EU Labour Migration since Enlargement

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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], 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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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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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: .

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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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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.

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