When the Czech Republic joined the EU there were just
three EU states prepared to allow the free movement of workers – the U.K.,
Ireland and Sweden. On the face of it, there would appear to be continued
resistance to opening markets to newcomers, with the U.K. and Ireland now among
those intending to impose restrictions. What, if anything, is so special about
Romania and Bulgaria that poses a perceived threat?
Some facts may help. Romania and Bulgaria account for around 20 million
people and, for the first time, admission will be granted to some of Europe’s
poorest countries. In fact, these two countries have similar gross domestic
products (GDPs), and both are below one-third of the EU average. The rich
countries of the EU must seem tempting to very poor migrant workers. The curiosity about the next round of admissions is that it falls hard on the
heels of the Central European admissions of 2004. Where migrant Romanians and
Bulgarians will aim for is wholly unclear: will they simply leap-frog the Czech
Republic and focus on wealthier EU states? Or will they, as the threat is seen
to be posed, settle for the shorter bus ride to the Czech Republic (and
neighboring states) where wages are far higher and the work held to be quite
abundant? Both prime ministers of Romania and Bulgaria have publicly stated that
they see the flood of emigrating workers as a trickle, and even then workers
will prefer Spain or Italy. When the U.K. opened its borders to migrant workers, original government
forecasts saw a possible influx of some 10,000 workers a year — a trickle in
other words. In reality the number was around 600,000 and sufficiently large to
push the population of the UK over the 60 million mark. It makes you wonder if
the Romanian and Bulgarian prime ministers might need to rethink their ideas and
introduce some sort of exit tax to control the likely exodus. The benefits of migrant labor All this sounds negative, with cheap foreign labor taking all of the local
jobs; the mass movement of nations; cultural and language difficulties; and so
on. In reality the truth can be different. The U.K. is more or less the only
case study on the influx of Central European workers, and the positive effects
have been clear. Migrants contribute positively to the tax and social security
systems and will take little or nothing out of the system into which they must
contribute. Most will return to their home countries to be replaced by others,
and so the U.K. government can bank their taxes confident in knowing there’s no
payback in terms of pensions and the like. There’s no evidence of a drain on the
state; indeed, quite the opposite. Migrants are generally hard working and
skilled, and have filled chronic shortages in the hospitality, construction and
distribution sectors. And they have done this cheaply, which allows employers to
increase profitability. More importantly, with the demographic profile of the
Czech Republic being as it is, turning away migrants may be a luxury the country
simply can’t afford as the population ages rapidly. The why of restrictions Somewhat crucially, the U.K. is debating the stance of restricting the access
of Romanian and Bulgarian workers. U.K. Home Secretary John Reid has indicated
restrictions may apply, but the form of such restrictions is unclear. There may
be a quota system that restricts by only allowing entry for those with the
skills needed, or perhaps other forms of prohibited entry will be used. The
question is why would the U.K. seek to indulge in any restrictions if the post
2004 experience was such a success? Leaving aside public sentiment over the arrival of foreigners into the
country, there’s the not so small matter of organized crime. The U.K. government
is clearly worried over the influx of crime into the EU, and will take every
measure it can to stop it. The U.K. describes this law enforcement issue as a
“fresh challenge” — which, decoded, indicates that the U.K. government is
seriously concerned. If other countries wish to shut their doors to Romania and
Bulgaria, then this will be the reason, and the Czech Republic will be no
exception. It has been said that the free movement of labor will, over time, even itself
out. The social impact on the migrant worker is all too obvious. The ordinary
worker must learn a new language and culture, and will soon find out that his
wage — a fortune by his home standards — will not go far in his host country.
The worker must still pay for his food and lodgings before he can think about
sending anything extra home. Thus, as the years pass by, and the euphoria of the
promised land diminishes, it will be business as usual — or will it? Ian Rowbotham is a consultant
on taxation systems in Central
Europe and
on EU law at the law office of bpv Braun
Haškovcová.