Labour Migration after EU Enlargement – Czech
experiences[1]
Abstract — the paper focuses
on the effect of the 2004 EU accession on labour mobility and migration in the
EU and is concerned with the nature of this movement and its impact on the
economies of the new member states, especially on the
Index Terms — Economically active citizens, Labour migration, Transitional arrangements, Vacancies database
1 Introduction
On 1st May 2004, eight transitional states from Central and and Eastem
European acceded to membership of the European Union (EU) expanding membership
from 15 (EU-15) to 25. The accession of the Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Poland, Slovakia and Slovenia (EU-8) was the largest expansion of
the EU. The European Employment Services was created to encourage the free
movement of workers within the EU, and 2006 was declared the 'European Year of
Workers' Mobility Towards a European Labour Market'. The Accession Treaties
introduced derogation from the principle of free movement of workers by
allowing existing member states to introduce transitional measures, restricting
access to their labour markets by workers from the new members for a maximum of
seven years, with reviews required in 2006, 2009 and 2011. From 2004 only Ireland
and Sweden and the UK granted workers from the EU-8 immediate access to their
labour markets. All EU-8 countries granted workers immediate access to each others
labour markets. In May
The first experience are such, that transitional arrangements had not much
effect on mobility. Most EU-15 countries have more immigrants coming from the
EU-15 than the EU-10. Even Ireland has over 50 % more of its immigrants
coming from the EU-15 than the EU-l0, and the United Kingdom over three times
more. Sweden had even 2,3 % from EU-15 compared with 0,2 % from EU-10.
And immigration from non-EU countries is even more important than intra-EU
mobility.
2 The labour migration after
enlargement of the EU in May 2004
The past two years have brought many
changes. Unemployment rates in EU-l0 decreased: the largest relative fall was
in
Transitional Arrangements are still
in force, however, and work permits are still required from new
The
On the other hand, given the Czech
workers' unwillingness to migrate, estimates about the low mobility rates of
the country are confirmed. There were 31 234 Czechs employed in the EU-25
Member States during 2005, mostly in the
The labour migration from the
Accession States after May 2004 targeted the traditiona1 destinations of
3 Economic Activity of Foreigners in
the Czech Republic
The Czech economy is an open small economy. The rate of openness of an economy is traditionally expressed as the ratio of export and import to gross domestic product. In this paper we will leave this approach aside and we will define the openness of an economy by the number of foreigners who are economically active in the given economy. The ratio of foreigners to the labour force in the Czech Republic, in other words to the economically active citizens at the age of 15 or older, has been on the rise for the last three years. In 2003 it amounted at 3,3 % while it reached 4,2 % in 2005.
There is no doubt there are a lot of factors influencing the number of foreigners employed in the Czech Republic. Given the data on the employment of foreigners, it is clear that the overall economic situation of the Czech Republic is one of the factors because it has an impact on the performance of the labour market. The Czech economy fell into recession in the years 1997 and 1998. The real GDP fell by 0,7 % and 0,8 %, respectively, and then there was only a mild rise the following year – by 1,3 %. The number of foreigners employed in the years 1998 and 1999 decreased by 40 thousand as compared with the year 1997. As it will be noted, the decrease hit especially the citizens of Slovakia, who traditionally account for a large part of the total employment of foreigners. The acceleration of the economic growth in the last years which reached 6,1 % in the years 2005 and 2006 accompanied with new productive capacities, a mild decrease in the rate of unemployment and a rise in the number of engagements has meant a considerable increase in the number of employed foreigners.
The changes in the legal framework have played an important role in the past. A part of the number of employed foreigners is made up of enterpreneurs with a trade license. The trade law has been subject to a number of considerable updatings. The updatings in the years 1995 and 1999 came out as more restrictive to foreigners. After both these updatings there was a significant decrease in the number of foreigners with a trade license in the following years, especially 1998 and 2002.
