Eastern European Immigrants as EU Threat?
Although the media and political discourse tend often to represent migration as a "crisis," or as a "new" and "exceptional" phenomenon, limited in space and time, population movements have characterized the history of humanity in all periods.
Recent population flows are inscribed in a wider context of globalization of capital and labor and the rapid development of transport and communication networks. Within this context, the migrations of the past 15 years are different in nature from those of the 1950s-1970s. New migrations are characterized by their fragmented nature: they include new forms of flexible labor, insecure legal status (often undocumented), variable duration, new gender roles and multiple destinations.
In the recent European context, these new forms of migration involve flows from East to West but also from Third World countries to EU member states. They are further influenced by the overall process of European integration and the recently realized Eastern enlargement of the EU.
EU member states gradually understood that mutual cooperation was necessary to design and implement effective policies controlling and managing immigration flows, especially as these increased and diversified since the late 1980s.
Until now, within the EU, labor migration has proved to be mainly demand-determined: it usually depends to a major extent on the needs and employment opportunities in the immigration countries. Having achieved a certain standard of living and having hopes for further improvements, people do not just move. They migrate only if they already have an attractive work contract in their pocket.
Since the late 1980s, the number of people applying for asylum has increased sharply. In 1984 there were only 104,000 applications in Western Europe. This figure grew to 692,000 in 1992 and then declined during much of the 1990s. Numbers grew again to 350,000 in 1998 and about 400,000 in 1999, although this year they have begun to fall away. Thus, asylum has become one of the principal means of immigration into the EU.
It is obviously beyond the immediate power of the EU to eradicate the root causes of all migration. But over time, if the EU wants to reduce migratory pressure, it will have to provide more development aid, debt relief, and fair trade.
From another point of view, should European states even try to stop economic migration? Europe's population is set to decline over the next 50 years. Italy will lose 28 percent of its population by 2050. In order to maintain its working age population, Italy would need to start importing more than 350,000 immigrants per year or, alternatively, keep its citizens working until they are 75.
If you read the business press -- from the Wall Street Journal to The Economist (London) - you might conclude that Western Europe is on the verge of collapse. Such rhetoric has only been stoked by France's recent rejection of the new European constitution. France is now being harshly criticized for standing in the way of needed continental reforms to labor market and business regulations.
Even with respect to the admittedly vexing problem of unemployment, conservatives have a conveniently historical take. The European economy became more sluggish as the European Union expanded and adopted trade regulation principles closer to U.S. norms. Expanded business investment in and worker emigration from Eastern Europe, where worker protections are slight, has put downward pressure on wages. In addition, the European Central Bank has pursued consistently high interest, pro banker policies. Many French citizens voted against the new constitution not because they were anti-Europe but because they feared that the new constitution would write these corporate norms into fundamental law.
If we look back in the history, in 1957 the original European Economic Community was formed, the Germans and French were afraid of being overrun by Italian "guest workers". However, something completely unexpected happened: only for a very short period of time did some Italians go North to become "guest workers" in Germany. Many more, but still relatively few Southern Italians moved to the fast developing Northern Italian economy and did not even think about going to other EEC member countries. When in 1981 Greece and in 1986 Portugal and Spain became members of the European Community, Northern European member countries again worried about the South-North migration potential. And again, Portuguese, Spaniards and Greeks did not follow conventional prejudices. They mainly stayed at home and moved North only in extremely limited numbers.
European enlargement is likely to stall after the first intake of 10 new members in 2004. Those left out in the cold are excluded for a long stretch. Rather than relying on the double panacea of NATO and the EU, they would do well to start reforming themselves by bootstrapping and better concentration on the resolution of their own problems by themselves. In this respect the situation of Bulgaria and Romania is not an enviable one. Both of these countries have sign the treaty to join the EU, but the actual trend of insecurities and lack of clear vision for the policy of the Union, is inspiring profound doubt about the good will of the countries-members.
Immigration is an important factor of providing the economies of industrially and economically stable developed states with labor force (comparatively cheap, ready for non-prestigious jobs and sometimes highly skilled). For example, according to one German government report dealing with the labor market situation and development, considering the lower birth rate in the country, the economy of Germany needs 50,000 foreign employees per year to counter a major deficit in its labor force.
