What is free movement of workers?
It is one of the fundamental freedoms of the EU. It includes the right of every EU citizen to move freely to another Member State and:
- look for a job in another EU country;
- work there without needing a work permit;
- reside there for that purpose with their family members;
- stay there even after employment has finished;
- enjoy equal treatment with nationals in access to employment, working conditions and all other social and tax advantages.
What are transitional arrangements on the free movement of workers?
Transitional arrangements are temporary derogations from EU rules on free access of Croatian workers to the labour markets of the other Member States. They have been agreed in the Accession Treaty of Croatia to enable EU-27 Member States to gradually introduce free movement for workers over a seven-year period.
The transitional restrictions typically consist in requirement of a work permit.
The restrictions only apply to workers: they do not apply to the self-employed persons and companies providing services (on the basis of the Accession Treaty only Austria and Germany can apply restrictions to workers posted from Croatia by such companies). Nor do they restrict the rights to travel and live in another Member State.
How long can the restrictions last?
There are three phases (2+3+2 years) and during each phase different conditions apply:
– The first two years phase (1.7.2013 – 30.6.2015): the national law of Member States regulates the access of workers from Croatia to their labour markets; Member States can open the labour markets or keep their restrictions. This phase ends at the end of June 2015.
– The second phase will last three years (1.7.2015 - 30.6.2018): those Member States that want to continue applying restrictions in that phase must notify the Commission beforehand, otherwise EU law granting free movement of workers applies.
– The last two year phase (1.7.2018 – 30.6.2020): a Member State may maintain restrictions only in the event of serious disturbances of its labour market, or a threat of such disturbances, and after notifying the Commission.
Member States may open their labour markets at any stage but must end all restrictions at the latest at the end of the seven year period, i.e. 30 June 2020.
What does the report contain?
The Commission's report provides information on the legal basis for transitional arrangements; statistical information on mobility flows from Croatia and their possible evolution; and an analysis of their potential economic, labour market and social impacts in EU-27 Member States and in Croatia.
Why is it published now?
The Accession Act states that before the end of the first two year phase since the accession (i.e. by 30.6.2015) the Council must review the functioning of the transitional arrangements on the basis of a Commission report. The report provides the relevant facts and figures aiming to help Member States review the functioning of the transitional arrangements and take a decision if they want to maintain or lift the restrictions.
How many workers from Croatia are there in EU-27 countries?
According to the EU-Labour Force Survey, in 2014 around 229,000 economically active Croatian citizens were residing in the EU-27 countries, where they represented around 0.1% of the total labour force. This share was higher, though still relatively low, in Austria (1.0%), Germany (0.4%) and Slovenia (0.2%). In all other countries, it was below 0.05% or too small to be reliably determined.
How has mobility from Croatia changed after accession?
Croatian workers' mobility after accession has been small in relation to the size of population and labour force of receiving countries and the population of the EU, though significant from Croatia's perspective. There is also tentative evidence of increasing activity rate among those who were already abroad.
Despite the restrictions there are signs of increasing mobility to traditional destination Member States, whichalready host large number of Croatians:
- in Austria, the Croatian population increased by 3,340 people (or +6%) between 2013 and 2014, employment of Croatian nationals increased by 2,000 (or +10%) to reach 22,450 in the same period;
- in Germany, the Croatian population increased by 22,800 people (or +10%) between 2014 and 2015, and employment of Croatian nationals increased by 10,000 (or +10%) from June 2013 to June 2014, to reach 108,120;
- in Italy and Slovenia, the Croatian population also increases but at a smaller pace and there is no evidence of a rise in the number of those in employment;
- In the UK the inflows of Croatian nationals remained limited (+ 330 applications for a national insurance number in 2014 than in 2013).
These Member States together covered approximately 95% of all mobile Croatian citizens in the EU.
Among the Member States that opened their labour markets, the inflows of Croatian workers remain limited in both absolute and relative terms. The clearest increase is seen in Ireland (2091 new registrations in 2014 compared to 486 in 2013), while numbers also went up in Sweden (net increase in Croatian residents of 857 in 2014) and the Czech Republic.
What has been the impact of transitional arrangements on mobility flows from Croatia?
The data suggest that there has not been until now any major diversion of the flows due to the differences in access to the labour market across EU-27 countries, as most post-accession movers from Croatia went to traditional destination countries (Austria, Germany and Italy).
Restrictions to salaried employment may have limited effect on the total flow of workers as they do not cover self-employment or, as a rule, posting of workers. For example, in Austria, the number of self-employed Croatians increased quickly between 2013 and 2014 (+772 persons or +56%), in particular compared to those being employees (+2,023 persons or +10%).
How is the mobility from Croatia likely to evolve in the future?
Future potential flows of Croatian workers to other EU Member States are likely to be small, at least in percentage of the labour force of the EU and in most destination countries.
