the Second World War, Latvia was an attractive destination for migrants from other regions of the USSR because of job opportunities and a higher standard of living. Inward migration changed the ethnic, gender and age structure of Latvia’s population, as well as its economic profile. During the period 1951 to 1990, 2,172,000 people arrived in Latvia – 54,300 people per annum – while 1,802,000 (45,000 per annum) left (see Table 14.1) (Bauls and Krišjāne 2000; CSB 2001, 142). Net inward migration during this period was 524,141 persons. Such massive migration – given a population of around 2.7 million in 1990, including immigrants – was caused by several factors, including the USSR’s policy of strengthening Soviet power by implementing ‘socialist industrialization’ through migration. Post-war industrialization, which disregarded the availability of local labour resources, created a demand for labour, as did the stationing of military personnel (Krišjāne 2008). Housing problems caused by the enormous inflow of migrants was one factor in the fall in the birth rate among the local population – the lowest of all the Soviet republics (Eglīte 2008). There was also a major impact on the ethnic composition of the Latvian population, as well as the use of and proficiency in the Latvian language (Mežs, Bunkše and Rasa 1994; Zvidriņš 2004; Eglīte and Mežs 2002). Approximately half of all post-war immigrants came from the present territory of the Russian Federation. The share of Latvians declined from 77 per cent in 1935 to 52 per cent in 1989 (CSB 2002, 123).

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Table 14.1  Migration in Latvia from 1951 to 2005 (‘000)1 Immigration Year

total

1951–1990 1991–1995 1996–2000 2001–2005 1991–2005 2006 2007

2 172.0 30.8 12.2 7.8 50.8 2.8 3.5

Emigration

average per year 54.3 6.2 2.4 1.6 3.4

total 1 647.9 168.2 47.1 17.3 232.6 5.3 4.2

average per year 41.2 33.6 9.4 3.4 15.5

Net migration total

average per year

524.1 –137.4 –34.8 –9.5 –181.7 –2.5 –0.7

13.1 –27.5 –7.0 –1.9 –12.1

Note: 1 Only those who have declared a change of residence. Source: Central Statistical Bureau of Latvia (CSB) 2008a, 102.













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Figure 14.1  International migration by country groups according to official statistical data From the beginning of the transition Latvia experienced dramatic changes in both the direction and the intensity of migration. After Latvia regained independence in 1991, and especially when it joined the European Union in 2004 and thus enjoyed free access to the labour markets of several EU-15 member states, migration

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changed radically. Latvia, which used to be a receiving country for migrants, has become a sending country: immigration from the post-Soviet space has given way to emigration to both East and West. During the 1990s some Soviet migrants returned to their native country. Approximately 15 per cent of those who arrived in Latvia after the Second World War left it at the beginning of the 1990s (Bauls and Krišjāne 2000). Emigrants included those who returned to their homeland after completing their work, those who had been employed by the Soviet administration and those who had served in the Soviet army (see Figure 14.1). Since then – and especially since 2004 – relatively large numbers of Latvians have left for the West (Bauls and Krišjāne 2000; Krišjāne et al. 2004). 1.1 Official Data on Migration Latvian government institutions dealing with migration issues include the Office of Citizenship and Migration, the Ministry of Economics, the Foreign Ministry, the State Employment Agency, the State Social Insurance Agency, the State Compulsory Health Insurance Agency and the Central Statistical Bureau (CSB) (for details see Lulle in this volume). Latvia’s CSB gathers and publishes data on long-term migrants in accordance with UN recommendations. The data cover people who move to a different country either with the intention of remaining there permanently or for a period of one year or more (CSB 2007a, 12). In the mid-1990s the methodology and definitions governing statistics in Latvia were changed in accordance with those of Eurostat. Migrants are now defined as persons who declare a change of permanent place of residence. Official data on migration processes are incomplete. The key problem for research is that there is no information on length of residence. Labour migration from Latvia to other countries – mostly to EU member states that have opened up their labour markets – largely does not involve a permanent change in place of residence, whether the time spent abroad is a few months, a year or several years. Most Latvians working abroad retain their declared place of residence in Latvia. This means that there are no statistics detailing the volume of this outflow, a state of affairs exacerbated by free labour movement to a number of countries since Latvia joined the EU. Data on labour force mobility are not fully recorded in official statistics because many of these migrants do not fit into the official concept of persons who stay abroad for more than a year and change their declared place of residence accordingly. Since 1 May 2004, citizens of the EU, the European Economic Area and Switzerland have been subject to minimal border controls in Latvia. Citizens of Latvia are not registered when they cross the border, and border control procedures only check people’s identity. Some information about citizens who are planning to leave for more than six months is available from the Office of Citizenship and Migration because when a resident of Latvia is departing from the country for more

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than six months, he or she must notify the Population Register (Cabinet of Ministers Regulation No. 786 of 25 October 2005). However, very few people do so. Data on long-term migration and the migration of citizens of third countries – both incoming and outgoing – are collected by the Office of Citizenship and Migration. This means that there are data on the number of temporary and permanent residence permits that have been issued, work permits, visas and people entering and departing the country, including those who are returning to another country. Latvian migration statistics focus on the registration of immigration, including the repatriation of former emigrants. But there is an absolute lack of information in the official statistics about Latvians who have taken advantage of free movement of labour in the EU and, of course, those who are working abroad illegally. Neither are there any data about family members, whether juveniles or adults, who join them abroad – whether they are studying or not working, for instance. 1.2 Research Data Although there is a lack of reliable official data, we do have data on labour migrants from Latvia to other countries thanks to a research project entitled ‘The Geographical Mobility of the Labour Force’ (Krišjāne, Eglīte, Bauls and Brants et al. 2007). The study was conducted in 2005–2007 by researchers at the University of Latvia and invited experts, under the leadership of Zaiga Krišjāne. This study provides much of the empirical material presented in the first part of this chapter. We begin by describing the scope and methodology of the survey. The study encompassed both qualitative and quantitative research: a survey of 8,005 Latvian residents in 2006, expert interviews, formalized interviews with Latvian residents who work abroad, as well as statistical and econometric analyses. Respondents were people of working age (15 to 65) at the beginning of 2006. During the process, interviewers visited 14,111 randomly selected addresses, and potential respondents were found at 11,680 of these. The overall response rate was 66.5 per cent (in some households people were either too young or too old, or refused to participate). We thus surveyed around 8,000 respondents (divided into 800 parts with 10 respondents in each). The sample was divided up into two parts: 1,001 valid interviews were conducted in Rīga and 7,004 interviews were with respondents elsewhere in Latvia. The 700 sample parts outside Rīga were divided up proportionally among Latvia’s 26 administrative districts and six major cities (excluding Rīga). The third phase of determining the sample involved quota selection. The territories were divided into four segments: urban municipalities and three categories of rural municipalities according to geographical location, proximity, population density and settlement and housing types. A random sample was assembled in the next phase. At each interview site, a random starting address was selected, and that is where the interviewer began his or her route. The number of respondents was in line with these proportions. If the respondents had been selected proportionately to the distribution of Latvia’s population, there

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would have been significantly more interviews in Rīga – some one third of all respondents. The main reason for using a disproportionate sample is to obtain sufficiently robust data representing not only Latvia overall but also at regional level. The data were weighted by sex, age and territorial units. Face-to-face interviews were conducted. For more complicated questions, respondents were given cards with possible answers. The questions that were posed in the survey can be divided up into 10 logical blocks. The questions related to experience living and working abroad were as follows: Had the respondent ever been abroad for more than one month at a time? Had the person studied abroad? Had the person worked abroad (if so, then how long, why, at what job, in which countries, why those and not other countries, together with a relative [children, spouse, parents or other relatives] or friend from Latvia or not)? Whether money earned there had been given to relatives and friends in Latvia? What share of the money has been spent abroad? What has been done with it in Latvia? The questions asked about working abroad did not specify the time period in which this occurred. Demographic and individual – education, income – characteristics and place of residence of migrants refer to the time of the survey. In subsequent sections we present selected findings from the survey focussing on the characteristics and motivations of Latvians who reported having worked in other EU countries. We also refer to other research that surveyed Latvians living abroad – in the UK and Ireland – at the time of the survey. 2. Migration Patterns of Latvian Residents Abroad In order to reach some conclusions about the number of people from Latvia who are working abroad, respondents in the study of the geographical mobility of the labour force were asked about relatives of working age who were working or studying abroad. There was a particular focus on those relatives who had done so in the previous two years, that is, since Latvia’s accession to the EU in 2004 (see Figure 14.2). Calculations based on these answers relating to respondents’ relatives studying or working abroad suggest that during the two years since enlargement more than 39,000 people of working age have been living abroad at any given time – 34,600 of them in the old member states – which is approximately 2–3 per cent of the working age population in Latvia.

  (i) Employment in Latvia, (ii) questions for employed people, (iii) readiness to work elsewhere, (iv) education, (v) migration in the last 10 years, (vi) planned migration within Latvia over the next three years, (vii) questions about eventually living in other countries, (viii) questions for those who had moved to Latvia in the previous 15 years and were working here, (ix) demographic information and (x) information about migration among relatives and acquaintances.

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Figure 14.2  Number of relatives working abroad after EU enlargement Source: Krišjāne, Eglīte, Bauls and Brants et al. (2007).

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The countries mentioned most often in terms of migration in the last two years were the UK (16,600), Ireland (11,200), Germany (1,700) and other EU member states. Among those countries in which relatives had lived for more than two years, those most often mentioned were Russia (approximately 14,000), other CIS countries, Germany (5,600) and Ireland (5,300). The large number of relatives in the post-Soviet area can be attributed to the large proportion of non-Latvian residents in the country – Russians, Ukrainians and Belarusians. In 1992, the year of the highest level of emigration, more than 50,000 people left Latvia, most of them to countries in the CIS (see Figure 14.1). At the same time, the decline in the importance of Germany compared to the UK and Ireland is a strong indicator of the importance of EU accession and the different policies adopted by these three receiving countries (see the relevant chapters in this volume). The characteristics and motivations of émigrés and details of the duration and location of their periods abroad are described on the basis of answers from those who have already returned to Latvia. According to these survey results 9 per cent of respondents – which extrapolated to the total population is equivalent to 146,627 residents of Latvia – had had working experience abroad for more than one month, and had subsequently returned to the country. 3. Numbers and Characteristics of Workers Who Have Returned from Abroad 3.1 Individual Characteristics of Migrants As already mentioned, 9 per cent of respondents in the survey had worked abroad for more than one month at a time. Men had done so more often than women: 12.1 per cent of men as against 6.2 per cent of women. Respondents aged 15–19 and 60–65 were least likely to have worked abroad. Among those aged 20–29, 20.9 per cent of men and 12.2 per cent of women had worked abroad. In the 30–39 age group, 15.4 per cent of men and 7.7 per cent of women had worked outside Latvia. The numbers in the 40–49 age group were 12.4 per cent and 5.2 per cent respectively; all data refer to age at the time of the survey rather than at the time of emigration (Figure 14.3).

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The average age of those who had worked abroad was 36 for men and 35 for women at the time of the survey (2006). Younger people are more mobile, and it is logical that they predominate in the group of those who have worked abroad. Of men who had worked abroad, 37.5 per cent were aged between 20 and 29 at the time of the survey, and the same was true of 39.0 per cent of the women. The survey data show that men who had a partner at the time of the survey – registered or unregistered cohabitation – went to work abroad more often than others, but it is also true that both men and women were more likely to go abroad by themselves and without their life partner: only 10 per cent took their partner with them. Women lived abroad with their partner more often than men (15 per cent of women and 7 per cent of men). This result is partly because a large proportion of those who have worked abroad are younger people, who are not just more mobile but also less likely to have established a family or have children. It is even less common for people to take their children with them when they go abroad: only 4 per cent had done so. Among those who had worked abroad, a larger share had a higher education (30.9 per cent) than was the case in the survey sample as a whole (21.1 per cent), and only half the respondents in that group had an elementary education (see Table 14.2). Again, this can be attributed in part to the age structure of those who left – there were few from the 15–19 and 60–65 age groups. Some people not only worked, but also pursued their education abroad, and that facilitated an increase in the overall education level of those who had spent time in other countries.

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Table 14.2  The education level of respondents who had and had not worked abroad (%) Had worked abroad

Had not worked abroad

Total

Primary or lower General secondary Specialized secondary Higher

9.8 20.4 38.8 30.9

21.0 23.8 34.1 21.1

20.0 23.5 34.5 22.0

Total

100.0

100.0

100.0

Education

Source: Survey on Geographical Mobility (2007a).

The English-language skills of those who had worked abroad were comparatively higher than the average in each age group. Twice as many people among those who had never worked abroad spoke no English than was the case among those who had worked in another country. In the case of German, half of those who had worked abroad did not speak the language compared with two thirds of the entire group of respondents, while a larger share reported that they spoke German fluently or had an intermediate-level command of the language (see below). In terms of regional distribution, the percentage of respondents who had worked abroad was fairly similar across the country. Respondents cited the region in which they lived at the time of the survey, not the region where they lived at the time when they left Latvia, so it is possible that some moved to a different region when they returned to Latvia. But still the data seem to suggest that Latvian migrants were drawn fairly evenly from all parts of the country, rather than being from, say, mostly rural or mostly metropolitan areas (Krišjāne et al. 2008). 3.2 Motivations Those who had gone abroad were asked about their motivation for doing so. Respondents were allowed to choose more than one reason. The dominant reason for both men and women was the fact that wages in other countries are higher: 67.7 per cent of men and 62.7 per cent of women cited this as the reason why they worked in another country. Gaining experience was the second most often cited reason: 21.5 per cent and 24.5 per cent respectively. The desire to learn a language was mentioned as an important motive by 8.6 per cent of male and 7.7 per cent of female respondents. There are some interesting correlations between combinations of different reasons. Gaining experience and learning a new language were the most closely correlated; this may reflect the high percentage of young people. Wages were most often mentioned as a reason in tandem with language skills, experience and the inability to find work at home. Those who said that they had been sent abroad by an employer, by contrast, usually mentioned that reason and no other.

