March 17, 2006
EMPLOYMENT POLICY,
LABOUR MARKET AND FREE
MOVEMENT OF WORKERS
Sven Dörge, Damon Craig, Kirby
Watkins, Daniel Zeng
OUTLINE
1. Legal Framework Before and After
Enlargement
2. Pros & Cons of Free Labour Migration
3. Sweden
4. Germany
5. Recent Developments
1. LEGAL FRAMEWORK
BEFORE AND AFTER
The Internal Market and the Free
Movement of Persons
INTERNAL MARKETS AND
THE 4 FREEDOMS
• Foundations For Internal Market in 1957
• Implementations Reluctant
• Free Movement of Persons, Capital,
Services and Goods
• Delors Era
• White Paper, Single European Act,
Maastricht Treaty
RIGHTS
• Equal Rights for All Workers From EU Members
When Working in Other Member-Countries
• Joining Trade Unions and Voting
• No Discrimination on Grounds of Nationality
• Treatment According to Law in the Hosting
Country
• Rights Charter, Art. 15.
CONSEQUENCES OF
ENLARGEMENT
• Enlargement Treaty Allows EU 15 to
Restrict Access to Labour Market for
Workers From the EU 8
 Exception From EU Law
• By Means of National Law or Bilateral
Treaties
• 12 of 15 Opted for Restrictions
2+3+2 PRINCIPAL
• Restrictions Are Limited for Maximum 7 Year (from 1
May 2004)
• 1st Period of 2 Years
• Consequences Are Evaluated by April 2006
• Sovereign Decision on Extending of Restriction by Each
EU 15 State
• End of all Restrictions by 2009 Recommended by Treaty
• States can prolong by two more years  2011
4 REGIME TYPES
• Different EU 15 Countries Block Access to
Labour Market to Different Extents
• 4 Regime Types
• Full Restriction (i.e. Germany)
• Quota Systems
• Access to Labour, Closure of Welfare
• Full Opened Market (Sweden)
2. PROS AND CONS OF FREE
LABOUR MOVEMENT
Examining the Many Considerations
Between Old and New EU Member
States With Regard to Labour
Migration
FEAR OF WESTWARD MIGRATION
FROM EASTERN MEMBER STATES
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Cheap Labor
Already High Unemployment Levels
Welfare Tourism
Currently Only 1.5% of Total Work Force
Are Employed In Other EU Member States
• Geographical Proximity to New Members
Causes Greater Concern
EASTERN CONCERNS
• EU 8 Countries Want Equal Rights
Regardless of Actual Interest In Migration
• More Non EU Citizens Work in EU 15
Countries Than EU 8 Citizens
• Brain Drain
• Youth Drain
INDIVIDUAL CONCERNS
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Language Barriers
Recognition of Professional Qualifications
Knowledge of Rights and Laws Abroad
Psychological Effects of Culture Shock
Distance From Families
FILLING THE PROJECTED
LABOR GAP
• Low Birthrate
• Rising Life Expectancy
• So Far Eastern Workers Take Positions
Otherwise Hard to Fill
• Denying Legal Entry Increases the Size of
Black Market Labour
RESTRICTING NEW STATES
• With ascension of new states such as
Bulgaria and Romania, EU8 countries may
impose similar restrictions.
• What is Considered Eastern Shifts as
Enlargement Continues
• Potential Restrictions on Bulgaria From
Czech Republic
3. SWEDEN
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Third of three countries to open its
labour market to citizens of EU-8.
Only country of EU-15 to not
restrict access to social services for
citizens of EU-8.
In order to qualify for welfare
benefits new workers must work
only 10 hours per week.
By law workers can not work more
than 40 hrs/week.
SWEDISH STATISTICS
BEFORE ENLARGEMENT
• Like many industrialized nations, had a low birth rate.
However unlike other industrialized nations, the
Swedish birth rate had been rising since the early
1980s
• Prior to EU enlargement immigration from other
Scandinavian countries accounted for 40% of
population growth.
• Labour force numbered about 4 million.
• Recession in early 90’s saw real wages fall, growing
unemployment, and 4% drop in GDP.
CONCERNS BEFORE
ENLARGEMENT
• The generous Swedish social security program
would attract “benefit shoppers” interested mainly
in exploiting the program.
• An increase in migrant workers would lower
overall wages and increase unemployment.
• Social Democrat government proposed restrictions
on immigrant labor from EU-8, exemplified by
keeping Sweden’s “work permit scheme.”
WERE THESE FEARS
PROVED ACCURATE?
• Sweden’s imbalance rate (unemployment+ those in
labour market programs) is 7.6% (May 2005). This is
an increase of .6% over May 2004.
