Unknown impact of enlargement on jobs

Date: 30/10/1997

By Mark Turner

IF ONE thing scares western Europeans about EU enlargement to the east, it is the prospect of 100 million new citizens stealing their jobs.

Whether this fear is well-founded or not, battles over haulier access to European roads, visa restrictions or fruit imports serve as a stark warning to politicians who downplay the issue.

Similarly, if one thing scares eastern Europeans about accession to the Union, it is the thought of being sacrificed to market economics and the threat of long-term unemployment.

One need only look at eastern Germany - which may not be directly comparable to the accession countries, but is the best example that exists - to see the impact that aggressive restructuring and cutthroat competition can have upon transition economies.

The sense of resentment amongst eastern Germans (with double their neighbour's unemployment level), coupled with the unwillingness of western Germans to allow them into the workplace, highlights the huge social and political problems that can follow premature integration.

Yet, amazingly, no Europe-wide assessment of the impact of enlargement on jobs seems to exist. If one does, few European officials know about it.

When asked what specific work they had done on the topic, the European Commission, the Council of Europe and several key think-tanks all drew a blank (although a study appears to be in the pipeline at the Commission).

The European Parliament talks in generalities, and even the European Trade Union Confederation (ETUC), the Union's self-proclaimed guardian of jobs, says it is too early for this kind of study.

When EU leaders discuss unemployment next month, the prospect of eastern European accession will scarcely be mentioned, just weeks before the Union chooses which applicants to start negotiating with.

All this smacks of a political cover-up, say insiders, given that employment is one issue that could seriously derail the accession process.

Where people do debate the social costs of enlargement, they tend to focus on western fears of eastern migration. Germany and Austria are already replete with eastern workers, the French black jobs market is well-known, and migrant Iberian labourers dread the threat of cheaper competition.

Even in Brussels, hundreds of miles from the ten eastern EU candidates, legions of 'informal' Polish or Russian labourers are at work.

Existing studies generally come to the conclusion that unwanted population flows can be avoided if the West helps to make the East a nicer place to live, through structural and other development funds.

This sentiment is echoed by ETUC spokesman Wim Bergens, who argues that “we must make sure that for every ecu that goes to the East in investment, another ecu goes into development there”.

It may be that preserving western trade union power is as much responsible for this stance as any genuine concern for eastern welfare. Although in theory it speaks as much for eastern trade unions as their western counterparts, the ETUC rails against what it describes as “social dumping” in countries where companies take advantage of lower wages and looser social legislation.

Others, of course, might describe the practice as capitalising on a region's competitive advantage. Either way, it is clear that cheap labour in the East will continue to pose a serious problem for the West.

Therein lies the paradox in the whole debate. Both sides of the old East-West divide are equally concerned about the impact of enlargement on employment, even though it stands to reason that someone must win out of the process.

Furthermore, if one accepts the free-trade credo that competition does not engender winners and losers but winners and greater winners, then everyone should gain from enlargement.

Eastern Europe, we hear repeatedly, is Europe's very own Pacific Rim (although the comparison may not be so positive today). Enlargement could be exactly what the doctor ordered if Europe is to remain competitive in a global market.

So much for the theory. When it comes to the crunch, every country will fight tooth and nail for its national interests, even if it means bringing the international architecture down with them.

Employment could yet prove to be enlargement's undoing.

(ILO methodology, 1996, European Commission.)