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There were differences between men and women, however, when it came to other reasons given for working abroad. Women were more likely to say that they did so to learn a foreign language: this reason ranked third among women and fifth among men. Men were slightly more likely than women to have gone abroad because their employers had sent them. Men were also a bit more likely to rely on the experience and recommendations of others vis-à-vis working abroad. The existence of better career opportunities outside Latvia was not a commonly cited reason for men or women, and it is possible that those who found such opportunities to be important have not returned to Latvia. Other non-work reasons given included business trips, a matter of interest, training, family circumstances, and so on. There could be a combination of many reasons, such as training and subsequent opportunities to find work, or learning languages and finding work on that basis, or helping relatives abroad and later finding a job. These reasons indicate the role of social networks in opening up work opportunities abroad. Motivations differed not only on the basis of gender, but also on the basis of age group. Wages were the predominant reason for all age groups (Table 14.3). But the importance of wages diminishes as people grow older: 70.8 per cent of those in the 20–29 age group said that wages were the most important issue, but only 61.5 per cent of those between 45 and 59 did so (Table 14.3). Secondary motives also differed. For those in the 30–44 age group another important reason, as distinct from other age groups, was the inability to find work near their place of residence. Those in the 20–29 age group talked about experience and acquiring language skills. Being sent by an employer and recommendations from those already working abroad were important for those in the 45–59 age group. Table 14.3  Motivations for working abroad, by age Reasons

% of those who had worked abroad 20–29

30–44

45–59

Wages Experience Learning a language Sent by employer Recommendations from others Couldn’t find work at home Better career opportunities Other

70.8 32.5 24.1 8.0 16.8 6.2 6.3 10.9

63.7 15.3 9.9 15.3 9.2 10.3 2.7 14.5

61.5 13.3 6.7 21.5 15.6 5.2 1.5 18.5

Total

176.2

140.8

143.7

������� Source: Krišjāne, Z., P. Eglīte, A. Bauls, M. Brants et al. (2007).

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Labour migration to the West has largely been the result of wage differences in the sending and receiving countries. Also important have been differences in employment opportunities and working conditions (possibly more important than suggested here, as those lacking re-employment opportunities back in Latvia may well have stayed abroad). Young respondents are more flexible in taking up career opportunities abroad and have taken most advantage of the freedom of movement. 3.3 Length of Stay Those who had worked abroad were asked about the duration of migration. The most common duration is up to three months (Figure 14.4). On average, 80 per cent of men and 85 per cent of women spent no more than two years abroad, 11 per cent and 9 per cent, respectively, were there for three to five years, and 3.5 per cent had spent more than 10 years working in other countries. The amount of time spent abroad depended on the age of respondents. Very young people – younger than 19 – usually worked abroad for no more than three months; 67 per cent of men aged 20 to 29 spent more than a year abroad, as did 72 per cent of the women in the same age group. In the 30–44 age group, 77 per cent of men and 86 per cent of men worked in another country for two years or less. Respondents older than 45 tended to spend more time working abroad: 36 per cent of men and 25 per cent of women reported spending more than two years in another country.



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Figure 14.4  Time spent working abroad, by gender (%) Source: Krišjāne, Eglīte, Bauls and Brants et al. (2007). �������





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Young people go abroad to gain experience, and in most cases they do so for three months or less. Employers send men more often than women to work abroad, and their stay in another country can be of various durations, while women are usually sent for three months or less. Those who go abroad because they have not been able to find work in Latvia often report spending a year or two there. When following the recommendations of others, men spend one or two years abroad, while women usually spend six months or less. 3.4 Remittances Respondents who had worked abroad were asked what they had done with the money they earned: did they send it back to Latvia and if so, how much did they send? Fifty per cent of them did not send any money back to Latvia: 9 per cent spent all of the money while abroad, and 40 per cent spent most of the money in foreign countries. The other half of the respondents sent remittances of between 20 to 80 per cent of their income back to Latvia. The difference between the two groups can be attributed in part to the age of those who were abroad and the amount of time that they spent there. Women were more likely than men to remit earnings to Latvia. Most of the money – as much as 80 per cent – was sent to Latvia by women and by men who are now aged 35–44. 3.5 Destination Countries When asked about countries and motivations for selecting them, 33 per cent of respondents said that they had worked in more than one country. All told, respondents mentioned more than 50 countries, and some were quite vague: ‘European countries’, ‘former Soviet republics’, and so on. Six countries were mentioned most often: Germany (by 17.8 per cent of those who had worked abroad), the UK (17.6 per cent), Russia (11.1 per cent), Ireland (9.8 per cent), Sweden (8.6 per cent) and the United States (6.7 per cent): in sum, 71.4 per cent of all respondents who had worked abroad had done so in one or more of these countries. Men had mostly worked in Germany, the UK and Russia; women had worked in Germany, the UK and Ireland. Women worked in Germany more often than men did, while men worked in Russia more often than women did. Germany became one of the most popular destinations during the 1990s for workers sent by employers with the assistance of the State Employment Agency. This agency had agreements with German institutions for sending workers, working contracts – mainly for skilled workers, especially builders – and training; 503 persons worked in Germany from 1991 to 2005 under this scheme. The quota for such workers was much higher, at 1,400, but many potential employees were unable to participate in this programme due to insufficient German language skills. Eight hundred and ten students gained experience through training between 1995 and 2005 (Krišjāne, Eglīte, Bauls and Brants et al. 2007).

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People from different parts of Latvia chose different destinations. Those from Latgale and Zemgale more often worked in the UK, while people in Rīga, the Rīga metropolitan area and Kurzeme region were more likely to have worked in Germany. People from Vidzeme region selected Ireland most often, while in Rīga and Zemgale region, Ireland was not even one of the top four destinations. This suggests that specific social networks among émigrés have already been established. Table 14.4  Reasons for choosing a specific country Country

Motivation Most important reason

Second reason

Third reason

Employer sent me; job offered in my area of specialization; career opportunities

Better wages than elsewhere

Spoke/wanted to learn the language; relatives, friends lived there; family circumstances

UK

Better wages than elsewhere

Employer sent me; job offered in my area of specialization; career opportunities

Spoke/wanted to learn the language

Ireland

Better wages than elsewhere

People already there recommended it

Relatives, friends lived there; family circumstances

Sweden

Employer offered job; been there before; no real reason

Employer sent me; job offered in my area of specialization; career opportunities

Better wages than elsewhere

Germany

Source: Survey on Geographical Mobility (2007a).

Respondents travelled to the UK, Ireland and the United States to earn more money. Germany and Russia were chosen because the respondents’ employers had sent them there or they had been offered a job by an employer in the relevant country. Career opportunities were also important. Motivations for choosing Ireland were different: the second most important motivation for people going there was that people who were already in Ireland had recommended that they join them. This motivation did not arise in relation to any other country. Job offers and previous experience were the main motivations for those who went to Sweden: the ability to earn more money ranked only third for those respondents. People also chose the UK and the USA because they already spoke English or wished to learn it. Respondents selected Russia because friends or relatives already lived there.

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3.6 Subsequent Labour Market Performance of Returned Emigrants It is also interesting to consider the labour market performance of those Latvians who have worked abroad but who have returned to Latvia. Among respondents who had worked abroad the unemployment rate was higher than among those who had remained in Latvia: among those who had worked abroad, 15.7 per cent of men were not working at the time of the survey, while among those who had not worked abroad the figure was only 12.6 per cent. Among women the difference was even greater. Among those respondents who had jobs at the time of the survey, a greater percentage of those who had worked abroad were working as employers or selfemployed people than among those who had not worked abroad. There were also more working ‘unofficially’, that is, without a written job agreement. Fewer had a job contract with their employer. Those who had spent a period of time outside Latvia were more prepared than those who had not done so to move to a foreign country to work and live there over the course of the next year. Among those who worked abroad, 32 per cent replied ‘yes’, and 13 per cent ‘probably’ to this question. Among those who had not worked outside Latvia, 10 per cent said ‘yes’ and 8 per cent said ‘probably’. One third – 34 per cent – of those who had worked abroad had no plans to go abroad again, while 21 per cent answered ‘probably not’. While the greater willingness to emigrate again is not surprising, the findings about the labour market performance of returned emigrants seems to contradict predictions that migrants return to their home countries with improved ‘human capital’ and thus benefit from a better labour market position (and also raise the overall skill level of the domestic labour force). Possibly the most successful migrants have stayed in the destination countries. 4. Characteristics of Latvian Workers Currently Employed in the UK and Ireland 4.1 Survey Methodology To find out about the composition and characteristics of Latvian labour migrants currently abroad and their motivation both to leave and to return, 328 formalized interviews were conducted in winter 2006–2007 in Ireland and the UK, and in Latvia during the Christmas holidays, some by e-mail. There were no possibilities to carry out a representative sample survey in a foreign country, and accordingly the precise share of different groups and answers will not necessarily be true of Latvian migrant workers as a whole in these two countries. Nevertheless, the proportion of age and education groups, as well as more popular motives and plans to return were similar to those in other surveys and also interviews published in

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the Latvian media. This suggests that the findings are broadly accurate (Krišjāne, Eglīte, Bauls and Brants et al. 2007). There were enough representatives of people of both genders, of comparable education levels and belonging to specific age groups – except for men older than 50 – to compare the most common attitudes, intentions and achievements of representatives of each group. Answers were given by 135 men and 193 women. This is in line with the general responsiveness of men and women in surveys. There is no reason to think, therefore, that this represents the gender distribution of those who have gone abroad to work. More than half of respondents were young people – up to the age of 30 – in other words, persons who had begun their working careers after the restoration of Latvia’s independence. It is generally the case that young people are more mobile than others, and the proportion of young people in all migrant flows tends to be at least twice as high as in the general population. The same is true if we consider the respondents on the basis of their level of education, which is broadly similar to that of the Latvian population. These results are encouraging regarding the representativeness of the sample. The most important difference between the composition of surveyed labour migrants and the composition of the Latvian population concerned where people lived before they emigrated. Fewer than a quarter of respondents were from the capital Rīga, where 32 per cent of the Latvian population lives. If the people of Rīga are less mobile, that is certainly because they have better job opportunities and receive higher wages in the capital city. We know from the previously reported survey that Ireland, in particular, attracted more migrants from rural parts of Latvia, so these findings seem broadly consistent. According to census results a total of 13,319 Latvian nationals were living in Ireland in April 2006. This was a considerable increase on the 2002 figure of 1,797. The Latvians in Ireland in 2006 were predominantly young and single. The average age of Latvians living in Ireland was 28.4 years: 58 per cent were single, 30 per cent married and the rest divorced. Of the 12,081 Latvians aged 15 years or over who lived in Ireland in April 2006 more than 10,000 were working. Among males, the labour force participation rate was 97 per cent. Agriculture featured strongly as a source of employment, at 9 per cent. Manufacturing (24 per cent) and construction (33 per cent) were the dominant industries for males, while shop work (23 per cent) and hotels and restaurants (24 per cent) were important for females. The main occupations were cleaners and domestics (7 per cent), sales assistants (7 per cent) and building labourers (6 per cent). Very few Latvians were working in the higher socioeconomic groups (Central Statistics Office of Ireland 2008).