A considerable change of conditions for the employment of foreigners was brought on by the European Union entrance on May 1, 2004 and a new employment act. This change was concerned with people who were employed in the Czech Republic. Before the EU entrance the foreigners except the citizens of Slovakia were allowed to be employed only on the condition of a working license and a residence permit presentation. After the EU accession the citizens of the members of the EU[5] and the citizens of Norway, Liechtenstein, Iceland[6] and Switzerland are not considered foreigners in the sense of the employment act so they have a position equal to the citizens of the Czech Republic. The citizens of other countries may be employed only on the presentation of a working license and a residence permit, unless provided otherwise. The persons without citizenship are treated as foreigners. The EU entrance had an impact on those with a trade license, too. Since May 1, 2004 there has been an updating of the trade law which in effect makes the conditions of the citizens of the Czech Republic and of the EU member states equal in the area of enterpreneurship based on a trading license.
Of course, there are many other factors which influence the number of foreigners employed in the Czech Republic. However, this paper focuses on the change in this number which occurred after the EU entrance. Therefore, the data for the years 2004 and 2005 will be analyzed. Where possible, the data for the year 2006 will be taken into consideration.
The foreigners who are economically active in the Czech Republic may be divided into two parts. The first part consists of those who are employees, officially referred to as foreigners filed at labour offices. The second part is made up by those with trade licenses. The data for the first group is collected by the Ministry of Labour and Social Affairs while the data for the second group is gathered by the Ministry of Industry and Trade[7].
Fig. 1 Structure of
Employment of Foreigners
Source: CSO (as by 31/12 of the
particular year)
Fig. 1 depicts the division of total employment of foreigners into these two groups. We can conclude that the first group – regular employees outnumbered those with trade licenses for all the years since 1996. However, we can also see that the ratio of these two groups has been changing. The highest ratio of employees was reached in 1996 - almost 76 %. From 1999 to 2004 the ratio of employees was about 62 %. One year after the EU entrance the share of employees increased up to 69 %. The share of foreigners with trade licenses is therefore 31 %.
Foreigners filed at labour offices
The first group – the foreigners filed at labour offices may be further divided into three subgroups. The first subgroup consists of the citizens of the members of the EU and the citizens of Norway, Liechtenstein, Iceland and Switzerland and their relatives. They are not considered as foreigners according to the labour law and have equal conditions to the citizens of the Czech Republic. Their employer has the kompetent labour office in writing on the day they Africe at the latest. In other words, people from this subgroup are filed in the statistics of the Ministry of Labour and Social Affairs labeled as „Number of citizens of the EU/EEA and Switzerland“. The second subgroup is made up of foreigners who do not have to ask a working license despite the fact they are not citizens or relatives of the EU/EEA or Switzerland. These include foreigners with permanent residence or employed on the basis of an international act, students up to the age of 26, pedagogical employees, etc. However, they are obliged to inform the competent labour office and, therefore, are filed at the Ministry of Labour and Social Affairs and labelled as „Number of citizens who do not need a working license“. The last subgroup is represented by those who are filed at labour offices and need working licenses.
Citizenship structure. By
December 31, 2005 151 736 foreigners were filed at labour offices. Almost
62 % (93 762 people) came from the member states of the EU. To this number
citizens of Norway, Liechtenstein, Iceland and Switzerland (105 people
altogether) may be added. The number of foreigners who do not need a working
license was 2 659 people. The rest of more than 55 thousand citizens filed
at labour offices need working licenses. The dominant share of foreigners from
the member states of the EU is evident throughout the whole history of the
Czech Republic. The main reason is the high number of citizens coming from
Slovakia who have been working here. Taking account of the gender structure,
there were 26 081 females from the member states of the EU filed at labour
offices by the end of 2005, which is about 28 % of the total number of citizens
from the EU filed at labour offices. The share of females was almost 33 %
in the case of those who need a working license. Fig. 2 depicts ten states where most
foreigners employed in the Czech Republic come from. The highest number of them
comes from Slovakia. By the end of 2005 they numbered 75 297 which represented almost 50 % of
foreigners registered. However, this share fell by 5 percentage points with
regard to the previous year. The second group consists of citizens of Ukraine.