Such a situation is quite typical for the EU countries in the whole, as foreigners, particularly those who are coming from the region of the Eastern Europe and CIS, specialize in those specific sectors of European economies that are characterized by considerably lower labor proposition. Thus, according to The Organization of Migration Chief of Mission in Vienna Irena Vojackova-Sollorano, the EU's "unemployment figures are relatively low, and when you look at the job openings that are all over Europe, even when we have local unemployment, there are low-level jobs which are never filled, because nobody wants to do them, in Europe."(1)
Evidently, any external impulse should cause asymmetry in labor payment, and, hereupon, influence the system of providing the steadiness of Euro. The access of labor force from countries of Central and East Europe, and also from other countries with lower level of economic development, creates the problems for the labor market of the EU countries. So functionally, in sake of the creation of dynamic labor market equilibrium for the EU it is necessary to provide for some restrictions for entrance from the countries of C&ES and even from the states that are now have the status of the EU candidate-members.
Still some experts and officials note specific features of Eastern European population's model of transborder crossing: unlike Asians, particularly from those people originating from China and Indochina, Eastern Europeans are more likely not to change citizenship. Thus, Irena Vojackova-Sollorano of the IOM sees not so much as a problem of Eastern Europeans, but as an opportunity for the EU: "A well regulated labor migration scheme would be the way to go, because just looking historically at the patterns of migration from Eastern Europe, people do not like to leave their countries -- even if they are impoverished. They always prefer to stay in their country, and if they leave, they leave [to] earn some money and go back. So this is an ideal opportunity for the EU to develop short-term labor migration schemes, to offer it to Eastern Europeans who will gladly take it, and who will also go back [home]." (2)
Generally speaking, at present there is no stable and effective interrelationship system between the EU and Central and East Europe labor markets systems. Still potentially the second one can be considered both as a destabilizing and stimulating factor for the first one. As yet, the process of market reforming, as well as consistent institutional building can be considered as the prime factors for the countries' integration within the European labor market. And such integration can be viewed as a part of more general integration processes on the continent.
In 2004, 10 European countries joined the European Union, bringing in their potential and expectations, adding a total population of 75 million people and a territory of 738,000 square kilometers. The EU-25 has 452 million citizens. The economic and social implications of the proposed free movement of labor will remain a controversial issue until the assimilation of new member states into the EU structures is complete, affecting both governments and citizens... if they have the time to do it.
Analysis shows that the pessimism expressed by West Europeans that their Eastern neighbors would "flood" their labor markets results more from subjective perceptions of a malfunctioning labor marketing their own countries than from actual data.(3) Even existing economic research is all too often a foundation more for speculation than for reliable predictions. However, although there is insufficient data to substantiate the fears of the West, these have nonetheless provided strong pressure against the immediate free movement of labor and have provoked a complicated cost-benefit analysis of the migration situation.
Because of public opinion in the West, new EU legislation, modified to fit the outcomes of the enlargement process, prescribes an initial transition period of two years.(4) An optional three-year transition could follow at discretion of each old member state. In a worst-case scenario of a massive migration flow, there is the possibility of extending the transition period by two more years, bringing the transition to a total of seven years of restricted movement.
What we could learn from the southward enlargement of the EU, mentioned earlier, is that rapid economic integration into a single market area was, and is, a most effective transformation strategy and therefore it turns out to be a most efficient anti-immigration strategy. The inclusion of Eastern Europe into an enlarged single market with no barriers to trade, free capital flows and unrestricted labor mobility can therefore be expected to diminish substantially, rapidly and sustainable the East-West migration potential. Moreover, the differences between GDPs of old and new EU member states establish a strong argument in favor of migration.
In fact, economic policies implemented in order to liberalize new markets are likely to curb the number of migrants as a secondary effect. For example, free trade policies pursued by the West are likely to lead to a greater convergence of consumer prices.
Also, direct foreign investment helps improve the economic climate in the Central and East European countries, providing for a higher standard of living.(5) Thus, one can conclude that the point of view evolved from defining free movement from the East as an almost unimaginable event in the early 1990s towards showing that an uncontrollable migration flow from the East is an unlikely event, mostly because economic integration supposes and preconditions economic convergence.