Box 14.1  Comparison: Profile of Latvians in Ireland according to the Irish census

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Summing up the methodological issues, the specific features of this method of extracting data mean that the results need to be interpreted cautiously. For all these reasons we will refrain from precise numerical characterizations of the information obtained. 4.2 Survey Results Previous occupation  A key issue is what migrants did before they emigrated. Answers show that nearly 90 per cent of respondents had jobs before they left, and that these were of all kinds and at all levels. Some respondents had a higher education and worked as academics, managerial staff and professionals. Others with a specialized secondary education worked in a whole range of mid-level occupations. Some had a general secondary or even only a primary education; almost all of those who did not have a job at the time of emigration were in the latter, less educated groups. Results from the Latvian Labour Force Survey also indicate that Latvian migrants tend to have jobs in Latvia before departing from the country. In 2007, according to the LFS, three fifths of Latvian migrants had been employed before departure, a fifth (18.3 per cent) had been at school or college, and only one sixth (17.4 per cent) had been unemployed. Among migrants who had been employed before leaving Latvia, 19 per cent were working in trade, 16 per cent in construction, 13.8 per cent in manufacturing, 9.8 per cent in agriculture, hunting and forestry, 9.4 per cent in transport and communications, 6.5 per cent in other community, social and personal activities, and 5.2 per cent in hotels and restaurants (CSB 2008c). Comparing these findings with the census data – see Box 14.1 – clearly suggests that most Latvians, in Ireland at least, were not working in their own occupations nor at an appropriate skill level (see also below). Reasons for emigration  In addition to those who were unemployed, those who said that the desire to find work was a motivation for emigration were mostly young people who had not yet begun their working lives in Latvia and had less chance of a well paid or otherwise attractive job. The ability to earn more money or to save money for specific purposes was the most common motivation for emigration among men and women at all levels of education, but it was not the only reason for the vast majority of respondents. Other reasons in addition to those already mentioned included the desire to learn a language (particularly among women), the desire to see the world (especially among men), the desire to test their abilities, to join a family or to follow friends (mostly among women). Less than 10 per cent of women and far fewer men said that they wanted to study. Migrants’ experiences on the UK and Irish labour markets  Difficulties reported by emigrants included insufficient language skills, not knowing their rights, difficult work, excessively long work hours or the failure of employers

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to do what had been promised in advance. Respondents also talked about their problems adapting to their new environment. Most often they spoke about missing friends and family members and about feeling isolated. Less often, respondents mentioned difficulties in finding a job – or a proper job – or housing. Given that most respondents said that they received information from acquaintances, it can be concluded that most people found work abroad without the involvement of any state or private companies or services. Approximately one half said that in their first job abroad they did not need the qualifications they had acquired in Latvia. A lawyer worked in a shop, an economist harvested strawberries, an optometrist and a schoolteacher worked as janitors, a construction worker washed dishes, and so on. Only around a quarter of respondents said that they immediately went to work in their profession and in line with their qualifications. Once they had improved their language skills and had more experience in the job market of the country in which they were living, approximately one half of respondents changed their first job for one that was more in line with their profession. For example, after working as salespersons or babysitters, teachers found work at kindergartens, children’s centres, in school administration or as teachers. Family and social network  A little more than one third of those respondents who were preparing to return to Latvia had a spouse, and of those spouses one third were in Latvia. Nearly one half of those who had a family indicated that they were not preparing to return to Latvia, and only one sixth of the spouses were in Latvia. Many of the people who had spouses had met them abroad. Accordingly, those who intend to remain abroad had more preschool-age children than those who planned to return – nearly one fifth, as opposed to one seventh in the latter group. In the first group, three quarters of the children were living with their parents abroad, while in the second group most of the children had remained in Latvia. Generally it can be concluded that if a migrant left a family behind and was separated from that family for a long time, the welfare of family members was somewhat at risk, but this was also a factor which encouraged people to go back home. Those who established a family abroad were less likely to want to return to Latvia. Duration of stay  Respondents were also asked how long they had been abroad at the time of the interview. Roughly equal proportions – around a quarter – answered less than one year, one year, two years and three or more years. The intensity of migration increased after accession, but over the last three years it has not increased. Less than one fifth of respondents had worked abroad on more than one occasion, and the average duration of their stay in another country was a little more than 18 months. Benefits and new skills abroad Respondents were next asked about what they had gained while abroad; they could choose up to three responses. Most often

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respondents talked about language skills: two thirds of men and nearly 80 per cent of women. That is in line with what people have said about their intentions to emigrate. The most common goal of those who had not yet emigrated – to earn more money – was less often mentioned as the main benefit from having been abroad. For men it ranked second and for women it was the third most important reason. Women were more likely to talk about learning about the host country – one half cited that as a benefit. Representatives of the two genders differed when answering whether they had supplemented their skills or learned a new job – this was stated by more than 40 per cent of men, but by less than one third of women. That could be because women in Latvia are more highly educated on average, while jobs for migrants tend to require little in the way of qualifications, but possibly also gender-specific differences in the jobs performed abroad. Use of earnings When asked about what they did with the money they had earned abroad – more than one answer was possible – only half said that they had spent the money entirely on themselves. Most respondents had one or more specific goals. Most often people wanted to help family members back in Latvia or to purchase or renovate a home. Around 25 per cent said that they would like to purchase a flat or a house, and a slightly lower percentage talked about renovating a home. This goal was stated by migrants in all age groups, especially by those who planned to remain abroad. The second most common intention was buying a car. This was discussed mostly by those who planned to return to Latvia. As many women as said that they would like to buy a car said that they would spend the money on education. Of course, this was true mostly of younger women. Older women – nearly a quarter in all – planned to spend the money on educating their children. Among men over 30, approximately 20 per cent said the same. Women were a little more likely than men to say that their earnings would be used to repay a loan, and those who said so were usually over 25 and planning to return to Latvia. Women’s wages in Latvia are such that the repayment of loans can be a major problem. Men, by contrast, were more likely to say that they wanted to earn money to start up their own business. This was particularly true of those aged around 40, especially among those who had no plans to return to Latvia. 5. Impact on the Latvian Labour Market and Economy Since EU accession migration has become a topic of considerable economic, political and social importance in Latvia. Here, as in other post-Communist countries with aging populations and depopulation, the emigration of young people only exacerbates the problems. The population decreased from 2,319,203 in 2004 to 2,281,305 in 2007 (CSB 2008a). There has been insufficient evaluation of how migration affects economic development in Latvia, one reason being the lack of detailed statistical data. As

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already mentioned, national statistics do not reflect the number of labour migrants who have left Latvia without declaring a change of permanent residence. Due to this we are unable to describe the impact of labour migration within the EU in precise quantitative terms. What initially was not expected, but has increasingly become evident, is the impact of current migration on the Latvian labour market (see Table 14.5). Only a few years after Latvia joined the European Union and free movement of labour had commenced, high unemployment was replaced by labour shortages in a number of professions – up to 2007 the shortages did not concern the most qualified, but rather shop workers, builders, and so on. Employers have been forced to raise wages at least to a level at which a decent family life can be preserved. Latvia has become less attractive to investors for whom the only issue was cheap labour. This could promote a shift toward production characterized by higher value added, which requires fewer, but better qualified workers, enhancing company profits, tax revenues and workers’ incomes. Table 14.5  The main employment changes in Latvia since joining the EU Variables Number of population 15–74 years of whom: employed unemployed

% of previous year

Thousands1 2004

2005

2006

2007

2005

2006

2007

1815.1 1813.2 1809.6 1803.6

98.0

96.4

94.0

1017.7 1035.9 1087.6 118.6 99.1 79.9

1119.0 72.1

101.8 83.6

105.0 80.6

102.9 90.2

Unemployed as a percentage of the economically active

10.4

8.7

6.8

6.0

83.6

78.2

88.2

Average wage (net €)

214

251

308

408

117.3

122.7

132.6

Note: Including undeclared migrants. Sources: Central Statistical Bureau of Latvia (2008b, 16; 2005, 14; 2007, 276). 1

Concerning the qualitative effects, the main issue is the existence or otherwise of a ‘brain drain’, or whether a ‘brain gain and circulation’ process is predominant. Analysis of migrants in the UK and Ireland allows us to draw certain conclusions about the losses caused to Latvia’s human capital by emigration. Slightly more than half of respondents were young – below 30. In terms of education, most had a secondary education, in line with Latvia’s working age population in general. Most emigrants already had a profession and work experience in Latvia. Given that they were at the beginning of their working lives, together with their level of education and training, their long-lasting or permanent

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emigration would represent a major loss of human capital and labour to Latvia. The situation is made worse by the fact that migrant workers are doing work – at least for some of the time – which requires lower qualifications than they in fact possess and which is not in their area of specialization. That means that working abroad is not helping these migrants to supplement their qualifications so that they could find better jobs when returning to Latvia. At the time of the study, the average duration of the respondents’ stay in other countries was a little over 18 months, and respondents differed considerably in terms of how much longer they planned to stay: from one month to more than five years. Nearly a quarter of men and a third of women have no plans at this time to return to Latvia, and more than 10 per cent of men and women have made no decision as to whether and when they might return. 6. Conclusions People of all age groups are involved in migration processes, although younger people are more mobile. The dominant push-factor is low wages and living standards in Latvia in comparison with the countries of destination. Another is the removal of the restrictions on foreign travel imposed when Latvia was behind the ‘Iron Curtain’, which had the effect of heightening people’s interest in going abroad. Labour migration from Latvia – mostly to the EU member states which have opened up their labour markets – usually does not involve a permanent change in place of residence, even if the time abroad lasts several years. A firm intention to return is an important reason for not declaring a change of permanent residence. A substantial proportion of emigrants have already returned. As their interviews both in Ireland and Latvia show, migrants mostly return having fulfilled their aims abroad, because they are homesick or to rejoin the family. As such sentimental factors become less important, the re-immigration trend will depend exclusively on reducing differences in standards of living between Latvia and the destination countries, always assuming that the political situation at both ends remains stable. Some businesspeople and researchers feel that one solution to labour shortages in Latvia is immigration from countries to the East, where wages are even lower (Indāns and Krūma 2006; Kazāks et al. 2006; Lulle in this volume). But at best this can be only a short-term solution and would jeopardize the improvements in working conditions that are necessary if emigration is to be curbed sustainably. With a view to Latvia’s further development the problems arising from labour migration could best be dealt with by ensuring a sustained rise in productivity and thus wage levels in comparison with other countries. This would make it possible to reduce the factors that encourage people to leave, and also to encourage those who have already left to return home (Krišjāne 2008). To ameliorate the negative effects of emigration more efforts are necessary to raise not only living standards,

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but the general quality of life in Latvia. Statutory social protection must be ensured, and working conditions must be improved (Eglīte et al. 2006). At the time of writing (October 2008) the Latvian economy is threatened by a major slowdown in the context of the global financial crisis and the end of an unsustainable boom. This is likely to have a major impact on migration flows, but the dimensions of such changes cannot be discerned at present. References Bauls, A., and Z. Krišjāne (2000), ‘Latvian Population Mobility in the Transition Period’, Folia Geographica/Geografiski Raksti 8, 24–36. Central Statistical Bureau of Latvia (CSB) (2000), Demographic Yearbook of Latvia 2000 (Riga: Central Statistical Bureau of Latvia). Central Statistical Bureau of Latvia (2001), Demographic Yearbook of Latvia 2001 (Riga: Central Statistical Bureau of Latvia). Central Statistical Bureau of Latvia (2002), Results of the 2000 Population and Housing Census in Latvia (Riga: Central Statistical Bureau of Latvia). Central Statistical Bureau of Latvia (2005a), Labour Force Survey: Main Indicators in 2005 (Riga: Central Statistical Bureau of Latvia). Central Statistical Bureau of Latvia (2005b), Statistical Yearbook of Latvia 2005 (Riga: Central Statistical Bureau of Latvia). Central Statistical Bureau of Latvia (2007a), Demography 2007. Collection of Statistical data (Riga: Central Statistical Bureau of Latvia). Central Statistical Bureau of Latvia (2007b), Statistical Yearbook of Latvia 2007 (Riga: Central Statistical Bureau of Latvia). Central Statistical Bureau of Latvia (2008a), Demography 2008. Collection of Statistical data (Riga: Central Statistical Bureau of Latvia). Central Statistical Bureau of Latvia (2008b), Labour Force Survey: Main Indicators in 2007 (Riga: Central Statistical Bureau of Latvia). Central Statistical Bureau of Latvia (2008c), ‘On Long-Term Migration and Employment in Foreign Countries in 2007’ [website], , accessed 1 October 2008. Central Statistics Office of Ireland (2008), Profile 5 – Latvians. Profiles of Nationalities, 40–43 [website], , accessed 1 October 2008. Eglīte, P., and I. Mežs (2002), ‘Latvijas kolonizācija un etniskā sastāva izmaiņu cēloņi 1944.-1990. gadā’, Okupācijas režīmi Latvijā 1940.-1956.gadā, Latvijas Vēsturnieku komisijas raksti, Vol. 7, 405–40 (Rīga: Latvijas vēstures institūta apgāds). Eglīte, P. et al. (2006), ‘Leaving Latvia since Joining the EU. Time for Work and Rest in 2003’, Studies of the Latvian Population 12, 7–57.

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Eglīte, P. (2008), ‘A Brief Overview of 20th Century Latvian Migration Studies’, Folia Geographica/Geografiski Raksti, 14. Indāns, I., and K. Krūma (2006), Latvijas imigrācijas politika: problēmas un perspektīvas (Rīga: Latvijas Ārpolitikas institūts, Konrāda Adenauera fonds). Kazāks, M. et al. (2006), Vai Latvijai nepieciešama darbaspēka imigrācija? Hansabankas analītiskās diskusijas. Krišjāne, Z. et al. (2004), ‘Changing Patterns of Population Mobility’, Folia Geographica/Geografiski Raksti 12, 66–73. Krišjāne, Z., P. Eglīte, A. Bauls, M. Brants et al. ������������������ (2007) Darbaspēka ������������ ģeogrāfiskā mobilitāte [The Geographical Mobility of the Labour Force], financed through a national programme related to the European Union’s Structural Funds No. VPD1/ESF/NVA/04/NP/3.1.5.1./0003. (Rīga: Latvijas Universitāte). Krišjāne, Z. (2008), ‘Labour Migration Processes after EU Accession in Latvia. Brain Drain or Brain Circulation?’, in K. Friedrich and A. Schultz (eds), Konsequenzen und Perspektiven der Ost–West-Migration, Forum IFL, Vol. 8, 63–71 (Leipzig: Leibnitz Institut für Landerkunde). Krišjāne et al. (Forthcoming 2008), ‘New Labor Migration Trends: Evidence from Latvia’, Geographical Review of Japan. Mežs, I., E.V. Bunkše and K. Rasa (1994), ‘The Ethno-demographic Status of the Baltic States’, GeoJournal 33 (1), 9–26. Zvidriņš, P. (2004), ‘Depopulācija’, Nacionālās intereses: formulējuma meklējumos. Stratēģiskās analīzes komisija. Zinātniskie raksti 1, 74–104.

