Don’t go West!

Thoughts on the planned Transition Period on Labour Movement for EU Enlargement Candidates

Enlargement in all its nuances has been dominating this year’s political agenda in Europe like no other topic, be it in the context of extending the European Union or NATO further east.

As opposed to the current debate surrounding the planned second wave of NATO enlargement, which is not entirely uncontroversial , the fact that the European Union will be enlarged later this decade is no longer in doubt. However, there is a very intense discussion under way at present about the modalities of enlargement, i.e. about its precise timing, its conditions – and the costs.

The announcement made recently at Göteborg by the fifteen EU heads of state about their intention of bringing enlargement talks to a close in 2002 with first accessions possible in 2004 (with the aim of reassuring candidate countries after the failure of the Irish referendum), may sound ambitious, but amounts to nothing radically new. Similar reassurances and promises have been made repeatedly over the last ten years (with original promises by Messrs. Kohl and Chirac on accession by the year 2000). Yet even these new dates may turn out to be nothing but a pipe dream given the current state of the enlargement negotiations and the political agenda ahead (especially elections in Germany and France in 2002).

Getting closer

According to the European Commission , the enlargement negotiations with the twelve candidate states, although no longer subject to daily headlines, are advancing at a steady pace. Yet given the different nature of the applicants and the varying issues under discussion, their progress in ’closing application chapters’ varies widely (with Cyprus, Estonia and Slovenia being the most advanced, Romania the least ). One topic that has repeatedly surfaced in this context in the past three months is the issue of a transition period on the free movement of labour from new member states into the current EU 15.

Although transition periods in one form or another and of differing lengths are part and parcel of the negotiation process, especially for delicate issues which cannot realistically be settled by the time of the planned accession (e.g. environmental ,qtters), the suspension of the free movement of labour constitutes in principle a violation of the EU’s four fundamental freedoms (free movement of people, goods, capital and services). This point has been raised repeatedly by the candidates’ negotiators, intent on avoiding their countries becoming second class members.

Yet differences in wage levels between the current EU 15 and the applicants of up to 1:10 and crucial internal political considerations (among which the already mentioned upcoming elections) have led to the proposal of a transition period on the movement of labour by both Austria and Germany (with tacit approval from other EU members, especially France and Italy). This proposed transition period would not allow workers from the new member states to settle and work freely in member states of the current EU during a period of between two and seven years upon accession.

The eventual adoption of the transition period came after initial stiff resistance from Spain , which blocked the first vote on the issue on 14 May, linking it to a promise on maintaining EU structural grants to Spain (worth EUR 43 bn over the period 2000-2006) after enlargement, which are certain to be reduced. Yet on 30 May, after intense Swedish mediation, Spain relented and agreed to the introduction of the transition period.

Although the idea of a transition period went down very badly with the accession candidates concerned, Hungary as the first accession state declared on 12 June that it would agree to it on the basis of reciprocity.

Gaps

The concept of transition periods on labour movement in itself is not new and was already applied in the case of Spain and Portugal upon their accession in 1986. Yet the wage gap between the two Iberians and their neighbours (mainly France) was much smaller then and did, quite expectedly, not result in mass migration north, once the transition period of originally seven years had been shortened and terminated. The general wealth gap, although big, was nevertheless smaller in those years than it is now : whereas the two countries’ GDP amounted to 50-60% of the EU’s average in 1986, that of the Eastern candidates now stands only at some 35% . At lot of catching up will therefore have to be done, and some in Germany and Austria fear that this will happen at the expense of their unskilled and low paid workforce. Yet while emotional debates are running high, precise figures about the possible migration west and its impact are still rare.

At this point therefore, only a number of estimates exist (e.g. that of the European Integration Consortium ), which put the number of potential migrants annually at some 350,000 over a period of ten years, most of them coming from Poland and the Czech Republic, most of which are expected to settle in either Germany (65%) or Austria (12%).

Another study conducted on the topic by the Central European Opinion Research Group last year, shows that only a very small part of the populations of Central Europe would seriously consider moving west for work after accession. And most of those surveyed would not like to settle in the EU permanently.

If these research results were confirmed by reality, this would in effect imply that the present debate about a mass exodus to the west is rather unfounded and based mainly on fears and internal political considerations. Yet to the political right (and extreme right) in both Germany and Austria, the numbers matter little. What counts is that there will be migration, however big – and it will hit countries not traditionally recognised as immigration countries and a population which is not yet ready for admitting large numbers of migrating workers. More than a question of economic absorption, this is a matter of social and political tolerance towards immigration – and both are still largely absent in many EU countries.

Why they won’t go west ?