They numbered 40 060 by the end of 2005, which was an increase by 17,5
thousand in comparison with the year 2004. Almost 33 % of all employees were
registered in the capital – Prague. By the last day of 2006 the number of
employed foreigners reached
Fig. 2 Foreigners Filed
at Labour Offices
Source: Ministry of Labour and Social Affairs of the Czech Republic
Professional structure. The fields the filed foreigners are employed in are depicted by table 1. The data represent the first half of the previous year. It is categorized according to the Branch Classification of Economic Activity (BCEA). The highest number of foreigners filed at labour offices was employed in the building industry – 37 116 people, which represents more than 22 % of the total foreigners registered. In this group foreigners from Ukraine and Slovakia have the highest percentage. There are more than 20 thousand citizens of Ukraine and almost 13 thousand citizens of Slovakia. A significant number of foreigners with the prospect of further growth is in the field of motor vehicles production. Last year the car factory in Kolín went into full operation and Auto Škoda increased production. In 2007 the car factory Hyundai in Nošovice is going to start operation. More than half of the foreigners working in this field is represented by the citizens of Slovakia and more than one third by the citizens of Poland.
Table
1 Numbers of foreigners registered at
labour offices according to BCEA
(first half of 2006)
|
BCEA |
|
|
|
45 |
Building Industry |
37 116 |
|
74 |
Other Enterpreneurship |
16 408 |
|
28 |
Metal working industry (except machines) |
10 896 |
|
34 |
Motor vehicles production (except trailers), trailers production |
8 079 |
|
51 |
Wholesale (except motor vehicles) |
7 687 |
|
52 |
Retail except motor vehicles, products mending for personal use
especially household |
5 933 |
|
29 |
Machine production and servicing |
5 553 |
|
01 |
Agriculture, hunting and related areas |
4 507 |
|
85 |
Health and social care, veterinary care |
4 470 |
|
15 |
Food and drink production |
4 403 |
|
31 |
Electric machine and devices production |
4 346 |
Source: Ministry of Labour and Social
Affairs of the Czech Republic
Age structure. Fig. 3 depicts the age structure of the foreigners filed at labour
offices. Almost one half is represented by those of age 25 – 39 followed by the
category of 40 – 54 which is more than 27 %. The last significant group is that
of 20 – 24 years old who represent more than 19 % of all registered foreigners.
Now we take account of the gender structure as well. The females have higher share
in the first two age categories. The share of females younger than
The age structures are almost the same for 2004 and 2005. For the year 2004 the data also include age structure according to countries for all foreigners (registered or with a trading license). The citizens of Slovakia had the highest share in all age groups. However, they dominated in the first two age groups – younger than 19 and 20-24. Their shares were 70 % and 63 %, respectively. The reason is the high number of students coming from Slovakia in both the secondary and tertiary stage of education. In the group of 25-39 their share is lower – 36 %. In this group there are also citizens of Ukraine, Vietnam and Poland with shares of 27 %, 13 % and 5,2 %, respectively. The structure of the next age group (40-54) is similar: 33 %, 23 %, 16 % and 8,2 %, respectively.
Foreigners with a trade
license
The conditions
for enterprise based on a trade license is treated by the trade act (455/1991).
Among these foreigners there are the citizens of the member states of the EU,
Norway, Liechtenstein, Iceland and Switzerland who obtained a trade license on
the grounds of a permanent residence in their countries and those with a
permanent residence in the Czech Republic or those in asylum or foreigners with
a temporary residence of more than 90 days.
Citizenship structure. The citizenship structure of the foreigners with a trade license is quite different from those filed at labour offices. The main difference is the share of those coming from the EU. By the last day of 2005 there were 13 397 foreigners with a trade license coming from the EU member states out of 67 246 foreigners with a trade license in total. That is around 20 % which means almost 80 % of the foreigners with a trade license came from outside the EU. We can recall that the ratio was about 62 % to 38 % in the case of the foreigners filed at labour offices. This is explained by the fact that the EU citizens (and also citizens of EEA and Switzerland) have unlimited access to the Czech labour market as employees as compared with those coming from other countries. This relatively low share of people coming from EU member states in the foreigners with a trade license in total is, however, evident even before the EU entrance. The share was lowest in 2000 – 16,1 % as opposed to 2004 when it reached 20,1 %.
The share of females is approximately 29 %, which is 19 344 females out of 67 246 foreigners with a trade license by the end of 2005. The share of females coming from the EU in all the female foreigners with a trade license is almost 12 %, while with males this share amounts to 23 %. Of course, the shares of the particular EU member countries differ.
Figure 4 depicts the numbers of foreigners with a trade license by the end of 2005 for the ten most numerous countries.