Chapter 15

Labour Emigration: Government and Social Partner Policies in Latvia Aija Lulle

1. Introduction In this chapter we review and analyse the policy responses and practices adopted by government and social partners in Latvia to deal with the challenges posed by migration since EU enlargement on 1 May 2004. Data have been gathered from policy and position papers and reports by various organizations, secondary studies by various researchers and expert interviews conducted specifically for the purpose. 2. Historical and Socio-economic Background 2.1 Historical Context of Policy Responses to Migration in Latvia Latvia experienced several waves of emigration in the twentieth century. After the Second World War – during which Latvia was annexed to the Soviet Union – until 1991 (when Latvia regained its independence) the ethnic balance in Latvia shifted significantly due to inward migration from Slavic Soviet republics. Many of those who arrived during the Soviet time are now integrated in Latvian society, speak Latvian and have obtained Latvian citizenship. But approximately 17 per cent of the population remain non-citizens; in fact they have a form of quasi-citizenship, given to those former citizens of the former Soviet Union who – or whose parents – were not citizens of Latvia before the Soviet Union annexed Latvia in 1940. At the end of the 1980s, when the so-called ‘Awakening’ process started, followed by the collapse of the Soviet Union and Latvia’s independence, a key legal act (Regulations 1989) to prevent inward migration was passed, with longterm consequences. As a result, and due to the dismantling of borders at that time, since 1990 migration flows have changed significantly, resulting in a negative migration balance (more people left than came into the country).  See the list of experts in References at the end of this chapter.   See Zaiga Krišjāne and Pārsla Eglīte in this volume for statistical details.

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Thus emigration is not something Latvia has experienced only since joining the EU; it started immediately after Latvia regained its independence. The reasons for emigration in the 1990s were varied: political reasons, including the requirement that military personnel of the former Soviet Union and their families should leave Latvia, Jewish minority emigration and economically motivated emigration to European countries and the US. Many went abroad legally, especially by means of family reunification, as well as for work and educational purposes. However, some overstayed their visas and therefore much labour emigration in the 1990s went unregistered. While many people emigrated after EU enlargement in 2004 made access to some West European labour markets easier, unknown numbers were already living abroad, but with irregular status. As a result of both pre- and post-accession emigration Latvian diasporas exist in the UK, Sweden, Ireland, Denmark, Iceland, Italy, Norway and Finland. Around 200,000 Latvians – one tenth of the Latvian population – currently live abroad, with the largest communities outside the EU (USA, Australia, New Zealand, Canada and Brazil). While some communities of Latvians have been living in other European countries for many decades, numbers of recently arrived Latvians have grown significantly over the last two decades and especially after the country joined the EU (IUMSILS 2004; Krišjāne and Eglīte in this volume). Summing up this historical context, Latvians living aboard have left at different times, come from different social, educational and cultural backgrounds, and have formed various communities and groups. Therefore they have differentiated needs, expectations and future orientation towards their homeland. The latest wave of economic migration within the framework of free movement of labour in the EU – our main focus here – also comprises individuals with varied professional and educational backgrounds, who are going through different stages of integration in the host country, practicing circular migration or leaning towards possible return migration to Latvia. All these differences need to be taken into account by policymakers designing responses to the challenges of emigration, be it to maintain cultural ties with Latvians living abroad or to promote return migration. 2.2 Push Factors Behind Emigration as a Background to the Policy Discussion The most comprehensive available research on migration realities since Latvia joined the EU, the ‘Geographic Mobility’ research study (Krišjāne 2007; see also Krišjāne and Eglite in this volume), found that emigrants’ main motivation for leaving was to earn more money. But quantitative polls cannot fully capture the reasons behind these motives and it is still a field requiring in-depth study. A research study based on qualitative methods, carried out a year after Latvia joined the EU, revealed that alongside economic reasons there are also social, cultural and political ones (Indāns et al. 2006). Emigration realities are, first, driven by the characteristics of economic development in Latvia since 1991, in its transformation from a former Soviet economy into an independent state with EU membership. Big industrial Soviet factories were closed, nationalized properties were privatized and

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the agricultural sector shrank. The country has undergone fundamental reforms, maintaining a neo-liberal course in economic policy, while keeping social benefits at low levels. This has resulted in regional disparities and social segregation. The latter is illustrated by the Gini coefficient: since the beginning of the 1990s, when it was 0.20, income differences have been widening; in 2004, when Latvia joined the EU, the Gini coefficient was 0.34, rising to 0.36 in 2007, whereas the average coefficient in the EU was 0.29 (CSB 2008). The reasons behind the latest emigration wave and political responses to it include the following. •

•

•

•

•

Partly related to the transition from the Soviet system, there are problems of quality of education and lack of coordination between both vocational training and higher education and the labour market. Many found themselves redundant or unable to earn sufficient wages in their existing professions, while lacking opportunities to improve their situation through education and training. Another reason reported by émigrés was employer–employee relations: social responsibility in the rapid transition was often neglected, reflected in poor management and harsh treatment of workers (for example, overload, workers’ financial responsibility for damages/theft in small shops or cafes despite low wages, and so on). The real estate market boomed in Latvia after 2000; mortgages became more easily available and at the peak of the boom in 2005 and 2006 many inhabitants were overoptimistic concerning their ability to repay loans (Liziņa-Balode and Rudkaste 2007). Many emigrants revealed in research interviews – see, for example, Indāns et al. (2006) – that they had left Latvia to earn the money they needed to repay their personal or household loans. There are also cultural reasons. Until the so-called ‘Awakening’, it was difficult to travel outside socialist countries. After the borders opened in the early 1990s, and especially after the country joined the EU, it was possible to fulfil a wish to learn about other cultures and learn new languages (English in particular). An additional possible driver is social alienation. Interviews with Latvian migrants in Ireland and elsewhere reveal a certain bitterness towards the neo-liberal economic policy in Latvia, which emphasizes growth and individual responsibility, but not social justice. This should be seen in a broader context of people’s alienation from the state identified in various social research studies (see, for example, Pabriks, Vebers and Āboliņš 2000; Zepa et al. 2001) and which in the context of recent emigration was conceptualized as a strategy of silent resistance by Ķešāne (2008). Based on her qualitative research in Ireland, involving interviews with

 ��������������������������������������������������������������������������������� The Gini coefficient measures inequality in wealth distribution: 0 means perfect equality and 1 perfect inequality.

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Latvian migrants, she concludes that recent emigration ‘seems to be in part resistance to such market-driven government – for example, inadequate social services, education and market-driven transformation in the labour market during the transition. While the neo-liberals claimed that it is people’s responsibility to be free and to exercise their freedom, initially, instead of voicing their resistance, people chose a silent form of resistance or emigration (Ķešāne 2008, 67). She assumes that ‘it was due to the absence of the notion of civil society in Soviet times’ (ibid.). Civil society in Latvia and similar countries during the Soviet era was closed to contacts with partners in other countries; in many cases civil society organizations and notions of a civil and active society have been rebuilt from scratch since 1991 (Adam, Tomsic and Primoz 2008). 3. Government Positions and Policies 3.1 Government Policies and Practices before 2004 Due to the complex and multifaceted nature of migration, regulation of these issues is the responsibility of various institutions: the Ministry of the Interior, the Ministry of Foreign Affairs, the Ministry of Welfare, the Ministry of Justice and the Secretariat of the Special Assignment Minister for Social Integration (hereafter, Ministry of Integration), each institution being in charge of a specific set of topics. Under Cabinet of Ministers’ Regulations the Office of Citizenship and Migration Affairs is governed by the Ministry of the Interior and its mandate covers the implementation of state migration policy, although in fact it focuses rather on immigration than on emigration policy. The main government institution dealing, not with the regulation of migration, but with the social integration of both returning Latvian migrants and migrants from third countries is the Ministry of Integration. Its main objective is to develop a common system of social integration for citizens and residents of Latvia, establishing and strengthening a framework for cooperation with the Latvian diasporas abroad. The need for a special programme to support the Latvian diasporas – both historical and newly established – was raised as early as 1995, when the Latvian Parliament adopted the national foreign policy concept until 2005 (Foreign Policy Directions 1995). Since then broad formulations concerning the need to strengthen cultural and economic ties with Latvians aboard have been included in Latvian foreign policy concept papers. The Latvian state’s ties with its nationals abroad was also one focus of a programme called ‘Integration of Society in Latvia 2001’, setting out a vision for developing an inclusive society in Latvia and cooperation amongst Latvians all around the world. One of the goals of the programme is ‘to maintain and

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enable ties with Latvians abroad to strengthen their communities and to encourage repatriation. Latvians residing abroad are invaluable in helping to create an image of Latvia and build contacts with societies and governments in their respective countries.’ Since December 2002, when the Ministry of Integration was established, policy planning and implementation regarding recent Latvian émigrés has been one of the focuses of its mandate. 3.2 Government and Policy Responses after EU Enlargement – Programme Declarations On the eve of Latvia’s EU accession, the realities of rapidly growing emigration flows came onto the political agenda. The Cabinet of Ministers, led at that time by Prime Minister Indulis Emsis, adopted the Declaration of the Intended Activities of the Cabinet of Ministers, which stated that the government would support close ties with Latvians abroad, ‘support education for Latvians residing in foreign countries by creating and implementing various opportunities both at home and abroad’ (Declaration 2004, section on foreign policy) and ‘adopt and financially support cooperation with Latvian diasporas, as well as their repatriation to Latvia’ (ibid.). Based on this Declaration, a programme to support Latvian diasporas abroad (2004–2009) was prepared under the Ministry of Integration. The emigration problematic and possible challenges it may give rise to in the near future were also included in the Declaration of the Intended Activities of the Cabinet of Ministers in 2006 issued under Prime Minister Aigars Kalvitis (Declaration 2006). This later Declaration drew attention to emigration realities which had been examined in initial research (Indāns et al. 2006) and discussed widely in the press. It stated that return migrants should be seen as a valuable resource because they have gained new experience abroad and that the government would promote the reintegration of return migrants through various policies. At the same time, the declaration included a paragraph stating that the government would reduce labour shortage risks related to emigration. The successor government’s declaration (Declaration 2007) – under Prime Minister Ivars Godmanis – stated that, due to demographic processes and the emigration of Latvian labour to more developed EU countries, a number of local industries were experiencing a shortage of labour and that it would ensure changes in laws and regulations covering legal employment relationships, and launch a large-scale information campaign in order to increase the mobility of the labour force, as well as promote its return from economic emigration abroad, while at the same time ensuring protection of the rights of employees and employers. (Declaration 2007)  All translations by the author.

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In contrast to previous declarations, this one emphasized the possible need for more immigrants in Latvia in response to labour shortages. The government would urgently implement a new migration and employment policy after objectively reviewing labour shortages in the national economy and in individual industries. All these declarations generally reflected the fact that emigration has been an important political issue since 2004, and that the focus of interest has shifted over time. At the same time, they were limited mostly to rather vague rhetoric and to some extent characterized by wishful thinking. Nevertheless, they also initiated several policy planning documents and concepts, which will be described and analysed below. 3.3 Policy Proposals to Promote Return Migration There are a number of policy planning initiatives addressing the consequences of emigration and possible return migration. However, it should be stressed that these are mostly declarations of intent or in the planning stage; action plans for concrete steps to promote return had not been adopted at the time of writing (September 2008). There are no initiatives or activities based on previous legislation, either: according to the Repatriation Act those willing to repatriate to Latvia, if they left the country after 4 May 1990, when Latvia declared independence, have no right to state assistance for repatriates. In this section we discuss the content of these initiatives. The current, fragmented initiatives and support for the latest wave of emigrants will be discussed in the next section. A number of policies and approaches in these documents deserve further comment. The signing of the Statement of Intent by the Association of State and Private Partnership, the World Federation of Free Latvians, the European Federation of Latvians and the Association for Latvians in Ireland is an important step towards creating a consultative mechanism to empower civil society in the form of Latvians abroad and to make their voice heard in Latvia. The Return Migration Action Plan included proposals to establish an effective monitoring system of emigration and return migration, and for help to returnees seeking to reintegrate in society and the labour market. Another suggestion was the introduction of dual citizenship, since a growing number of Latvian children born abroad have other citizenship. The current Latvian Citizenship Act allows only those individuals – and their descendants – who fled from Latvia during the Second World War to hold dual citizenship. This constitutes a significant obstacle to families with children born, for example, in Ireland wishing to return to Latvia. The proposal of dual citizenship has led to a political debate in Latvia concerning whether this would be against Latvia’s national interests, or encourage Russian-speaking people in Latvia to obtain Latvian and Russian citizenship. The amendments to the Citizenship Act were prepared by the Ministry of Integration in 2007, but the dual citizenship debate remains deadlocked.