At present, cross-border movement seems to be a top priority issue on government agendas and in intergovernmental discussions. It is a known fact that economic policies implemented in order to liberalize the new markets are likely to, as a secondary effect, curb the number of migrants. For example, free trade policies pursued by the West are likely to lead to a greater convergence of consumer prices and eventually of factor prices. Also, direct foreign investment is helping to improve the economic climate in Central and East European countries, providing for a higher standard of living.
The experience of previous enlargements of the EU shows that initial skepticism and fear of being "flooded" by migrants from the new members, with resulting attempts to restrict migration, have been by and large unfounded. The East-West migration following the most recent enlargement then should not be viewed solely as an obstacle on the road to European integration, but as an opportunity to further deepen that integration, and make it meaningful to the populations of both Eastern and Western European nations.
According to some guesstimates the migration flows from Central and Eastern to Western Europe could be up to 10 million people. Other assessments indicate more modest figures in the magnitude of about 4 million. Most of them (about 3 out of 5) would probably go to Germany.(6)
But even if there were a migration hump and more people than expected moved West, this would not harm Western Europe. Less than 2 percent of EU citizens presently live in another EU country. In the immediate future it is therefore more likely to be too little migration which causes a problem for the EU than too much. More migration would facilitate the overcoming of regional and sectoral labor market disequilibria and some of the demographic problems caused by the aging of the EU population.
The German chancellor has stated his preference for a transitional period of seven years as was the case for the Southern European countries. Such transitional periods are only a third best solution, however. The second best solution would be to implement free mobility but to set an upper limit to the number of immigrants. This would at least allow an immediate partial reallocation of the labor force according to market mechanisms. And it would therefore be a first step on the way towards the economically first best solution: the free movement for all new citizens of the European Union.
Economic integration in a single market takes place above all via trade in goods and services and via capital transfers, and not so much via the migration of workers. Trade flows react much more elastically than people to the formation of a single market. To a large extent trade in goods and capital transfers make the migration of labor unnecessary.
For the capital markets in Eastern Europe, becoming a member of the EU is like getting a quality certificate. It means credibility and security for the protection of property rights, the rights of shareholders and, thus, for direct investments. Risks for capital transfers are reduced. Hence, West-East direct investments are likely to function to a large extent as a substitute for the East-West migration of workers. In as far as there is a complementary relationship between capital transfers and migration, direct investments and the migration of labor are necessary in order to exploit the advantages of an integrated economic area. In this case, however, it is usually a question of the migration of highly qualified specialists and not of the mass migration of unskilled workers.
Once the Eastern European countries become EU members, access to the large internal market will support efficiency and thus stimulate economic growth. This will have a strong inhibitive effect on migration, as can again be demonstrated by the example of Southern Europe. With their rising standard of living, the traditional EU emigration countries (Italy, Greece, Spain, Portugal) have become immigration countries. The natives of these countries no longer migrate in order to seek employment abroad. Instead, the economic upswing has created a pull effect on workers from third countries.
The Southern European experience tells us one more story, namely that immobility has a positive economic value. Staying at home allows people to use their specifically local know-how for earning an income and for spending that income. This know-how would be lost in the case of migration and would have to be acquired once more at the new place of residence. A further advantage of immobility lies in the option value of waiting. Analogously to investment decisions on financial markets, waiting has a positive option value, which arises because the postponement of the migration decision until later reduces the relative uncertainty and therefore the risk which is involved. If during the period of waiting the differences in income between the home region and the potential host region diminish, the actual migration flow will be much smaller than originally planned.
All those said, we can ask differently ourselves the main question raised in this article. What are the alternatives to the enlargement of the EU at the moment? The answer is: None! The process must be followed because it is objectively necessary for the EU itself. It is another problem how it could be done smoothly and less costly. Hopefully we shall discuss this topic in the future.
1. RFE/RL, 2 August 2001.
Recent population flows are inscribed in a wider context of globalization of capital and labor and the rapid development of transport and communication networks. Within this context, the migrations of the past 15 years are different in nature from those of the 1950s-1970s. New migrations are characterized by their fragmented nature: they include new forms of flexible labor, insecure legal status (often undocumented), variable duration, new gender roles and multiple destinations.
