TCS Daily

Worker's Paradise?

By Gareth Harding - May 5, 2006 12:00 AM

The EU has designated 2006 the European Year of Workers' Mobility. Try telling that to the 75 million citizens of the Union's newest member countries -- who have been barred from working in all but three of the EU's previous 15 states since they joined the bloc two years ago.

The right to live and work in another European Union country is enshrined in the club's founding treaty and is one of the four so-called "freedoms" all EU citizens are meant to enjoy. But when the former communist states of the Czech Republic, Poland, Hungary, Estonia, Latvia, Lithuania, Slovenia and Slovakia joined the EU on May 1, 2004, this basic right was denied them, along with a host of other perks and privileges of EU membership.

Germany and Austria, whose eastern frontiers used to be those of the Union, argued that their labor markets would be swamped by poor eastern Europeans if they opened up their borders to the eight newcomers. Despite the evidence of all previous enlargements -- which had only a minor impact on labor mobility -- and numerous European Commission surveys predicting a trickle of economic migrants from the east, 12 of the EU's then 15 members followed the examples of Berlin and Vienna in shutting their doors to workers from the new states.

Only three countries welcomed eastern workers with open arms -- Britain, Ireland and Sweden -- and citizens from the new member states wasted no time heading west. By the end of last year, 345,000 had signed up to a work registration scheme. In Ireland, the figures are even more impressive, with more than 120,000 east Europeans registered to work in a country of four million.

However, the Emerald Isle is only one of two EU states -- the other is Austria -- where nationals from new countries represent more than one percent of the working age population. In the Union as a whole, only 1.5 percent of citizens live and work in a different member state from their country of origin -- a proportion that has hardly changed for the last 30 years. So much for labor mobility.

Ahead of the EU's biggest ever enlargement London's notoriously shrill tabloid press warned that Britain was about to be flooded with poor eastern European "scroungers" who would steal the jobs of hard-working Brits and "sponge" off the welfare state. In fact, all evidence points to the contrary. A study by the Brussels-based advocacy group European Citizen Action Service found that eastern Europeans generated over $900 million for the UK treasury in the first 12 months after enlargement, while putting very little strain on state coffers. More than 97 percent of east Europeans are in full-time employment, helping to increase tax revenues, curb inflation and keep interest rates down, according to a report by Ernst and Young. In the first year after Sweden opened its borders, the state had paid out a mere $23,400 in social security to families from the new member states.

East European workers have had so little impact on the British, Irish and Swedish labor markets because all three countries are booming in comparison to most of the 12 EU states that refused them. The newcomers, who tend to be young and well-educated, are also doing the sort of jobs Brits, Irish and Swedes either cannot or will not do. Indeed, Polish workers are held in such esteem in Britain -- as opposed to France, where the spectre of the mythical Polish plumber helped torpedo the EU constitution last year -- that many employers prefer migrants to British nationals, according to a recent Joseph Rowntree Foundation study.

With such positive evidence of the first two years of enlargement to draw on, one would have thought governments in the 12 other "old" European member states would have rushed to follow the example of Britain, Sweden and Ireland. But as the deadline for deciding to lift or keep the ban for a further five years approached on May 1, only four countries -- Spain, Portugal, Finland and Greece -- had opted to open their borders.

What is remarkable about these states is that they include the EU-15's three poorest members -- Spain, Greece and Portugal -- and two countries, Finland and Spain, that have traditionally grappled with high unemployment rates. Contrast this with the list of EU states that have chosen to either keep their ban on eastern workers or lift it gradually over the next five years. This numbers all but one of the Union's richest and most powerful countries, the exception being Britain, and six founding members of the European Union -- France, Germany, Luxembourg, Italy, Belgium and the Netherlands.

It is no coincidence that almost all the states that have opened their borders enjoy relatively high growth rates and lower-than-average unemployment levels, whereas those that have shut off their labor markets from outside competition suffer from low growth and high jobless rates.

It is also unsurprising to learn that economic growth in the new member states, with their low taxes and pro-market policies, is two to three times higher than old EU countries. A paper to be published by the European Commission this week is expected to show the spectacular progress made by the eight countries that shrugged off four decades of communist rule just 15 years ago. Their per capita incomes have risen from 44 percent of the average for the old EU-15 in 1997 to 50 percent last year.

"All animals are equal, but some animals are more equal than others," proclaimed one of the ruling pigs' edicts in George Orwell's Animal Farm. The EU has been based on a two-tier system ever since the eight former Soviet satellite states joined two years ago; but it is the countries on top that are rapidly slipping down the league and the countries handed second class status just two years ago that are rising the fastest.

Gareth Harding is a freelance journalist based in Brussels.


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