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Statement of Intent on Promoting Return Migration – Ministry of Integration (2006) This aimed to develop a state and private partnership model to stimulate the return to Latvia of Latvian emigrants. The Statement was signed by a number of civil society groups representing Latvian emigrants abroad. The Statement of Intent was reviewed by the government in 2006. Information Report to Promote Return Migration – Ministry of Integration (2007) The report outlined policy aims and priorities for promoting return migration. It concluded that the main long-term priorities for encouraging return are as follows: special support in housing policy for return migrants, especially for families with children; broad regional development, starting with job creation; child care provision; road improvements to facilitate commuting to work in nearby towns; raising the standards of employer–employee relations; changes in the tax and social benefit systems to support families; easing of bureaucratic obstacles to launching and running a small business. It was submitted to the government in 2007, but had not been adopted by September 2008. Return Migration Action Plan – Ministry of Integration (2007) The action plan supplemented the information report by proposing concrete actions to promote the return of émigrés to Latvia. It included a wide range of tasks involving different governmental, business and civil society partners. This plan had not been adopted by the government by September 2008. Concept Paper on Migration Policy – Ministry of the Interior and its Citizenship and Migration Affairs department and Ministry of Welfare (2007) This focused mainly on immigration issues and possible future policy scenarios regarding immigration. It had not been accepted by the government at the time of writing (September 2008). National Development Plan 2007–2013 – Ministry of Regional Development and Local Government (2007) This macro level policy planning paper also touches upon emigration and immigration issues, stressing the importance of more equal regional development in Latvia as a major national policy to prevent emigration. Economy Stabilization Plan – Ministry of Economics (Stabilization Plan 2007) The Plan recommends that the government work out a balanced policy of economic migration in order to reduce labour outflows and ensure controllable recruitment of labour that meets the long-term goals of Latvian economic development. The Plan was adopted by the government in 2007.

Box 15.1  Overview of Policy Planning Documents and Initiatives on Migration

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Another practical suggestion in the Return Migration Action Plan concerns tax changes to encourage Latvians to return home or reduce the disincentives to do so. The Ministry of Integration suggested launching a debate and raised the possibility of temporary exceptions to the so-called ‘income tax difference’ for Latvian residents commuting to work in other EU countries. For example, personal income tax in Latvia is a flat 25 per cent, while in Ireland, one of the main destination countries of Latvians, it is lower. Therefore those who are commuting to Ireland and have still not decided whether they want to remain permanently in one country or the other are currently supposed to pay additional taxation in Latvia on income they have received in Ireland, reflecting the higher tax rate in Latvia. The proposal would remove this additional tax liability. However, Latvian Finance Minister Atis Slakteris rejected this, arguing that residents of Latvia – those who have spent more than 183 days during one year in Latvia – must declare all their incomes earned abroad and pay the difference in Latvia. ‘Everybody must pay tax on all income ... It is just and common practice throughout the world and it would be unjust to make exceptions’ (LETA 2008). The Latvian organization in Ireland, Latvians in Ireland, argued that current tax policy discourages commuters from remaining Latvian residents and also Latvians resident in Ireland from returning home due to higher taxes and lower social benefits (Latvians in Ireland 2008). Various government institutions have stated that the gradual improvement of the Latvian economy and wage growth are the main goals with a view to directly and indirectly promoting return migration. Indeed, emigration has itself fostered these developments. For example, according to the Ministry of Economics (Stabilization Plan 2007) the latest emigration wave has resulted in significant wage growth in a number of economic sectors and regions of the country. In the recent period – 2003–2006 – wage growth has been most intense in, for example, construction and services. Latvia has been hit by skill shortages, reflected in growing vacancy rates (particularly in construction), especially since 2005. The report identified two main factors: labour demand and free movement of labour in the EU. Employees’ real income increased by 29.9 per cent between 2004 and 2006, and by 22 per cent in the first three quarters of 2007. According to the Ministry the opening of the labour market in such highly developed countries as Ireland and the United Kingdom has increased competition in the Latvian labour market – falling labour supply due to growing emigration – exerting significant pressure on wages. But it also stressed that the wages of employees in Latvia were very low in comparison with the EU average – a mere 15–20 per cent in most sectors up to 2006. For this reason, wage growth is a manifestation of the objective process of convergence on a wider European scale. The gross monthly minimum wage has been increased gradually, reaching LVT 180 (€256) in 2008. But it is still much lower than in most EU countries. The Ministry of Economics recommends that the government work out a comprehensive and balanced policy of economic migration in order to reduce labour outflows and ensure controllable labour recruitment that meets the longterm goals of Latvian economic development. An interview with a senior official

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at the Ministry of Economics confirmed that while the Ministry welcomes policy plans to promote return migration from the Ministry of Integration, at the same time, it was in favour of adopting balanced immigration policies to meet the need for professionals and skilled workers in various economic sectors which face labour shortages; for demographic reasons, return migration alone would not solve problems with labour shortages in coming years. Another broad national policy approach to prevent emigration, stressed by a number of government institutions and the Ministry of Regional Development and Local Government in particular, is more equal regional development, since lack of work opportunities and low wages outside the capital city, Riga, are one of the main driving forces of emigration (National Development Plan 2007–2013, 2007). Indeed, an analysis carried out by King and Muravska (2007) revealed strong regional economic disparities in Latvia. In 2004, when Latvia joined the EU, GDP per capita in Riga was 83.3 per cent of the EU-27 average in terms of purchasing power parity (PPS), while in the eastern region of Latgale GDP per capita was as little as 21.1 per cent; the national average is around 50 per cent of the EU-27 (Ministry of Economics 2007). Emigration from the Latgale region, which lies outside commuting distance from Riga, was higher than in the other regions at the beginning of the recent emigration wave, even if pronounced emigration affected all regions of Latvia after EU accession. In general, initiatives to achieve gradual improvements through economic and regional development policies and so prevent emigration reflect the assumption that uneven economic development and migration are gradually reducing wage differences between sending and receiving countries. But the Latvian government and other actors would be ill-advised to rely on the long-term prospect of economic growth. The economic slowdown that started in early 2008 indicates that the situation has changed and labour demand has shrunk in Latvia. This could in fact cause a new emigration wave. Although many of the documents we have mentioned remain mere statements of intent and the programmes and plans have not been adopted to date, these initiatives have generated public debate on emigration and its consequences at the national, regional, community and individual levels; they have also given rise to a number of concrete activities (discussed below). 3.4 Current Activities for Migrant Workers Abroad As mentioned in the previous section concrete government measures have been limited, and in many cases activities supporting possible returnees are provided mainly by civil society bodies and social networks. Latvian government institutions, especially the Ministry of Integration, have carried out information and assistance campaigns and community activities both in Latvia and abroad to maintain ties with Latvian diasporas and promote return migration.

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Financial support for various organizations, schools and amateur dancing and singing groups has been allocated to newly established communities in the UK and Ireland – the main receiving countries – as well as for the maintenance of Internet web sites (for example, for Ireland: <www.Baltic-ireland.eu>, and Germany: <www.latviesi.com>) and subsidies for publications in Latvian abroad. Latvian state institutions also distribute information materials about Latvia through embassies and migrants’ organizations. Despite a lack of financial support and policy encouragement, Latvians living abroad actively form communities and groups via the popular webbased portal <www.draugiem.lv>. There are specific subgroups – for example, ‘Latvians Abroad’, ‘Latvians in London’, ‘Latvians in Ireland’ and in other cities and regions – that discuss everyday practicalities, publish job seeking and job advertisements and actively maintain ties and circulate information among friends and acquaintances in Latvia. In some cases ties can be maintained only in ‘cyberspace’, by way of mutual advice and support, but such ties can also become concrete social ties in the real world. In countries with active local diasporas of relatively recently arrived Latvians, information has been distributed through local newspapers: for example, Sveiks (printed in Latvian) and Nasha Gazeta (printed in Russian) in Ireland, Brīvā Latvija in the UK and Germany. According to the social research company SKDS, which has reviewed nearly all countries with Latvian diasporas (SKDS 2006), there are active communities in several EU countries, mainly comprising recently arrived Latvians: Germany, Sweden, Denmark, Norway, France, Belgium and the Netherlands, and relatively active ones in the UK, Ireland and Finland, while data are missing on community activities in Spain, Cyprus, Italy, Greece, Austria, Luxemburg and Portugal, where Latvian communities are smaller. Every two years the Latvian Ministry of Integration organizes a conference, inviting Latvians from abroad to discuss the most acute issues among their communities. There are also minor activities: for example, Latvian young people living abroad are annually invited to apply for summer internships in Latvia; there are also summer schools for Latvian children in Latvia and various countries; an intensive language course is provided to repatriates who wish to improve their Latvian; and financial support is provided for a Lutheran priest to serve in Ireland, where one of the largest Latvian communities is located. Even in the absence of concrete policy action to promote return migration, all these activities have encouraged individuals to rethink their future plans. Latvian newspapers – see, for example, Diena, Neatkarigā Riga Avize Latvijai and Latvijas Avize from 2005 onwards – have published the life stories of individual Latvians willing to come back and those who have returned, encouraging others to follow their example. Improvements in Latvian wages, labour shortages in rapidly growing sectors and the saturation of migrant workers in the most popular receiving countries, such as the UK and Ireland, have encouraged many migrants to return to Latvia since EU enlargement. Since there has not been comprehensive research on

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return migration trends, unfortunately it is not possible to capture the phenomenon in terms of quantitative data (see the empirical chapter on Latvia in this volume). Qualitative research, based on interviews in Latvia and three receiving countries – the UK, France and Germany – revealed that return migrants tend not to rely on formal work offers, but instead use social networks as a primary means of finding work and accommodation in Latvia (ASPRI 2008). However, the life stories of return migrants also show that social networks alone are not a sufficient pull factor for returnees; a lack of formal support for reintegration into the Latvian labour market and society can make returning home difficult. In many cases this leads to a second or further emigration, using social networks and formal ways of finding employment in the previous or a new host country (ibid.). On the other hand, transnational social networks also function as mechanisms promoting further emigration. According to recent research by Baltic Consulting (LETA 2008) 80 per cent of emigrant respondents said that they maintain contacts with Latvia, but they were uncertain whether to remain in the host country or return to Latvia; during this period of uncertainty they were helping other Latvians to find employment abroad (ibid.). This shows that not only are specific return programmes needed in Latvia to assist the reintegration of return migrants, but also Latvia clearly needs to reduce various push factors that continue to encourage people to consider ‘exit’ strategies. In summary, we can assume that despite the difficulties involved in reaching political agreement on concrete actions to prevent emigration and promote return migration, information about good jobs and educational opportunities can be successfully channelled through social networks and also the media; at the same time, the same channels can also work in the opposite direction. People must be provided with adequate and structured support to enable them to return to and reintegrate in Latvia, if the country wants to achieve sustainable results in return migration. Therefore individual motivations should be strengthened with broad social inclusion mechanisms provided not only through social networks of returning migrants, but also by official institutions. 4. The Social Partners’ Responses to Emigration The government is not the only actor which has to develop policies to meet the challenge of existing and foreseeable migration trends. The Free Trade Union Confederation of Latvia and the Latvian Employers’ Confederation are two influential social partners whose partnership has been fixed in a tripartite agreement. Their opinions on emigration have significant weight. There are 23 trade unions in Latvia; in terms of size the largest represents employees in education, followed by those for health care workers and employees of Latvian Railways. The trade unions in Latvia organize around 16 per cent of workers. Both the public and the private sector are represented.

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The Latvian trade unions, organized in the Free Trade Union Confederation of Latvia (LBAS), generally welcomed EU enlargement, seeing it as ‘the only means of gradual and sustainable improvement of working conditions for Latvia’s workers’ (interview, LBAS). LBAS views emigration as a negative, but inevitable consequence of the differences between living and working conditions in Latvia and those in the majority of EU countries. The Confederation therefore recognizes that it cannot really influence labour outflows (interview, LBAS). LBAS agrees to some extent that it is not strong enough to provide comprehensive support or to bring about wage increases sufficient to prevent outward migration. It attributes this mainly to the overall weakness of trade unions in Latvia, also compared to Western European countries (LBAS Vēstis 2007; Trade Union of Latvian Policemen 2007). Therefore it considers increasing its membership as its main goal, which would give workers much more power to improve their working conditions in Latvia, as a result of which there would be less pressure to emigrate. LBAS has been actively involved in the review of current migration policy and has also expressed its views on specific migration issues; it has also been involved in activities to solve the problems of Latvians working abroad – for example, Latvians working on ships in Ireland (see below). LBAS also maintains links and has signed various mutual agreements with trade unions in such receiving countries as Sweden, Denmark and Ireland, advising Latvian workers before their departure on how to join local trade unions in other EU countries. LBAS is also a member of the Baltic Sea Trade Union Network (BASTUN), Council of Nordic Trade Unions (NFS), European Trade Union Confederation (ETUC), International Confederation of Free Trade Unions (ICFTU) and others (see Arvidson in this volume). The best publicized example of cooperation between LBAS and Western European unions was in 2005 when the company Irish Ferries sought to replace Irish crews with agency workers, mainly from Latvia, and pay them much lower wages than stipulated in existing collective agreements. Irish trade unionists protested against such discrimination. LBAS backed the Irish union in arguing that migrant workers from Latvia should receive the same wages as their Irish colleagues (Margevica 2005; LETA 2005). The conflict received wide coverage in the Latvian media, mainly because emigration had become a hot topic and it implied possible discrimination against newly emigrated workers. The conflict was solved with a compromise settlement and wages for migrant workers were raised, although only to the level of the Irish minimum wage. In the context of the emigration debate, the trade unions see the improvement of working conditions in Latvia as the main aim because it would serve both to encourage émigrés to return and to discourage those who might otherwise consider  �������������������������������������������������������������������������������� For details see .