In the recent European context, these new forms of migration involve flows from East to West but also from Third World countries to EU member states. They are further influenced by the overall process of European integration and the recently realized Eastern enlargement of the EU.
EU member states gradually understood that mutual cooperation was necessary to design and implement effective policies controlling and managing immigration flows, especially as these increased and diversified since the late 1980s.
Until now, within the EU, labor migration has proved to be mainly demand-determined: it usually depends to a major extent on the needs and employment opportunities in the immigration countries. Having achieved a certain standard of living and having hopes for further improvements, people do not just move. They migrate only if they already have an attractive work contract in their pocket.
Since the late 1980s, the number of people applying for asylum has increased sharply. In 1984 there were only 104,000 applications in Western Europe. This figure grew to 692,000 in 1992 and then declined during much of the 1990s. Numbers grew again to 350,000 in 1998 and about 400,000 in 1999, although this year they have begun to fall away. Thus, asylum has become one of the principal means of immigration into the EU.
It is obviously beyond the immediate power of the EU to eradicate the root causes of all migration. But over time, if the EU wants to reduce migratory pressure, it will have to provide more development aid, debt relief, and fair trade.
From another point of view, should European states even try to stop economic migration? Europe's population is set to decline over the next 50 years. Italy will lose 28 percent of its population by 2050. In order to maintain its working age population, Italy would need to start importing more than 350,000 immigrants per year or, alternatively, keep its citizens working until they are 75.
If you read the business press -- from the Wall Street Journal to The Economist (London) - you might conclude that Western Europe is on the verge of collapse. Such rhetoric has only been stoked by France's recent rejection of the new European constitution. France is now being harshly criticized for standing in the way of needed continental reforms to labor market and business regulations.
Even with respect to the admittedly vexing problem of unemployment, conservatives have a conveniently historical take. The European economy became more sluggish as the European Union expanded and adopted trade regulation principles closer to U.S. norms. Expanded business investment in and worker emigration from Eastern Europe, where worker protections are slight, has put downward pressure on wages. In addition, the European Central Bank has pursued consistently high interest, pro banker policies. Many French citizens voted against the new constitution not because they were anti-Europe but because they feared that the new constitution would write these corporate norms into fundamental law.
If we look back in the history, in 1957 the original European Economic Community was formed, the Germans and French were afraid of being overrun by Italian "guest workers". However, something completely unexpected happened: only for a very short period of time did some Italians go North to become "guest workers" in Germany. Many more, but still relatively few Southern Italians moved to the fast developing Northern Italian economy and did not even think about going to other EEC member countries. When in 1981 Greece and in 1986 Portugal and Spain became members of the European Community, Northern European member countries again worried about the South-North migration potential. And again, Portuguese, Spaniards and Greeks did not follow conventional prejudices. They mainly stayed at home and moved North only in extremely limited numbers.
European enlargement is likely to stall after the first intake of 10 new members in 2004. Those left out in the cold are excluded for a long stretch. Rather than relying on the double panacea of NATO and the EU, they would do well to start reforming themselves by bootstrapping and better concentration on the resolution of their own problems by themselves. In this respect the situation of Bulgaria and Romania is not an enviable one. Both of these countries have sign the treaty to join the EU, but the actual trend of insecurities and lack of clear vision for the policy of the Union, is inspiring profound doubt about the good will of the countries-members.
Immigration is an important factor of providing the economies of industrially and economically stable developed states with labor force (comparatively cheap, ready for non-prestigious jobs and sometimes highly skilled). For example, according to one German government report dealing with the labor market situation and development, considering the lower birth rate in the country, the economy of Germany needs 50,000 foreign employees per year to counter a major deficit in its labor force.