It
comes as no surprise that most of the foreigners came from Slovakia. By the end
of 2005 there were 8719 people with a trade license from Slovakia. There was a
small decrease in this number by 38 people as compared with 2004. Two other
significant groups came from Poland (1 294 people) and Germany (1 164
people). We can conclude that with both female and male the people coming from
Slovakia dominated, followed by Poland and Germany. Thus, most of the
foreigners with a trade license came from the non-member EU states. Due to the
former political regime most of them came from Vietnam. By the end of 2005 they
numbered 22 620. As compared with the previous year there was an increase
by almost 600 people. The second most numerous group of foreigners is from
Ukraine. There were 21 135 by the last day of 2005 and there was a rise by
1 649 compared with the previous year which accounts for most of the
year-over-year increase in the foreigners with a trade license (an increase by
2 027 people). Citizens of three other countries with a trade license
exceeded one thousand. They came from Russia, Serbia/Montenegro and Bulgaria.
However, there was a year-over-year decrease in all three cases.
Fig. 4 Foreigners with
Trade License
Source: www.cizinci.cz
Age structure. The age structure of foreigners with a trade license differs to a large
extent from those filed at labour offices. Fig.6 shows that the most numerous
age group in 2005 was 25-39 which accounted for more than half of all foreigners
with a trade license. The group of 40-54 had the second significant share. The
other groups accounted for just 12 % altogether. As compared with foreigners
filed at labour offices there is, of course, a much lower share of younger age
groups. The first group of younger than 19 had the share of just 0,6 % compared
with 2,5 % in the case of foreigners filed at labour offices. In the group of
20-24 it was 5,7 % and 19 %, respectively.
4 Conclusion
The 2004 enlargement has changed the whole debate about labour mobility
within the EU. For the first time in nearly 50 years, the EU has ceased to
lament the failure of the 'fundamental right' to live and work in any member
state because it has started to become a reality. But rather than rejoicing,
the exercise of this right has become highly controversial, with a substantial
gap between the European Commission and economic opinion on the one hand and
popular opinion on the other. Political realities have overridden economics. Although
Bulgaria and Romania have a GDP of less, than 30 % of the EU average and
half that of Poland, the British Government has announced that it intends to
introduce transitional arrangements when they join on 1st January 2007, and is
restricting access to all but skilled workers. Given the experience of EU-8
migration this decision ignores economic reality and the fact that most of the
demand for CEE workers is for unskilled jobs. However, even without these
restrictions it is uncertain whether many Bulgarian and Romanian workers would
come to the UK, because they have smaller populations, fewer English speakers,
and stronger links with southern Europe.
As
other countries ease their restrictions, will EU-8 workers now choose to go
elsewhere, or will the level of migration increase, with a consequential
detriment to their economies? It might have been expected that the imposition
of transitional arrangements by all but three of the member states would have
altered and delayed labour market adjustments, but rather surprisingly, the
figures compiled by the European Commission demonstrate that the transitional
arrangements had little effect. Economic forces are the main determinant of the
level of immigration.
What of the future? The European Commission have argued that
'Since enlargement unemployment rates dropped significantly in almost all EU-8.
This suggests that there is no reason to expect increased pressure to move
outside EU-8 countries ... '. However, given the remaining differences in
living standards and the level of previous migration, it is not obvious that
this is a likely outcome. And although the evidence to date suggests that most
of these EU-8 workers are temporary, and the eventual outcome is uncertain. If
the EU-8 workers become permanent and do not develop careers, then migration
has resulted in a misallocation of resources with the relatively well educated
EU-8 workers taking unskilled jobs in EU-I5. This is not the market equilibrium
of a European labour market which has been an objective of the European Union.
Supply has been in response to changing demands for a new workforce. The prospect of an ageing population will in turn highlight a growing need. Transitional arrangements hitherto can be seen to have had little real economic effect, and it is not clear that the new transitional arrangements will have much effect on the ebb and flow caused by broader economic realities. The Market Equilibrium may turn out to be different from that which the European Commission envisaged because the broader economic realities are less susceptible to control than the Commission had expected.
The emerging problem which will need addressing is the effect on those countries which are losing their worforce - the beggar-thy-neighbour. And hence the wider problem of immigration from China, Vietnam and Ukraine.
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