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employment abroad. In late 2006, when Latvia had to decide whether to open up its labour market to Romanian and Bulgarian nationals when they joined the EU on 1 January 2007, the Confederation was against this, arguing that specific criteria should be laid down concerning what types of immigrant workers Latvia needed. The Confederation favoured an open labour market for highly qualified workers, for example, those with specific skills not available in Latvia (for example, skilled plumbers working on ships). It also suggested that immigrant workers’ contracts should be limited to performing a specific task in a certain period of time, after which they would have to return to their home countries. LBAS was against a liberal immigration policy of allowing in unqualified labour, arguing that it might cause severe social and ethnic problems in the future (interview, LBAS). The unions’ main argument is opposition from the local labour force, which is already alarmed about potential wage dumping caused by immigrant workers from both the EU and third countries. This problem was especially pronounced in the construction sector in 2006–2007. If a liberal immigration policy were to be adopted, it would lead to huge protests from local workers, according to the Confederation (interview, LBAS). Moreover, unemployment is still comparably high among the local population, reaching more than 20 per cent in the Latgale region. From the trade union point of view, internal migration should be given priority. Furthermore, few immigrant workers have joined Latvian trade unions so far. The main reason for this is relatively recent and modest immigration, plus the short-term work contracts – if any – of immigrant workers. The Latvian Employers’ Confederation (LDDK) was one of the most vocal social partners in its response to one of the first research findings on Latvians working in Ireland (Indāns et al. 2006), calling for a debate on the social responsibility of Latvian employers to prevent outward migration. However, emigration and steps to promote return migration were not priorities on the employers’ agenda (interview, LDDK). Their indifference towards promoting return migration was based on the following arguments: return migrants might ask for unrealistically high wages, similar to those they had become used to earning in Western countries, while the employers have no means of spreading information about job opportunities in Latvia; in any case, it is not their task, but that of the government to so do. The Latvian Employers’ Confederation appears to support calls to prevent emigration, while at the same time it has clearly stated that controlled and well-managed immigration is the only solution to solve labour shortages in Latvia. The latter would also ease pressure on wages, which has caused disparities between labour costs and productivity (interview, LDDK). Although this is clearly the rational course for the employers, who wish to access cheaper labour, it might not provide a long-term solution, either for migration or for overall economic development in Latvia, given the rather negative public attitudes towards migrants and the lack of integration mechanisms both to promote tolerance among the general public and to help migrants integrate better into Latvian society. In 2006–2007 the employers in general and the Latvian Employers’ Confederation in particular were the strongest promoters of a more liberal

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immigration policy, which would be based on quotas in certain sectors rather than on company vacancies, which would negatively influence individual company competitiveness and violate business confidentiality because it would enable rivals to infer a company’s plans to expand production (interview, LDDK). The Confederation also argues that unqualified workers should be allowed entry to the Latvian labour market because (i) as regards highly qualified immigrants Latvia should not be as open and welcoming as had been proposed because ‘we ourselves know best how to conduct business’, and (ii) during rapid economic development unqualified workers are those most in demand. They fill niches in the labour market performing jobs that locals are not willing to accept (for example, cleaning, heavy industry, and so on) (interview, LDDK). But the most important challenge, according to the Employers’ Confederation, is a strategic change in the Latvian education system, and in vocational training in particular, to prepare native workers to fill skill gaps and to be able to work productively in today’s environment. 5. Social Attitudes towards Emigration and Immigration Three stages can be identified in the public debate on the latest emigration wave since EU enlargement in 2004: 1. The issue of emigration became a hot media topic in 2005 when it was mainly described as dramatic in scope, and questions were asked about why people were leaving, what living and working conditions were like abroad, and so on. 2. In the second part of 2006 the media turned from general description to individual cases, taking a ‘life stories’ approach in a ‘search for solutions’. In both these stages emigration was one of the most popular issues in political speeches, especially before the general election in 2006. 3. In 2007 the attention of the media and politicians was diverted and the emigration debate lost its topicality; it was replaced with the issue of immigration. This can be explained by wage pressure on employers, who saw immigration from third countries as a solution to prevent rising costs, on the assumption that third-country nationals would accept lower wages than returning Latvian migrants, who had experienced higher wages during their time in Western European countries. Public attitudes towards emigrants have not been researched in quantitative surveys. Qualitative media-content analysis reveals that attitudes are both ambivalent and exaggerated, swinging from very positive to distrustful and negative. Emigrants are often seen and portrayed as ‘national traitors’, but also as victims of the government’s neo-liberal economic policy (Lulle 2007). In the media and public debate the – extremely heterogeneous – group of Latvian emigrants is often

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stereotyped as ‘economic refugees’, ‘mushroom pickers’ and ‘economic birds of passage’. This portrayal is typical of both state officials and mainstream society. The main public issues concern victimization and apportioning blame, which is often attached to unsuccessful government policies regarding the economy, regional development and social support. There are cleavages between groups – for example, those who stayed and those who left to work abroad, the latter being blamed for ‘betraying’ the country and merely seeking their own gain (ibid.). The emigration debate and the threat of leaving Latvia has also been used as a tool in protesting against various government policies, for example in protests by teachers, policemen and health care workers in 2006 and 2007, with the deployment of such slogans as ‘Teachers, let’s all go to Ireland’ and ‘Mushroom pickers in Ireland are paid more than teachers in Latvia’. In the meantime, attitudes towards immigrants have become even more hostile than those towards co-nationals abroad. A public opinion poll carried out by the research centre SKDS in December 2005 shows that attitudes towards potential immigrants are predominantly ‘very negative’ or ‘rather negative’ (69.8 per cent). The answer ‘very negative’ was given by more than one third (39 per cent) of respondents. The ‘very positive’ answer was marginal, at a mere 2.8 per cent, while the ‘rather positive’ answer was given by only 13.5 per cent of respondents. These answers clearly indicate the sensitiveness of the immigration issue, which cannot be neglected by policy-makers. The most negative views concerning immigration are expressed towards potential immigrants from Asia, indicating that Latvians have a feeling of social distance towards people from far away countries and those with a distinct skin colour and culture. In contrast, rather positive views were expressed about possible incomers from Belarus, Ukraine and – to a lesser extent – Russia, despite the generally polarized debate on ethnic/national issues in Latvia. The strong social attitudes towards both emigration and immigration also do much to explain why the immigration policy programmes discussed earlier remain stuck at the policy-making stage and have not been adopted. Such attitudes may also directly deter return migration. Any official support to facilitate migration in either direction can be expected to encounter a negative response in Latvia. 6. Conclusions The most important background factor behind recent outward migration in Latvia is the dominant neo-liberal economic policy implemented since the early 1990s, which stresses individual responsibility in seizing opportunities to improve one’s own life. However, the large-scale growth of emigration, which during the period of rapid economic growth of 2002–2007 caused labour shortages, attracted the attention of policy-makers who were urged to consider measures to prevent further labour outflows. However, four years after EU accession, no concrete measures have yet been introduced to help economic migrants return to Latvia.

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Instead, inward migration from third countries was considered as a way of tackling labour shortages and rapid wage increases. However, this approach to preventing wage increases runs counter to the assumption that convergence with wealthier countries in terms of wages and economic development in Latvia would encourage some recent Latvian emigrants to return home. On the other hand, the experience of large immigration waves during the Soviet period and its consequences for the ethnic balance in Latvia further complicates the migration debate. Return migrants could easily be reintegrated into the Latvian labour market if there is the political will and the country’s economy continues to grow, even if the rate of growth diminishes. In the meantime, before any steps are taken careful consideration should be given to future economic development in Latvia, which in 2008 has experienced a sharp economic slowdown, almost certainly leading to recession at the end of the year. This may give rise to another emigration wave. However, in any scenario of Latvia’s future economic performance, programmes to reduce emigration and encourage émigrés to return would constitute both an immediate and a long-term investment in the country’s sustainable development. References Adam, F., M. Tomsic and K. Primoz (2008), ‘Political Elite, Civil Society, and Type of Capitalism: Estonia and Slovenia’, East European Quarterly XLII (March), 43–67. ASPRI (2008), ‘The International Migration of Latvia’s Labour Force: The Dynamics of Social Networks in the Processes of Emigration and Return’, principal researcher A. Kalniņa, University of Latvia, Project research of the Latvian Council of Sciences, Advanced Social Political Research Institute. Unpublished manuscript. Central Statistical Bureau (2004), Latvia’s Regions in Figures, 61–5 (Riga). Indāns, I., A. Lulle, M. Laizane-Jurkane and L. Znotiņa (2006), �������� Latvia and Free Movement of Labour: The Example of Ireland (Riga: Strategic Analysis Commission). IUMSILS (2004), Latviešu diasporas atbalsta programma 2004.-2009. gadam. Ķešāne, I. (2008), ‘Governmentality and Labour Migration: The Case of Latvian Labour Migrants in Ireland’, Master’s Thesis, Albert-Ludwigs-Universität Freiburg i. Br. (Germany) and the University of KwaZulu-Natal, Durban (South Africa). Unpublished manuscript. King, R., and T. Muravska (2007), ‘EU Enlargement and Out-migration: Policy Choices for Latvia’, presented at the Marie Curie network conference, 26 October 2007 (Riga). Krišjāne, Z. (ed.) (2007) ������� The Geographic Mobility of the Labour Force. The National Programme of the EU SF Labour Market Research. Welfare Ministry Research (Riga: University of Latvia).

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Latvians in Ireland (2008), Open Letter (27 May 2008) [website], , accessed 24 October 2008. LBAS Vēstis (2007), Latvian Trade Union Confederation paper [website], , accessed 30 August 2008. LETA (2005), ‘Īrijas prāmju kompānija “Irish Ferries” paaugstinās jauno darbinieku algas’ [‘Irish Company “Irish Ferries” Will Increase Salaries of New Employees’] (15 December). Liziņa-Balode, H., and U. Rudkaste (2007), ‘������������������������������������ Strādājošie ārzemēs - zaudējums vai ieguvums?’ [website], , accessed 24 October 2008. Lulle. A. (2007), ‘Jaunā latviešu emigranta tēla konstruēšana publiskajā telpā’ [‘Social Construction of an Image of a New Latvian Emigrant’, in Savējie un svešie. Sabiedrības radikalizācijas tendences Latvijā, Eiropā un Pasaulē [Aliens and Us. Tendencies ������������������������������������������������������������ towards Radicalization in Latvia, Europe and the World’, Strategic Analysis Commission, 229–49 (Riga: Zinātne). Lulle, A. (2008), ‘The Power of Attitudes towards Migration. View from Latvia’, in A. Pabriks (ed.), Effects of Migration on European Policy Thinking and Decision-making Processes, Vidzeme University College, 70–77. Margēviča, A. (2005), ‘Īri saceļas pret lētajiem latviešiem’ [‘Irish People Protests against Cheap Latvians’] Neatkarīga Rīga Avīze Latvijai (28 November), local newspaper (28 May). Pabriks, A., E. Vēbers and R. Āboltiņš (2000), ‘Atsvešinātības pārvarēšana: sabiedrības integrācija’, Soros Foundation – Latvia [website], , accessed 3 October 2008. SKDS (2006), ‘Pētījums par ārpus Latvijas dzīvojošajiem bijušajiem Latvijas iedzīvotājiem, viņu pēctečiem un kopienām I posms’ [Research on former residents of Latvia, their descendants, diasporas. Part 1]. Zepa, B., I. Šūpule, I. Peņķe, E. Kļave and J. Krišāne (eds) (2001), ‘Enhancing Civil Society – 2000’, Baltic Institute of Social Science Research. Policy Planning, Statistics and Government Documents Action Plan on Return migration (2007), ĪUMSILS Rīcības plāns Latvijas iedzīvotāju izbraukšanas darba meklējumos mazināšanai un atgriešanās veicināšanai 2008.-2012.gadam. Cabinet of Ministers Regulations, No. 811 of 3 October 2006, Regulations of the Office of Citizenship and Migration Affairs. Cabinet of Ministers Regulations, No. 49 of 27 January 2004, ‘Regulations of the Ministry of Welfare’. Cabinet of Ministers Regulations, No. 238 of 29 April 2003, ‘Regulations of the Ministry of Economics’. Cabinet of Ministers Regulations, No. 238 of 29 April 2003, ‘Regulations of the Ministry of Economics’, Latvijas Vēstnesis, No. 70 (13 May 2003).

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Cabinet of Ministers Regulations, No. 49 of 27 January 2004, ‘Regulations of the Ministry of Welfare’, Latvijas Vēstnesis, No. 16 (30 January 2004). Cabinet of Ministers Regulations, No. 811 of 3 October 2006, ‘Regulations of Office of Citizenship and Migration Affairs’, Latvijas Vēstnesis, No. 160 (6 October 2006). Citizenship Law (1998), Latvijas Vēstnesis (27 October 1998) [website], , accessed 8 May 2008. Declaration (2006), ‘Declaration of the Cabinet of Ministers’, PM Aigars Kalvitis [website], , accessed 8 May 2008. Declaration (2007), ‘Declaration of the Cabinet of Ministers’, PM Ivars Godmanis [website], . Economy Stabilization Plan (2008) [website], , accessed 8 May 2008. Declaration of the Intended Activities of the Cabinet of Ministers (2004), Prime Minister Indulis Emsis. EM (2007), Report on Economic Development, Ministry of Economics [website], , accessed 8 May 2008. IUMSILS (2007), Return Migration Action Plan, 2007–2012. Migration Concept (2007), Ministry of the Interior. Concept on Migration Policy in the Context of Employment. Migration Concept (2007), Research commissioned by the Ministry of the Interior and its Citizenship and the Migration Affairs department and the Ministry of Welfare. Source: Koncepcijas par migrācijas politiku nodarbinātības kontekstā (Concept on Migration Policy in the Context of Employment). National Development Plan, 2007–2013 (2007), Ministry of Regional Development and Local Government [website], , accessed 30 August 2008. Policy Planning Document of Latvian Parliament (Saeima) (1995), ‘Latvijas Republikas Ārpolitikas pamatvirzieni līdz 2005.gadam’ [‘Main Directions of Latvian Foreign Policy until 2005’]. Regulations (1989), Cabinet of Ministers of the Soviet Republic of Latvia (14 February). (Title in Latvian: ‘Par pasākumiem iedzīvotāju skaita nepamatota mehāniska pieauguma pārtraukšanai un migrācijas procesu regulēšanai Latvijas Padomju Sociālistiskajā Republikā’). Repatriation Law [Repatriācijas likums], paragraph 14 [website], , accessed 30 August 2008. Social Integration Programme (2001) [website], , accessed 30 August 2008.