Such a situation is quite typical for the EU countries in the whole, as foreigners, particularly those who are coming from the region of the Eastern Europe and CIS, specialize in those specific sectors of European economies that are characterized by considerably lower labor proposition. Thus, according to The Organization of Migration Chief of Mission in Vienna Irena Vojackova-Sollorano, the EU's "unemployment figures are relatively low, and when you look at the job openings that are all over Europe, even when we have local unemployment, there are low-level jobs which are never filled, because nobody wants to do them, in Europe."(1)
Evidently, any external impulse should cause asymmetry in labor payment, and, hereupon, influence the system of providing the steadiness of Euro. The access of labor force from countries of Central and East Europe, and also from other countries with lower level of economic development, creates the problems for the labor market of the EU countries. So functionally, in sake of the creation of dynamic labor market equilibrium for the EU it is necessary to provide for some restrictions for entrance from the countries of C&ES and even from the states that are now have the status of the EU candidate-members.
Still some experts and officials note specific features of Eastern European population's model of transborder crossing: unlike Asians, particularly from those people originating from China and Indochina, Eastern Europeans are more likely not to change citizenship. Thus, Irena Vojackova-Sollorano of the IOM sees not so much as a problem of Eastern Europeans, but as an opportunity for the EU: "A well regulated labor migration scheme would be the way to go, because just looking historically at the patterns of migration from Eastern Europe, people do not like to leave their countries -- even if they are impoverished. They always prefer to stay in their country, and if they leave, they leave [to] earn some money and go back. So this is an ideal opportunity for the EU to develop short-term labor migration schemes, to offer it to Eastern Europeans who will gladly take it, and who will also go back [home]." (2)
Generally speaking, at present there is no stable and effective interrelationship system between the EU and Central and East Europe labor markets systems. Still potentially the second one can be considered both as a destabilizing and stimulating factor for the first one. As yet, the process of market reforming, as well as consistent institutional building can be considered as the prime factors for the countries' integration within the European labor market. And such integration can be viewed as a part of more general integration processes on the continent.
In 2004, 10 European countries joined the European Union, bringing in their potential and expectations, adding a total population of 75 million people and a territory of 738,000 square kilometers. The EU-25 has 452 million citizens. The economic and social implications of the proposed free movement of labor will remain a controversial issue until the assimilation of new member states into the EU structures is complete, affecting both governments and citizens... if they have the time to do it.
Analysis shows that the pessimism expressed by West Europeans that their Eastern neighbors would "flood" their labor markets results more from subjective perceptions of a malfunctioning labor marketing their own countries than from actual data.(3) Even existing economic research is all too often a foundation more for speculation than for reliable predictions. However, although there is insufficient data to substantiate the fears of the West, these have nonetheless provided strong pressure against the immediate free movement of labor and have provoked a complicated cost-benefit analysis of the migration situation.
Because of public opinion in the West, new EU legislation, modified to fit the outcomes of the enlargement process, prescribes an initial transition period of two years.(4) An optional three-year transition could follow at discretion of each old member state. In a worst-case scenario of a massive migration flow, there is the possibility of extending the transition period by two more years, bringing the transition to a total of seven years of restricted movement.
What we could learn from the southward enlargement of the EU, mentioned earlier, is that rapid economic integration into a single market area was, and is, a most effective transformation strategy and therefore it turns out to be a most efficient anti-immigration strategy. The inclusion of Eastern Europe into an enlarged single market with no barriers to trade, free capital flows and unrestricted labor mobility can therefore be expected to diminish substantially, rapidly and sustainable the East-West migration potential. Moreover, the differences between GDPs of old and new EU member states establish a strong argument in favor of migration.
In fact, economic policies implemented in order to liberalize new markets are likely to curb the number of migrants as a secondary effect. For example, free trade policies pursued by the West are likely to lead to a greater convergence of consumer prices.
Also, direct foreign investment helps improve the economic climate in the Central and East European countries, providing for a higher standard of living.(5) Thus, one can conclude that the point of view evolved from defining free movement from the East as an almost unimaginable event in the early 1990s towards showing that an uncontrollable migration flow from the East is an unlikely event, mostly because economic integration supposes and preconditions economic convergence.
At present, cross-border movement seems to be a top priority issue on government agendas and in intergovernmental discussions. It is a known fact that economic policies implemented in order to liberalize the new markets are likely to, as a secondary effect, curb the number of migrants. For example, free trade policies pursued by the West are likely to lead to a greater convergence of consumer prices and eventually of factor prices. Also, direct foreign investment is helping to improve the economic climate in Central and East European countries, providing for a higher standard of living.
