Migration in the European Union: The coming hordes

Date: 17/01/04

Fears of migration from east to west

ON ONE side stand economists armed with formulae and tables of data, arguing that migration from the poor countries of central Europe to the rich countries of western Europe will be modest and manageable after ten new members join the European Union in May. On the other stand Eurosceptics, trade unions and some governments, worried that enlargement will bring a rush of migrants chasing jobs and social-security benefits. Almost drowned out are voices from the poor countries themselves, demanding the rights and freedoms of EU membership, but fearing a drain of skilled workers.

Free movement of workers across borders is a basic EU policy. But it poses problems of scale when the EU is gaining ten countries, with a combined population of 75m, that have wage levels and living standards far below the 15 existing member countries (and 380m people). Cyprus and Malta apart, the new members include eight central European countries with an average income per head of only 23% of the EU average in 2001. That figure falls to 18% if Bulgaria and Romania, which hope to join in 2007, are added.

Given such a big income gap, and high unemployment in many of the new countries, the question should perhaps not be why so many workers might want to leave, but why so many might choose to stay. One answer is that prices are lower in central Europe, making those low average incomes worth more like 35-45% of their west European counterparts. But that still leaves plenty of incentive for workers to go overseas, send money home, and come back to spend it later. Already more than 400,000 migrants from central Europe are working legally in the EU, and many others are doing so illegally.

Fears of a big new migration wave from central Europe after enlargement have provoked a policy split among EU governments, already hard-pressed by asylum seekers and illegal immigrants from farther afield. Germany and Austria, which border the new members, oppose a quick opening-up of labour markets. They have secured agreement that EU members can restrict labour inflows from central Europe for up to seven years, although this should not affect students or tourists.

Britain and Ireland are among the countries taking a quite different view. They have promised to open their labour markets immediately, seeing workers from the new countries as a timely source of cheap, skilled labour. Some EU governments have yet to state final positions, though the European Commission hopes they will do so by the end of January. They all have the option to bar workers from central Europe for an initial two years, and to renew this bar for another three years in 2006. A further extension of two years will be possible for countries that still fear “serious disturbances” in labour markets.

Recent academic simulations have predicted that as many as 3m-4m people will migrate from central to western Europe in the 25 years after enlargement, about 1% of the present EU population. Roughly half of those will be workers. There will be a first surge of migrants for two or three years, then a falling away. Based on past trends, at least half the migrants will head for Germany.

Those who think the rate of migration will be higher point to German unification, when over 7% of the population moved from east to west in ten years, despite a huge flow of subsidies from west to east. Those who think it will be lower cite the EU's experience with Spain and Portugal, which joined in 1986. There was no big outflow then: rather the opposite, as strong growth at home attracted Spaniards and Portuguese back from other countries. But when they joined, Spain and Portugal had living standards much closer to the EU average than the countries of central Europe do now. Spanish purchasing power was about two-thirds of the EU average. For Poland, the biggest country in central Europe, the figure is about 40%.

Even diligent and legal migrant workers from central Europe could pose political problems for western European governments, if they come in large enough numbers and seem to price locals out of jobs. But they will still be valuable economically, because they are likely to contribute more in work than they take out in pay.

The bigger worry for rich-country governments concerns migrants in search of state benefits. Central Europe's Roma minorities - about 9% of the population in Slovakia, 5% in Hungary and 3% in the Czech Republic - are a particular cause for concern. The poorest Roma villages, especially in eastern Slovakia, are among the most desperate places in Europe, with no work and little schooling. A flow of Roma migrants claiming political asylum led Britain to reintroduce temporary visas for Slovaks a few years ago. Such barriers will be illegal after EU enlargement.

Yet whatever problems migration may pose, short-term restrictions, such as those proposed by Germany and Austria, will not be a solution. At best they may merely delay or divert flows. A two-year or even five-year delay is not much when set against the 50-90 years that it might take the countries of central Europe to catch up with west European living standards. If the incentive to migrate from central Europe is strong in 2004, it will be strong in 2009 - unless western Europe's economies do remarkably badly.

A better way to deter too much movement of people would be through investment in the poorest parts of central Europe, especially improving infrastructure such as roads. This should bring businesses and jobs, making it less likely that people will migrate. That is a good argument for directing eastwards the subsidies that the EU gives to poor regions.

Even so, east-west migration will be a fact of life in the EU for at least the next 30 years. The trick is to make the best use of it. This means fine-tuning benefit systems to shut out short-stay claimants, as Denmark is doing, and improving incentives to work. It means deregulating labour markets so that jobs can be created cheaply but legally for the workers who want them. Migration will be less of a challenge, and more of an opportunity, if it forces such reforms on recalcitrant governments.

Fears of migration from eastern to western Europe. Should it be seen as an opportunity rather than a threat?

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