• At the time of these figures (May 2005) the imbalance
rate was decreasing on a monthly basis.
• The long term unemployment figure also decreased by
7.500 persons and the number of job vacancies
increased by 8.000 during the same period (May
2004-May 2005).
WERE THESE FEARS PROVED
ACCURATE (CONT)
• Real wages did not decrease over this period.
• Around 22.000 immigrants from the EU-8 have
arrived in Sweden. This represents a tiny portion
of its total labour force of 4.5 million, suggesting
that there has not been any “welfare tourism.”
• First time permits (for more than three months of
work) numbered only 8768 for the period 1 May
2004-31 Dec 2005.
CONSEQUENCES
• Sweden has become increasingly concerned with
foreign companies paying their workers in Sweden a
‘fair wage’ (Vaxholm Affair).
• New immigrants are sometimes unaware of rights and
responsibilities in Sweden, this problem is further
exacerbated by firms’ willingness to circumvent
Swedish laws i.e. taxes, environmental laws.
• Assimilation and Integration i.e. Language Barriers
GERMANY: BEFORE
EASTERN ENLARGEMENT
– General Problems Concerning German Labour
Market:
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High Unemployment (12 % in 2/2006)
High Non-wage Labour Costs
Low Birth Rate (age structure)
High State Expenses (subventions, welfare
system)
GERMANY: BEFORE
EASTERN ENLARGEMENT
– Reaction: National Reform Project “Agenda
2010”, Started in 2003. (For EU: Lisbon 2000,
2005 Revised)
– Development of national labour market as one
point.
– Goal: More employment through more mobility
and flexibility.
(Expanding sector of low qualification work,
forcing unemployed to take any work etc.)
GERMANY: BEFORE
EASTERN ENLARGEMENT
– Fears:
– Cheap workers coming to Germany. (Especially to
eastern regions with already high [long-term]
unemployment.)
– ‘Welfare Tourism’
– Increased Criminality (Populism)
– Reduced subventions for economically underdeveloped
east German regions.
– Relocation of specific sectors out of Germany.
– Higher chance of immigration compared to Sweden.
GERMANY: BEFORE
EASTERN ENLARGEMENT
– Benefits:
– Projected Need of Workers From 2010 (Immigration to
Compensate National Age Structure)
– Cheap labour helps in overall economic competition.
(stimulation)
– Easier Access to Eastern Markets – Good for Export
Country (and thus employment) like Germany; Need
for New Equipment Through Transformation Process
GERMANY: BEFORE
EASTERN ENLARGEMENT
Historical Analogy:
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1986 EU Southern Enlargement
7 years of restriction for workers from
Portugal and Spain.
Feared immigration did not take place.
GERMANY: BEFORE
EASTERN ENLARGEMENT
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Germany is one of the countries that applied
restrictions for EU-8.
Classified as “Restrictive” (EU-8 treated
like non-EEA)
Group also consists of Belgium, Finland,
Greece, France, Luxembourg, Spain
GERMANY: AFTER
EASTERN ENLARGEMENT
Development after the first 2 years of
enlargement:
- Germany extended the restrictions for at
least another 3 years.
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Some countries of this group consider
dropping the restrictions.
5. RECENT DEVELOPMENT
• Several States Announced That They Will
Lift Restrictions by May 2006 (P, E, SF)
• EU 8 Exercises Pressure Against
Restrictions
• GER + AUT Will Keep Restrictions After
2006
THANK YOU FOR YOUR
ATTENTION
Any Questions?
SOURCES
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www.fafo.no/Oestforum/Kunnskapsbase/Publikasjoner/FoU/dolvik_eldring_eng_feb06.pdf
www.etuc.org/a/1992
http://www.workpermit.com/news/2004_02_27/eu/working_restrictions.htm
http://www.migrationinformation.org/Feature/display.cfm?id=274
http://www.workpermit.com/news/2004_04_29/sweden/opens_market_for_new_eu_workers.htm
http://www.scb.se/templates/Standard____130877.asp
http://europa.eu.int/comm/employment_social/social_model/index_en.html#intro
The Economist, European migration: The brain-drain cycle, December 10th 2005
EurActiv, Member states ponder lifting labour market restrictions, January 24th 2006
EurActiv, Feared labour exodus from the East a no-show, August 31st 2005
EurActiv, Prague threatens labour restrictions on Bulgaria and Romania, December 16th 2006
EurActiv, Germany will not lift labour movement restrictions for EU-10, November 4th 2005
http://www.bundesregierung.de
http://www.destatis.de