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back to index backGLOBALtalk May,  2007

European Union—The Free Movement of Central European Workers

Western European employers have been gazing at Central Europe as a possible labor oasis since the fall of the Soviet Union—with the ascension of 10 central European states into the European Union in the last few years, the potential has only increased. Nelissen and Disseldorp elucidate the rules and restrictions on employing central Europeans in the Western European employment market, and contemplate future changes to legislation.

Ever since the fall of the Iron Curtain, it has been clear that employers in Western Europe have an interest in hiring workers from Central Europe.

Now, after the accession of eight central European counties—the Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Slovenia, and Slovakia—to the European Union (EU) in 2004, and with the accession of two more members states—Romania and Bulgaria—as of January 1, 2007, this discussion is a hot topic for European politicians and employers.

In 2004, many European countries feared being flooded by workers from Central Europe—in response, they built paper walls,” making it difficult for workers from these new member states to immediately enter their employment markets.

This article will give you background on the rules and restrictions on employing central Europeans in the Western European employment market, the reason why restrictions were enacted, and some further insights as to what the results of and experiences with restrictions have been. Also addressed are some immigration solutions in the current environment and a discussion of potential future developments.

Legal Background

Workers within the EU, as well as service providers, are, in principle, free to work in whatever country they want. Often, when new member states join the EU, the accession treaty contains certain periods during which citizens of member states cannot yet fully benefit from the EU treaty. Free movement of workers often is one of the areas in which restrictions apply. The first two years of restrictions expired a while ago for the eight ascension countries from 2004, and the other EU members have reconsidered their restrictions or still are reconsidering them.

Services, however, can be rendered freely throughout the EU. A development in this issue is the approval and implementation of the so-called Bolkestein directive.” In January 2004, then-European Commissioner Frits Bolkestein proposed a directive with regard to the free movement of services within the EU. Bolkestein wanted to eliminate the restrictions that were unneeded for the public interest. Further, he proposed that the providers of the services would be subject to the national law instead of the laws of the countries in which they provide their services.

Bolkestein was criticized in the press. Most people were of the opinion that the restrictions were needed to protect employees, among others; to guarantee the quality of the services rendered; and ensure services were accessible for everyone. Therefore, the directive was adjusted and, in the beginning of 2006, entered into force. There still are restrictions mentioned in the directive—however, they are not as far-reaching as they were before. Based on the directive, free movement of services is guaranteed. A work permit, in most cases, no longer is needed.

Now there is a directive for free movement of services that EU countries have to implement within the next few years. For example, in the Netherlands, the directive already is implemented. A work permit is not required when a worker from Central Europe works in the Netherlands as an employee of a foreign company rendering a service in the Netherlands. However, restrictions apply and there is a notification obligation.

Historic Context

When the Iron Curtain fell, German law dictated that certain Polish citizens were entitled to a German passport. This pertained to individuals from Silesia, a part of Poland. With their German passports, they were free to enter the European employment market. They were very well received, mainly because of their craftsmanship and excellent skills (especially those skills that nearly had become extinct in the Western European employment market). Although in the early days these people had a reputation for taking lower wages, this now is changing. In most cases, their wages are now equal to the wages of local workers.

Central European workers mainly are in demand because of their skills and dedication. As mentioned before, within the EU, workers are, in principle, free to work wherever they want because of the rules involving the free movement of people. Therefore, in 2004, when eight Central European countries joined the EU, Western European employers were eager to employ Central European workers, known for their hard work, motivation, and willingness to go the extra mile. These workers often were unemployed in their home countries, and were eager to temporarily work in a Western European country and return home afterward.

However, the accession of such a large group of countries, as well as the governmental and union fear of an overflow of workers at much lower wages compared to workers in the older EU member states, resulted in a significant push back from existing member states. Many of the old” member states insisted on special provisions that would allow them to protect their labor markets.

Restrictions Imposed on Eight New Member States

When the 2004 accession took place, existing member states were allowed to deny workers from the new member states for a certain period of time. Under the accession treaty, each old member state was able to determine its specific restrictions. At first, the restrictions would be valid during the first two years. After those two years, each country was to reconsider their restrictions. If extension of the restrictions was required, it was possible to extend them for three years. Under certain conditions, it was possible to extend the restrictions another two years. Consequently, after seven years, there would be free movement of workers for the new EU countries.

