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.

Zahari Varbanov

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.