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Expert Interviews Interview with an official of the Macroeconomic Planning Department, Ministry of Economics. Interview with a high ranking representative of the Trade Union Confederation (LBAS). Interview with a high ranking representative of the Latvian Employers’ Confederation (LDDK).

 Names of interviewees are not mentioned to protect their anonymity.

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Index Page numbers in italics denote illustrations or tables. A2 countries EU accession of, 5–6, 55, 70 A2 nationals, see Bulgarian and Romanian nationals A8 countries, see specific country names abuse of rights, see exploitation of migrant workers age structure of intra-EU migrants, 17, 35, 77–8, 156–8, 193–5, 276 asylum seekers, 51, 95, 101, 127, 129, 223, 256 attitudes towards migration in Germany, 128–30 in Latvia, 24, 303–5 in Sweden, 69 Aussiedler, see ethnic Germans Austria age structure of migrants in, 156–8 bogus self-employment in, 17, 161, 178 commuter migration in, 149–52, 165–6, 176, 182n, 183 demographic characteristics of migrants in, 154–8 dimensions of migration in, 150–54, 171–2 employer policy on migration in, 180–82 employment status of migrants in, 161–2 gender division of migrants in, 156–7 geographical location of, 4, 149–51 government policy on migration in, 171–9 guest workers in, 151, 167 highly skilled migrants in, 173, 175, 180 labour market impact of migration in, 162–6

origins of migrants in, 150, 155–6, 159 posted workers in, 17, 177, 180 regional effects of migration in, 164 seasonal workers in, 21–2, 158, 160, 175, 177, 179, 181–2 sectoral distribution of migrants in, 158–9 skill levels of migrants in, 160–61 social partner policy on migration in, 171–2, 179–83 trade union policy on migration in, 182–3 transitional measures regulating labour market access in, 3–4, 151, 167, 171–83 unemployment rate in, 6, 155, 163–5, 172, 180 unemployment rate of migrants in, 161–3 wages of migrants in, 160–61 working conditions of migrants in, 158, 160 Baltic states, 69–70, 72, 78, 85, 97, 110, 112, 155, 175n, 206; see also Estonia; Latvia; Lithuania BCC, see British Chambers of Commerce Belgium, 6, 189, 191, 193n, 219n, 220, 233, 236, 300 ‘benefit tourism’, 56, 88, 90, 99 benefits of inward migration in European Union, 12–13 in Germany, 120, 123 in Sweden, 87 in United Kingdom, 45, 46, 51–3, 65–6 bogus self-employment in Austria, 17, 161, 178 as effect of restrictions on mobility, 7, 17, 22–4, 260

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in Germany, 17, 135–6 in Sweden, 17, 91, 94–5 in United Kingdom, 17, 56, 66 brain drain, 12, 14, 23, 25, 195, 246, 261, 287 British Chambers of Commerce, 51–2, 58, 64 Bulgarian and Romanian nationals access to Hungarian labour market of, 255, 267 attitudes in Latvia towards, 24, 303 and bogus self-employment, 56, 66 in informal sector, 45, 66 restrictions on, 3, 51–2, 55–6, 64–6, 173 as seasonal workers, 32 UK work schemes for, 55–6 CAB, see Citizens Advice Bureaux CBI, see Confederation of British Industry Citizens Advice Bureaux, 38, 60, 255 commuter migration in Austria, 149–52, 165–6, 176, 182n, 183 in Germany, 103, 114n, 115, 123 from Hungary, 254, 257, 264 to Hungary, 253 Confederation of British Industry, 52, 58, 64 crowding out, see displacement effects cultural factors behind migration, 8, 16, 167, 293 data, availability of for Germany, 102–3 for Hungary, 230 for Latvia, 271–3 for Poland, 187, 190 for United Kingdom, 29–31 data, comparability of, 3–5 demographic characteristics of intra-EU migrants in Austria, 154–8 in Germany, 17, 110–12 from Hungary, 235–7 from Latvia, 275, 282–6 from Poland, 16–17, 188–97, 200, 207, 211

in United Kingdom, 34–6, 45–6 demographic effects of migration, see population effects Denmark, 2, 6, 69, 73, 81–3, 219n, 220, 231, 233, 236, 292, 300, 302 dimensions of migration in Austria, 150–54, 171–2 in Germany, 105–8, 123, 127–9 from Latvia, 18, 22–3, 31, 240, 271–5 from Poland, 1, 4, 18, 185–92, 207, 211 in Sweden, 70–73 in United Kingdom, 1, 2, 3, 14, 31–3 displacement effects of migration in Sweden, 79–80 in United Kingdom, 43–4, 46 driving factors behind labour migration, see pull factors; push factors ECJ, see European Court of Justice economic effects of migration in Germany, 121–3 in Sweden, 87 in United Kingdom, 43, 45 educational services by trade unions, 61–3 ELFS, see European Labour Force Survey employer policy on labour migration in Austria, 180–82 in Germany, 131 in Hungary, 260–61 in Sweden, 90–91 in United Kingdom, 57–60, 66 employers as enforcers of government policy, 57–8, 66 employment agencies in Germany, 133 and subcontracting, 60 in United Kingdom, 40, 58, 60, 63 employment effects of migration, see labour market impact employment rights, see rights of migrants employment status of intra-EU migrants in Austria, 161–2 in Germany, 117–18, 123 in United Kingdom, 38–40 employment terms of intra-EU migrants in Sweden, 88, 97 in United Kingdom, 37–9, 46

Index Estonia, 31, 72, 76–7, 80, 108–9, 111–13, 173, 175n, 214, 215n, 219n, 232, 235, 240; see also Baltic states ethnic German migrants, 101–2, 105n, 127–8, 185 ETUC, see European Trade Union Confederation European Court of Justice, 2, 20, 88, 98–9, 174 European Labour Force Survey, 14, 102–3, 116, 119n, 155 European Trade Union Confederation, 7, 95, 98, 223, 262, 302 European Works Councils, 137, 216 Eurostat, 5n, 15, 224, 271 exploitation of migrant workers in Germany, 134–5 in Poland, 213, 221 in Sweden, 95–6, in United Kingdom, 22, 38, 44, 52, 58–60 factors behind labour migration, see pull factors; push factors ‘false tourist’, 185–6 family reunification, 35, 72, 101, 152–3, 156, 166, 168, 173, 185–6, 292 Finland, 4–6, 69, 81–4, 188n, 219n, 231, 233, 236, 292, 300 freedom of services, 99, 102, 107, 113, 131–5, 137, 140–41; see also mobility of services freedom of settlement, 129, 132–7, 141 gender division of intra-EU migrants in Austria, 156–7 from Latvia, 275, 278, 283 from Poland, 192–3 in Sweden, 72–3, 76 in United Kingdom, 34–6 General Municipal and Boiler Makers’ Union, 51, 62, 221 Germany attitudes towards migration in, 128–30 bogus self-employment in, 17, 135–6 commuter migration in, 103, 114n, 115, 123 contract workers in, 113–15

313 data on, 102–3 demographic characteristics of migrants in, 17, 110–12 dimensions of migration in, 105–8, 123, 127–9 economic effects of migration in, 121–3 employer policies and practices on migration in, 131 employment rate in, 11, 116, 123 employment status of A8 migrants in, 117–8, 123 ethnic German migrants in, 101–2, 105n, 127–8, 185, exploitation of migrant workers in, 134–5 freedom of services in, 99, 102, 107, 113, 131–5, 137, 140–41 freedom of settlement in, 129, 132–7, 141 government policy on migration in, 127–31, 137–42 guest workers in, 101, 110, 112, 114–15, 119, 127–8, 132 highly skilled migrants in, 101–2, 115, 119, 123, 133, 138–9, 141 historical context of migration in, 101, 127–9 illicit work in, 135–6 integration of migrants in, 101, 127–9 labour market impact of migration in, 121–3 minimum wage in, 20–21, 132, 134–5, 137–41 new guest workers in, 114–15 origins of migrants in, 105–8, 123 posted workers in, 17, 128, 133–4, 136, 139 programme workers in, 113–16 regional distribution of migrants in, 109, 110 registration of migrants in, 103, 107, 135–6 rights of migrants in, 132, 136–7 seasonal workers in, 3–4, 17n, 21–22, 113–16, 122–3, 128, 132, 138 sectoral distribution of migrants in, 119–20, 123

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skill levels of migrants in, 101, 102, 115, 119–20, 123, 133, 138–9, 141 social partner policy on migration in, 129–30, 136–7, 142 Spätaussiedler, see ethnic German migrants student migrants in, 102, 112–13 trade union policy on migration in, 22, 131–2, 136–9 transitional measures in, 3–4, 6, 16, 21–2, 102, 105, 113, 121–3, 131–5, 138–42 Turkish migrants in, 101, 104, 105, 112, 113, 117–20, 127 unemployment rate in, 6, 11, 16, 20, 113, 122, 138n, 167–8 working conditions of migrants in, 133, 138n GMB, see General Municipal and Boiler Makers’ Union government policy on labour migration in Austria, 171–9 in Germany, 127–31, 137–42 in Hungary, 255–6 in Latvia, 294–9 in Poland, 23, 212–5, 225–6 in Sweden, 88–9 in United Kingdom, 46, 51–6, 65–6 guest workers in Austria, 151, 167 in Germany, 101, 110, 112, 114–15, 119, 127–8, 132 highly skilled migrants in Austria, 173, 175, 180 and brain drain, 14, 195 in Germany, 101–2, 112, 115, 119, 123, 133, 138–9, 141 from Hungary, 245–6, 253, 257–8, 265 from Latvia, 303–4 from Poland, 195–6 and transitional measures, 17, 24, 166 in United Kingdom, 54 Hungary Bulgarian and Romanian migrants in, 255, 267 cooperation with other EU countries, 257–8, 264

data on, 230 destinations of migrants from, 15, 229–35 doctors migrating from, 238–9 commuters from, 238, 254, 264 commuters to, 253 employer policy on migration in, 260–61 government policy on migration in, 255–6 highly skilled migration from, 245–6, 253, 257–8, 265 historical context of migration in, 229 labour market impact of migration from, 246 macroeconomic factors in migration from, 240–42, 247, 265 migration to, 253 minimum wage in, 258–9 regional mobility in, 243, 253 remittances to, 246 return migration to, 258 Roma migration from, 239–40 seasonal workers from, 237–8, 254 seasonal workers in, 253, 262 social partner policy on migration in, 260 socio-demographic characteristics of migrants from, 235–7 trade union policy and practice on migration in, 261–4 unemployment in, 241–2, 263 wages in, 9, 241–2 welfare provisions in, 16, 244–5 Iceland, 69, 82–3, 188, 219n, 220, 231, 233, 292 illegal migration, 44, 54, 152, 162, 185, illegal work, 7, 22, 24, 52–3, 55, 57–8, 64, 132, 135–6, 182, 254, 263, 272 impact of migration on labour markets in aggregate, 12–13 in Austria, 162–6 in Germany, 121–3 in Hungary, 246 in Latvia, 286–9 in Poland, 203–5, 208 in receiving countries, 19–20

Index in sending countries, 18–19, 22 in Sweden, 70, 79–81 in United Kingdom, 43–6 informal sector, 44–5, 66 Ireland as destination for Latvian migrants, 275, 280–84 as destination for Polish migrants, 123, 188–9, 191, 196, 199 open labour market in, 6, 15, 22, 52, 141, 191, 199 labour demand, see under pull factors behind migration labour market impact of migration in aggregate, 12–13 in Austria, 162–6 in Germany, 121–3 in Hungary, 246 in Latvia, 286–9 in Poland, 203–5, 208 in receiving countries, 19–20 in sending countries, 18–19, 22 in Sweden, 70, 79–81 in United Kingdom, 43–6 labour standards, 8, 132, 215, 226, 260 language training for migrants, 61–3 Latvia age structure of migrants from, 276 attitudes towards migration in, 303–5 brain drain in, 287 data on, 271–3 destinations of migrants from, 15, 76, 80, 109, 111–113, 173, 175n, 232, 280–84 dimensions of migration from, 18, 22–3, 31, 240, 271–5 experiences abroad of migrants from, 284–5 gender division of migrants from, 275, 278, 283 government assistance for emigrants from, 299–301 government policy on migration in, 294–9 highly skilled migration from, 303–4 historical context of migration in, 269–71, 291–2