The Growth of the European Union

The modern European Union (EU) has come a long way from its modest beginnings. In 1957, the Treaty of Rome was signed by France, West Germany, Italy, Belgium, the Netherlands, and Luxembourg to create the European Economic Community (EEC). The goal of the EEC was an economic union of the member states—the community worked for the free movement of goods, services, labor, and capital; the abolishment of trusts and cartels; and the development of joint policies on labor, social welfare, agriculture, transport, and foreign trade. Several other European countries joined before the Maastricht Treaty was signed in 1992, which officially established the EU, introduced the euro, and renamed the EEC the European Community and established it as the first pillar of the three-pillar structure (The other pillars are the Common Foreign and Security Policy pillar and the Justice and Home Affairs pillar.). As of January 1, 2007, the EU consists of 27 countries that span the width of Europe.

The current view of the European Commission is that national restrictions on the free movement of all workers in the EU will have to end by April 30, 2009, unless a country can prove that its economy would be at risk of collapse as a result. However, as noted above, around 2011, the EU should have an employment market without any restrictions for any member state.

Three EU member states have opened their employment markets directly for the workers from the eight countries: the United Kingdom, Ireland, and Sweden. Respectively, these countries were faced with 300,000; 160,000; and 8,000 workers from the new member states.

According to the European Commission, the local workers are not worse off when workers from Central European countries enter their employment markets, as the total migration of employees would have remained limited to less than 0.5 percent. However, experience taught some interesting lessons—in Ireland, for example, pressure was noticeable on minimum wages and thought to be caused by the number of Central European workers entering the employment market.

In the United Kingdom, the open employment market seemingly has not resulted in disadvantages for the UK economy. On the contrary, Central European workers are thought to have boosted the British economy by €750 million per year. In addition, the number of Central European workers that wished to settle in the UK was less than expected—most workers return to Central Europe, especially Poland.

New Members

On January 1, 2007, Romania and Bulgaria joined the EU. The United Kingdom took a different view with respect to free movement of workers from these two countries. The United Kingdom has opted to protect its employment market and limit access to Romanian and Bulgarian workers, except in the case of migrants capable of meeting particular demands. By doing this, the UK treats workers from Romania and Bulgaria the same as non-EU workers.

Some countries have followed the example set by the UK, Ireland, and Sweden after they had restrictions in place for a two-year period. Portugal, Spain, and Finland all opened their borders on May 1, 2006 for workers from the eight Central European states.

Other countries slowly are leaning toward opening their employment markets. The Netherlands has moved in this direction step by step, increasingly lowering restrictions. However, in the Netherlands, there is a fear that when surrounding countries deny Central European workers access, it will get more than its fair share of foreign workers.

Other countries have a more conservative approach towards workers from the new Central European member states. In France, the borders remain closed for the new workforce. At the time the French population voted on the EU Constitution, there was a big campaign against the constitution, featuring the Polish Plumber,” a symbol of cheap labor. The Polish Plumber became the symbol of the French vote no” camp during the referendum on the EU Constitution. Belgium also decided to keep a ban on Central European workers. Austria and Germany decided to keep their borders closed for Central Europeans for the foreseeable future. Given the geographic location of these states, the reasons for this are obvious.

Arguments for and Against Free Movement

An argument often heard in favor of allowing Central European workers free movement is that they do not constitute a threat to the older member states’ labor markets. Central European workers often do blue-collar work for which no Western European workers can be found. Another argument in favor of opening the borders is that Central European workers will enter regardless of whether the borders officially are open. Access restrictions will only lead to illegal labor, often at wages far below minimum wage. Illegal immigrants also will lead to tax evasion. Often, the argument heard is that when there is no way of stopping them from coming anyway, you can legalize the situation to make sure you can control of it. An alternative may be that Central European individuals decide to work in Western European countries as self-employed individuals, which basically is allowed.

But an important argument against a free employment market is the difference in wages. An overflow of Central European workers may cause negative effects on wages, hurting local workers. Also, there is the difference in workers’ rights, which differ significantly when comparing Central European states to Western European countries. This pertains, for example, to social security entitlements. Experience in the UK reveals, however, that Central European workers hardly made any claims against the welfare system.

Practice—Now, and in the Future

Within Europe, we inevitably are moving toward open borders for workers from the Central European member states. Currently, we see that fewer than half of the old EU member states opened their employment markets for Central European workers. In other countries, Central European workers can work, but only when certain conditions are met—conditions that also may apply to workers from non-European countries.

This does not imply that the labor market is closed. In practice, creative ideas often are found that allow workers to be active in Western European member states, sometimes as independent entrepreneurs, thus benefiting from the freedom of delivering services within the EU—a freedom that cannot be restricted by any EU member state.

Source: Mobility magazine - GAI

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