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We
had written earlier about the 10 new member states that
had joined the European Union - the Czech Republic,
Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta,
Poland, Slovakia and Slovenia. (See: Care
needed in regulating an enlarged EU).
At the time Europe was clearly divided in its
approach to these new entrants. Some countries
took advantage of the legislation to restrain the
numbers of incoming 'foreign' workers from the state
whilst others opened their borders, Britain amongst
them.
We
thought it might be interesting to revisit the topic in
light of the accession of new countries next year and
also the discussions about the entry of Turkey to the EU. Several
of the states had levels of income per head less then
half the average of the then current EU15 member states
- and employment rates were typically well below the
EU15 average. There were fears of a mass migration and
the loss of jobs from locals to incoming workers who
would work for less. In
anticipation of the advantages of EU enlargement some
international businesses had already been investing in
the accession countries for over a decade to take
advantage of their unique combinations of relatively low
labour costs and high skills. An example is
Slovakia where, from a standing start there will shortly
be more cars made person in that country than anywhere
else in Europe. In Slovakia the example of Peugeot is a
salutary lesson for some – at the same time that 2500
jobs are to go in a closure at Ryton, more jobs are
being created by the same country at a vast new plant in
Trnava. As
someone who has worked in Corby, Teesside, the Black
Country and elsewhere helping mitigate the effects of
the Thatcher years on employment in traditional British
manufacturing (the necessity for much of which I totally
accept), I well remember real anger and resistance in
those areas to change that, though seeming inevitable to
we outsiders, was unacceptable up to the last amongst
many of those affected. Much energy was expended
in what was a futile resistance to change. (We unwisely
held a meeting for workers in the Board room of one
plant. One worker turned up, openly hostile,
unzipped himself and relieved himself in the corner. He
then smiled beatifically and left saying – “I
have wanted to do that for years!”. Interesting
then to compare how attitudes have moved on. In Slovakia
an engineering student was on record as saying "I
know how the auto industry works. They're here today -
they might not be here in five years. But we can live
with communists we can live with that.” Today
we can compare the acceptance in Slovakia of the
transitory nature of the automotive industry with the
real anger felt in Coventry and, in the case of the
latter, it is not very different in appearance with that
recorded by miners, steel workers and others a decade
ago in the old industrial heartlands of the UK. In
short, we find in a former Eastern/Soviet Bloc country
an acceptance of the velocity of change and
inevitability of re-skilling that will follow. A
180º difference in attitude here in the UK that made
change much more difficult to achieve, then and now. The accession countries are required to adopt the EU acquits - i.e. detailed laws and rules adopted on the basis of the EU's founding treaties - on employment and social policy. The rational is that enforcing EU Employment Directives in these countries will aid capital movement and inward investment within an enlarged EU since investors will face a broadly common regulatory environment.
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In
addition, existing member states also stress that
enlargement must not lead to 'social dumping' in order
to allay concerns that the candidate countries will
attract investment and jobs away from the more developed
EU member states. The worry, however, is that this
might put some of the accession economies under
strain.
A
key concern is that in a globalised world economy,
additional regulation will be penalised by a loss of
investment from accession countries to low cost
countries outside the EU. While this is a
potential problem for the EU15 as well, the accession
countries, given their current state of economic
development, are far more exposed to competition in
markets for standardised products where cost
considerations are most important. Concern
of this sort does not of course mean that the accession
countries should be exempt from EU regulation but does
provide additional impetus to sensible structural
reforms designed to improve the competitiveness of the
EU economy as a whole. Parallel
with the issues of inward investment have been, of
course, the issues of economic migration – labour
migration - which has somehow become mixed up in the
minds of many with illegal immigration, corrupt
gang masters, sex slaves, terrorists and the kinds of
emotive but baseless claims put about by the extreme
nationalist parties. Polish plumbers being a good
example of some of this. The
experiences of the two approaches - open or restricted
borders - make interesting reading where there is often
more heat than light. On the one hand there is the
view “Member states that have opened up have benefited
greatly. There is no doubt about it. The UK,
Sweden and Ireland confirm it — jobs haven’t been
taken away.” In
Britain the arrival of Eastern European workers has been
widely seen as a success, providing armies of
construction workers and nannies, and beating labour
shortages from dentists to bus drivers. With
Britain and Ireland restricting access to the welfare
system, there have been very few claims for benefits. The
Bank of England has credited the Eastern Europeans with
keeping down wage inflation, a mixed blessing for native
workers. Most economists believe that they have
helped to fuel economic growth, although some believe
they could be responsible for the rise in unemployment. Most
other West European countries have admitted only a
handful of Eastern European workers. France has
given just 875 work permits to Polish workers, while
Greece has given 580. Nearly 500,000 Eastern
Europeans already lived and worked in Germany but the
number has hardly changed since enlargement. On
the other hand opponents of open borders are likely to
argue that countries that did not impose restrictions
had a far higher influx than predicted. The
British Government predicted only 5,000 to 13,000
Eastern Europeans would come, but 175,000 came in the
first year alone. Ireland had 85,000 workers from
Eastern Europe in the first year. Inevitably it is
the high numbers and the supposition of being taken over
by foreigners claiming benefits that has made the
headlines with a wilful avoidance of looking at the
underlying facts in an open way.
Countries
with strong economies such as Britain and Ireland have
not ,in fact, been greatly been disturbed by the new
workers; but many EU countries have high unemployment,
making the issue far more controversial. Fears
that the “Polish plumber” boosted the “no” vote
in last year’s French referendum on the EU
constitution. In
the UK it seems that public perceptions are likely to
influence thinking and cause this country to set
limits and to use the transition period to
control the “flood” that some newspapers are
predicting once more and, all too often, in ignorance of
the facts. That
said it would, I suppose, help if more of us could have
any confidence in either the Home Office or the Criminal
Justice system which would go some way towards
convincing us that mistakes or transgressions by
departments or individuals could be corrected and
situations normalised without undue delay in the event
of problems or unforeseen events.
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