315

immigration to, 19, 24, 269–71, 306 labour market impact of migration from, 286–9 minimum wage in, 298 motivations of migrants from, 278, 284 population effects of migration in, 4, 18, 269 push factors behind migration from, 288, 292–4, 305 regional origin of migrants from, 277 remittances to, 19, 205, 280 return migration to, 18, 23, 275, 277–8, 282, 285–6, 288, 292, 294–306 sectoral distribution of migrants from, 283 social partner policy on migration in, 301–304 socio-demographic characteristics of migrants from, 275, 282–6 survey of migrants from, 282–6 time spent abroad by migrants from, 279–80 trade union policy and practice on migration in, 301–4 trade unions in, 23–4, 97 unemployment rate in, 10–11, 19, 287 youth drain in, 18 see also Baltic states Lithuania, 72–78, 80–81, 85, 108–9, 111, 112, 173, 175n, 205–6, 215n, 221, 231, 232, 240; see also Baltic states low-skilled workers, 21, 37, 43, 54–5, 83, 120, 133, 203 managed migration (United Kingdom), 52–7 migrant workers, definition of, 29–30 migration drivers, see push factors migration statistics, see data, availability of minimum wage in Germany, 20–21, 132, 134–5, 137–41 in Hungary, 258–9 in Latvia, 298 in Poland, 215, 226 in Sweden, 94, 97 in United Kingdom, 20, 37–9, 44, 59

316

EU Labour Migration since Enlargement

mobility of services, 73–4; see also freedom of services network effects, 8–9, 278 non-EU migration, 14, 20, 46, 54, 65, 101, 220, 223 Nordic countries, 69, 79, 81–5, 87, 95; see also Denmark; Finland; Iceland; Norway; Sweden Norway, 16, 69, 73n, 80n, 81–5, 188, 191, 194, 207, 212, 219, 221, 231, 233, 236, 292, 300 NSZZ Solidarność, see Solidarność Poland age structure of migrants from, 193–5 data on, 187, 190 destinations of migrants from, 15, 188–95, 200–201, 207 dimensions of migration from, 1, 4, 18, 185–92, 207, 211 educational level of migrants from, 195–7 employers of migrants in, 224–5 ethnic outmigration from, 185 exploitation of migrant workers in, 213, 221 ‘false tourism’ from, 185–6 gender division of migrants from, 192–3 government assistance for migrants from, 217 government policy on migration in, 23, 212–5, 225–6 highly skilled migration from, 195–6 historical context of migration in, 185–6 labour market impact of migration from, 203–5, 208 minimum wage in, 215, 226 population effects of migration from, 202–3, 208 posted workers from, 213–14, 219, 222 regional origin of migrants from, 197–9 remittances to, 19, 200, 205–8 return migration to, 186, 207–8, 211, 218–21, 225–6

seasonal workers from, 186, 206, 222 skill levels of migrants from, 211 social partner policy of labour migration in, 23, 220 socio-demographic characteristics of migrants from, 16–17, 188–97, 200, 207, 211 Solidarność, 60, 63, 220–3, 226 taxation of emigrants in, 219–20 temporary migration from, 186–7 trade union policy on migration in, 220–24 unemployment in, 203–4, 208, 225 working conditions of migrants in, 215, 217–24 youth unemployment in, 10–11 policy, employer in Austria, 180–82 in Germany, 131 in Hungary, 260–61 in Sweden, 90–91 in United Kingdom, 57–60, 66 policy, government in Austria, 171–9 in Germany, 127–31, 137–42 in Hungary, 255–6 in Latvia, 294–9 in Poland, 23, 212–15, 225–6 in Sweden, 88–9 in United Kingdom, 46, 51–6, 65–6 policy, social partner in Austria, 171–2, 179–83 in European Union, 21–4 in Germany, 129–30, 136–7, 142 in Hungary, 260 in Latvia, 301–4 in Poland, 23, 220 in United Kingdom, 51–3, 57–64 policy, trade union in Austria, 182–3 in European Union, 21–2 in Germany, 22, 131–2, 136–39 in Hungary, 261–4 in Latvia, 301–4 in Poland, 220–24 in Sweden, 91–6 in United Kingdom, 60–63, 66

Index population effects of migration, 4, 18, 202–3, 208, 269 posted workers in Austria, 17, 177, 180 in Germany, 17, 128, 133–4, 136, 139 from Hungary, 246 from Poland, 213–14, 219, 222 and transitional measures, 17, 20–21 pull factors behind migration acquisition of financial and human capital, 200, 207 career opportunities, 278, 281 cultural factors, 8, 16, 167, 293 economic factors, 152–3; see also wage differentials employment opportunities, 14–15, 153–4, 167, 200, 259, 279; see also labour demand family reunification, 152‑3, 166 geographical factors, 6, 16, 167 income differentials, 8, 173; see also wage differentials institutional barriers, lack of, 199–200, 298 labour demand, 14–17, 25, 85, 265, 298; see also employment opportunities linguistic factors, 8, 16, 153, 281 standard of living, 225, 269 wage differentials, 9–10, 25, 123, 240, 259, 264, 281 welfare benefits, 79 push factors behind migration macroeconomic factors, 152, 240–42, 247, 265 political factors, 11, 151–2, 292 psychological factors, 265 region of origin, 199 social alienation, 293 standard of living, 16, 288 wage levels, 288 working conditions, 16, 265, 279 unemployment, 8–11, 203 refugees, 44, 79, 101, 127, 151–2, 172, 212, 214, 217, 239–40, 256 registration of migrants in Austria, 152

317

in Germany, 103, 107, 135–6 in Hungary, 256 in Latvia, 272 in Poland, 213–14 in Sweden, 81 Worker Registration Scheme (United Kingdom), 4, 6, 30–34, 54–6, 64–6 remittances as benefit for sending countries, 9n, 12, 19, 25 to Hungary, 246 to Latvia, 19, 205, 280 to Poland, 19, 200, 205–8 retarding factors that impede migration, 16, 243–7 return migration, 5, 12–14, 18, 21–25, 42, 128, 166, 172 to Latvia, 18, 23, 275, 277–8, 282, 285–6, 288, 292, 294–306 to Hungary, 246, 258 to Poland, 186, 207–8, 211, 218–21, 225–6 rights of migrants in Austria, 182–3 in Germany, 132, 136–7 in Hungary, 264 and trade unions, 21–2, 51–3, 58, 60, 66, 136–7, 216, 226 in United Kingdom, 51–3, 58, 60, 66, 284–5 ‘rogue employers’, 56; see also bogus selfemployment Romanian and Bulgarian migrants, see Bulgarian and Romanian migrants seasonal workers in Austria, 21–22, 158, 160, 175, 177, 179, 181–2 in Germany, 3–4, 17n, 21–22, 113–16, 122–3, 128, 132, 138 from Hungary, 237–8, 254 in Hungary, 253, 262 from Poland, 186, 206, 222 and transitional measures, 17, 21–22 in United Kingdom, 32, 55 sectoral distribution of intra-EU migrants in Austria, 158–9 in Germany, 119–20, 123

318

EU Labour Migration since Enlargement

from Latvia, 283 in Sweden, 77–8 in United Kingdom, 36–7 self-employment, see bogus selfemployment services, freedom of, 99, 102, 107, 113, 131–5, 137, 140–41 services, mobility of, 73–4 settlement, freedom of, 129, 132–7, 141 skill deficits, 21–2; see also skills bottlenecks skill levels of migrants in Austria, 160–61 in Germany, 101, 102, 115, 119–20, 123, 133, 138–9, 141 from Poland, 211 in United Kingdom, 37 skills bottlenecks, 7, 23, 25, 138; see also skill deficits social dialogue, 51, 64–5, 261n social partner policy on labour migration in Austria, 171–2, 179–83 in European Union, 21–4 in Germany, 129–30, 136–7, 142 in Hungary, 260 in Latvia, 301–4 in Poland, 23, 220 in United Kingdom, 51–3, 57–64 social welfare provisions as retarding factor, 16, 244–5 Solidarność, 60, 63, 220–3, 226 statistics on migration, see data, availability of subcontracting as effect of restrictions on mobility, 260 of Polish workers, 222 in Sweden, 73, 93–4, 99 in United Kingdom, 60 substitution effects, see displacement effects Sweden age structure of EU-10 migrants in, 77–8 attitude towards migration in, 69 benefit tourism in, 88, 90 bogus self-employment in, 17, 91, 94–5

business cycle in, 81, 83–4 dimensions of migration in, 70–3 displacement effects of migration in, 79–80 economic effects of migration in, 87 employer policy on migration in, 90–91 employment rate of migrants in, 75–7 employment terms of migrants in, 88, 97 exploitation of migrant workers in, 95–6, family members of migrants in, 75–6, 84 gender division of migrants in, 72–3, 76 government policy on migration in, 88–9 historical context of migration in, 69 Hungarian migration to, 231, 233, 236 joint initiatives in, 96–9 labour market impact of migration in, 70, 79–81 Landsorganisationen, 73, 77, 91 Latvian migration to, 280, 300 minimum wage in, 94, 97 mobility of services in, 73–4 non-working migrants in, 74–5 Nordic countries compared to, 81–4 open labour market in, 4, 6, 15, 22, 52, 69–70, 81, 88, 199 origins of migrants in, 72–3 Polish migration to, 15, 69, 188–91, 197, 200 residence permits in, 74–6 sectoral distribution of migrants in, 77–8 social dialogue, see joint initiatives subcontracting in, 73, 93–4, 99 trade union policy on migration in, 91–6 transitional measures in, 69, 87–93, 99 unemployment rate in, 11, 16, 20, 83, 84 Vaxholm/Laval, 73–4, 97–99 working conditions of migrants in, 69, 87–99

Index taxation of migrants, 8, 218–21, 225, 298 trade union policy on labour migration in Austria, 182–3 in European Union, 21–2 in Germany, 22, 131–2, 136–39 in Hungary, 261–4 in Latvia, 301–4 in Poland, 220–24 in Sweden, 91–6 in United Kingdom, 60–63, 66 trade unions, educational services by, 61–3 trade unions, migrant membership in, 60–3 trade unions and rights of migrants, 21–2, 51–3, 58, 60, 66, 136–7, 216, 226 Trades Union Congress, 38, 51–3, 56, 60–61, 63–4, 222 transitional measures regulating labour market access; see also policy in Austria, 3–4, 151, 167, 171–83 in EU-15 countries, 1–2, 5–8 expiry of in 2011, 6, 22, 25, 66, 123, 265 in Germany, 3–4, 6, 16, 21–2, 102, 105, 113, 121–3, 131–5, 138–142 and highly skilled migration, 17, 24, 166 impact of on characteristics of migrant workers, 16–17 impact of on migration flows, 9, 14–16 position of European governments on, 21–3 position of European social partners on, 22–4 and posted workers, 17, 20–21 and seasonal work, 17, 21–2 in Sweden, 69, 87–93, 99 TUC, see Trades Union Congress Turkish migrants in Germany, 101, 104, 105, 112, 113, 117–20, 127 UCATT, see Union of Construction, Allied Trades and Technicians UNITE, 51, 60, 63 United Kingdom age structure of A8 migrants in, 35 bogus self-employment in, 17, 56, 66 data on, 29–31

319 demographic characteristics of A8 migrants in, 34–6, 45–6 dimensions of migration in, 1, 2, 3, 14, 31–3 displacement effects of A8 migration in, 43–4, 46 economic effects of A8 migration in, 43, 45 employer policies and practices in, 57–60, 66 employment status of A8 migrants in, 39–40 employment terms of A8 migrants in, 37–9, 46 exploitation of migrant workers in, 22, 38, 44, 52, 58–60 gender division of A8 migrants in, 34–6 government policy on migration in, 46, 51–6, 65–6 highly skilled migration in, 54 historical context of migration in, 29 informal sector in, 44–5, 66 labour market effects of A8 migration in, 43–6 managed migration in, 52–7 migration intentions of A8 migrants in, 41–2, 46 minimum wage in, 20, 37–9, 44, 59 occupational distribution of A8 migrants in, 36–7 origins of migrants in, 33, 34 regional distribution of A8 migrants in, 40–41 rights of migrants in, 51–3, 58, 60, 66, 284–5 seasonal workers in, 32, 55 sectoral distribution of A8 migrants in, 36–7 skill levels of A8 migrants in, 37 social partner policy on migration in, 51–3, 57–64 trade union policy on migration in, 60–63, 66 wages of A8 migrants in, 37–9 Worker Registration Scheme in, 4, 6, 30–34, 54–6, 64–6

320

EU Labour Migration since Enlargement

working conditions of A8 migrants in, 37–9, 46 unemployment rates, national in Austria, 6, 155, 163–5, 172, 180 in Germany, 6, 11, 16, 20, 113, 122, 138n, 167–8 in Hungary, 241–2, 263 in Latvia, 10–11, 19, 287 in Nordic countries, 83 in Poland, 203–4, 208, 225 in receiving countries, 15–16 in sending countries, 10–11 unemployment rates of intra-EU migrants in Austria, 161–3 in Germany, 118 returning to Latvia, 282 in United Kingdom, 40 Union of Construction, Allied Trades and Technicians, 44, 51, 62, 63 Union of Shop, Distributive and Allied Workers, 51, 60, 62, 63 USDAW, see Union of Shop, Distributive and Allied Workers

wage gap/differential as migration driver, 3, 9–11, 16, 25, 84, 123, 149–50, 240, 258–9, 279, 299 wage impact of migration, 20, 43–4 wages of intra-EU migrants in Austria, 160–61 in Germany, 118 in United Kingdom, 37–9 welfare effects of migration, 12, 79 Worker Registration Scheme, see under United Kingdom working conditions of migrant workers in Austria, 158, 160 in European Union, 3, 7–8, 12, 21–4 in Germany, 133, 138n in Poland, 215, 217–24 in Sweden, 69, 87–99 in United Kingdom, 37–9, 46 WRS, see United Kingdom, Worker Registration Scheme ‘youth drain’, 18, 25 youth unemployment, 10–11, 263