Despite lacking a sound basis, the current debate about expected westward migration from the new accession states is nonetheless intensifying. It is therefore crucial to inject some arguments into the discussions to show why most fears are unfounded. Although some westwards movement of Central European workers is to be expected, it is highly unlikely at this stage that there will be genuine mass migration, mainly for the following reasons :

1. Central European workers, like many of their western European counterparts, are lacking the necessary geographic mobility to move to where the jobs are. This can already be observed within the accession candidates themselves, with unemployment in rural areas being a multiple of that in urban areas. To expect that these workers would go even further and leave their country in search of work seems therefore highly unlikely.

2. Many of them lack the necessary language skills to go abroad for work, especially unskilled and manual workers.

3. Skilled workers from the accession states can already now work legally in the EU at the request of their employer. In 2000, there were some 1m East Europeans living and working in the EU, some two thirds of which in Germany.

4. Many of them work under existing quotas for non-EU workers. These quotas, however, are not always exhausted, e.g. those for IT workers from Poland.

5. Unemployment in some of the enlargement candidates is already lower now than in some EU countries (e.g. in Hungary), leading rather to reverse pressure. Besides, as many Slovenian politicians point out, there are currently more Austrians working in Slovenia than the other way round, rendering the argument of westward migration void in their case.

In addition to that, fears about Eastern workers pushing down wages in western EU countries are also largely unfounded, since existing wages cannot be undercut due to the existence of minimum wages in most EU countries. Those areas (e.g. construction) which attract the biggest number of illegal migrant workers will continue to remain a problem, in the presence or absence of a transition period.

Besides, EU accession creates a huge number of new job opportunities in Central and Eastern Europe, attracting outside investment, thus reducing the pressure on outward migration. Finally, massive emigration west would also pose a serious problem for the accession candidates, since this would mean a brain drain for their economies in transition, a fact which is not taken lightly by the governments concerned. It can therefore be expected that these governments on their part will undertake everything possible to limit the exodus of workers to the west.

(Il)legal work

Among the main argument of the proponents of a transition period on labour movement is the issue of illegal workers. Yet hopes that a transition period will reduce their numbers are beside the point, since illegal labour by its very nature is largely unaffected by the legal mechanisms in place. Thousands of illegals are already active in the EU now, and will continue to be, if there is a transition period or not. As a result, there is no reason to expect that the number of illegal workers in the current EU 15 would rise after enlargement without a transition period – on the contrary. Some analysts believe that the incentives provided by legal registration (unemployment benefits, social security) would actually reduce the number of illegal workers.

Transition ends

From the above said it results quite clearly that the introduction of a transition period for Eastern workers after accession to the European Union cannot be justified by sound economic arguments. As has been pointed out, the opening of the EU labour market to workers from the accession countries is not likely to result in a massive movement west. There are undoubtedly going to be workers who will seek employment in the west, yet their numbers will remain manageable. It will also be in the interest of the accession states themselves to reduce and prevent a possible exodus of skilled workers to the west. The issue of illegal workers cannot be addressed by the introduction of a transition period.

Another important argument against the introduction of a transition period is the political signal sent to the accession candidates. They would effectively be turned into second class members, deprived of one of the fundamental freedoms of the Single Market. Besides, the issue is likely to have a negative impact on their internal political situation as well (e.g. elections in Poland later this year ). For some, the idea of the Common European Home will be put into doubt on the last stretch before the goal posts (which have been moving steadily for years). In this context and under these conditions, there is a risk that enlargement will be seen by many as an obligation and not a chance – with the corresponding impact on the referenda that have to be held in some of the accession states.

A transition period on labour movement is therefore unnecessary, but is nonetheless likely to be introduced due to domestic considerations in Germany and Austria. It is no secret that the transition period is mainly aimed at Polish and Czech workers, but would affect workers from all accession countries, especially the smaller ones like Estonia and Slovenia, which pose no risk whatsoever. There is however hope that the transition period will be abolished quickly, with a first revision planned after two years likely to show that there was no mass migration. It could already be abolished then, or else after five years (model ’2+3+2’). Individual EU states can even decide not to introduce the transition period at all, as Sweden has announced.

Another serious risk of the current debate is that of admitting unhappy, obstructive members who will hinder the internal EU dialogue. Similar to Spain’s recent balking as well as France’s in 1973 and 1981, some of the new members risk to become bad team players in their own right when their national interests will be at stake. It can already be predicted now that with the entry of the Czech Republic, Europe will gain yet another strongly eurosceptic nation, a label that will possibly also have to be applied to Poland.

At the same time, it is clear that western Europe, due to its deteriorating demographic situation, will be increasingly in need of immigration. Central and Eastern Europe with its skilled workforce would therefore constitute a natural reservoir for workers over many years if not decades to come.

Finally, the question of labour migration shows that Europe is in clear need of a wider and more informed debate on the issues involved. Europe itself also has to speed up internal reform, of its labour market on the one hand, making it more flexible, and of the EU institutions on the other, to allow more efficient handling of such matters as labour movement . Let us not forget that the accession countries also have eastern neighbours – with a huge pool of workers yearning for a better life.