The experience of previous enlargements of the EU shows that initial skepticism and fear of being "flooded" by migrants from the new members, with resulting attempts to restrict migration, have been by and large unfounded. The East-West migration following the most recent enlargement then should not be viewed solely as an obstacle on the road to European integration, but as an opportunity to further deepen that integration, and make it meaningful to the populations of both Eastern and Western European nations.
According to some guesstimates the migration flows from Central and Eastern to Western Europe could be up to 10 million people. Other assessments indicate more modest figures in the magnitude of about 4 million. Most of them (about 3 out of 5) would probably go to Germany.(6)
But even if there were a migration hump and more people than expected moved West, this would not harm Western Europe. Less than 2 percent of EU citizens presently live in another EU country. In the immediate future it is therefore more likely to be too little migration which causes a problem for the EU than too much. More migration would facilitate the overcoming of regional and sectoral labor market disequilibria and some of the demographic problems caused by the aging of the EU population.
The German chancellor has stated his preference for a transitional period of seven years as was the case for the Southern European countries. Such transitional periods are only a third best solution, however. The second best solution would be to implement free mobility but to set an upper limit to the number of immigrants. This would at least allow an immediate partial reallocation of the labor force according to market mechanisms. And it would therefore be a first step on the way towards the economically first best solution: the free movement for all new citizens of the European Union.
Economic integration in a single market takes place above all via trade in goods and services and via capital transfers, and not so much via the migration of workers. Trade flows react much more elastically than people to the formation of a single market. To a large extent trade in goods and capital transfers make the migration of labor unnecessary.
For the capital markets in Eastern Europe, becoming a member of the EU is like getting a quality certificate. It means credibility and security for the protection of property rights, the rights of shareholders and, thus, for direct investments. Risks for capital transfers are reduced. Hence, West-East direct investments are likely to function to a large extent as a substitute for the East-West migration of workers. In as far as there is a complementary relationship between capital transfers and migration, direct investments and the migration of labor are necessary in order to exploit the advantages of an integrated economic area. In this case, however, it is usually a question of the migration of highly qualified specialists and not of the mass migration of unskilled workers.
Once the Eastern European countries become EU members, access to the large internal market will support efficiency and thus stimulate economic growth. This will have a strong inhibitive effect on migration, as can again be demonstrated by the example of Southern Europe. With their rising standard of living, the traditional EU emigration countries (Italy, Greece, Spain, Portugal) have become immigration countries. The natives of these countries no longer migrate in order to seek employment abroad. Instead, the economic upswing has created a pull effect on workers from third countries.
The Southern European experience tells us one more story, namely that immobility has a positive economic value. Staying at home allows people to use their specifically local know-how for earning an income and for spending that income. This know-how would be lost in the case of migration and would have to be acquired once more at the new place of residence. A further advantage of immobility lies in the option value of waiting. Analogously to investment decisions on financial markets, waiting has a positive option value, which arises because the postponement of the migration decision until later reduces the relative uncertainty and therefore the risk which is involved. If during the period of waiting the differences in income between the home region and the potential host region diminish, the actual migration flow will be much smaller than originally planned.
All those said, we can ask differently ourselves the main question raised in this article. What are the alternatives to the enlargement of the EU at the moment? The answer is: None! The process must be followed because it is objectively necessary for the EU itself. It is another problem how it could be done smoothly and less costly. Hopefully we shall discuss this topic in the future.
1. RFE/RL, 2 August 2001.
2. International Labour Organization. Program and Budget Proposals for 2000-01. - Volume 2.- GB.274/PFA/9/2. 274th Session. Geneva,March 1999.
3. Klaus Zimmerman, European Migration, Push and Pull, Proceedings of the World Bank Annual Conference on Development Economics 1994-1995.
4. Ibid.
5. Ivo Slosarcik, EU Enlargement and Schengen Implementation ? What Next? A Report on the Czech Republic, 2002.
6. INTERECONOMICS. East-West Migration: Will It Be a Problem? January/February 2001.
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