Forecasts of net migration from Croatia to EU-27 over 2013-2019 indicate that it would range between +166,000 (a scenario where existing restrictions are maintained) and +217,000 (if all Member States opened their labour market on 1 July 2015). This means, respectively, between 0.03% and 0.04% of the destination countries’ population. Some destination countries will get a larger than average net migration from Croatia as a share of their population but this ratio will be much below 1%. In the ‘maximum scenario’, it will reach 0.55% in Austria, 0.34% in Slovenia and 0.13% in Germany.
Finally, the forecasts indicate that the difference between the restrictions remaining in place and them being lifted from July 2015 amounts overall to +51,000 Croatian citizens or just 0.01% of the EU-27 population.
In any case future inflows of Croatia workers are unlikely to lead to labour market disturbances, even in the main destinations (Germany, Austria and Italy).
What is the labour market situation of the Croatian citizens who recently moved to EU-27 countries?
In 2014, the employment rate of the recent mobile Croatians of working-age was high (71.3%), in particular compared to the average employment rate across the EU-27 (65.0%). This confirms that workers from Croatia moved to EU-27 mainly in order to take up employment and are likely to bring a positive economic contribution.
Croatian citizens working in the EU tend to work predominantly in manufacturing (20%), construction (12.7%) and human health and social work (11.9%). They are also more present in the sectors of accommodation and food services activities (10.4%) and administrative and support services activities (7.6%).
What is the profile of mobile Croatian workers in the EU in terms of age, gender and education?
Of the Croatians that recently moved to EU-27, 87% were of working age (15-64) compared to an average of 66 % of all those living in EU-27. They are rather young, as 62% of them are aged 15-34 compared to only 37% in the EU-27 working-age population. They are therefore much more likely to be in the economically productive period of their lives than the native population.
As for the gender breakdown, there is a similar share of women among the recent movers from Croatia (52 %) as in the average in the working-age population of EU-27 (50 %).
Only around 19% of the recent movers from Croatia had in 2014 a low level of education, compared to around 27% in the EU-27 working-age population, while the share of those having a high level of education was somewhat smaller (respectively 19% and 26%).
What has been the impact of the inflows of workers for the destination countries?
The characteristics of recent movers from Croatia show that they moved to the EU-27 mainly in order to take employment and are therefore likely to bring a positive economic contribution. Movers from Croatia are predominantly of working-age and younger than the average of citizens in destination countries, have a relatively good level of education and are more likely to be in employment. These are the characteristics that they have in common with mobile EU-27 citizens in general and post-2004 enlargement movers in particular, for which the economic and labour market impact in destination countries has been assessed in most studies to be overall positive.
Mobile EU workers have enabled the host countries’ economies toimprove the skill mix, as they work mainly in sectors and occupations where labour shortages need to be filled. The effect of post-enlargement mobility on the unemployment rate and wages in the destination countries has been rather marginal, at least in the long-run. In terms of the fiscal impact of mobile EU citizens, studies have shown that it is often neutral and in most cases can be said to be positive. Studies are available on the Access of mobile EU citizens to social protection, on the impact on the Member States' social security systems of the entitlements of non-active intra-EU migrants and on the Fiscal Impact of EU Migrants in Austria, Germany, the Netherlands and the UK.
What has been the impact of increased workers' mobility on Croatia? Is there not a risk of brain drain?
The extent of the outflows in the last decade has been relatively modest. Nevertheless, mobility flows have increased since accession and mobility of young and well-educated people could worsen the demographic prospects and the growth potential of Croatia. Indeed, recent movers from Croatia are younger than the average working-age population of Croatia and tertiary graduates are slightly overrepresented.
The evidence on the impact of emigration on Croatia thus far does not indicate that it caused skills shortages in certain sectors.
Whilst efforts are needed to ensure that the country retains and attracts the needed labour force, labour mobility in the EU is a significant economic adjustment mechanism. The potential benefits of people being employed in another Member State compared to remaining unemployed at home are also important.
One of the positive impacts of mobility of Croatian citizens on their country’s economy are remittances sent back home. Their net balance was as much as €702 million in 2013 or 1.6% of its GDP, the sixth largest ratio in the EU and the highest net remittances per person in the EU (almost 500 EUR per person residing in Croatia in 2013). There are some indications that remittances are mainly used for savings and investments. They also helped decrease the level, depth and severity of poverty in Croatia.
What are the conditions for Member States to maintain restrictions for workers from Croatia after 30.6.2015?
Member States may continue to restrict access to their labour markets after 30.06.2015 for the next three years only if they notify the Commission beforehand. That notification is the only condition. The Member State's decision to maintain restrictions is not subject to a review by the Commission or any other EU institution.
If a Member State does not notify its decision on 30.6.2015 at the latest, the EU law on free movement of workers will fully apply to workers from Croatia in that Member State (in other words, no restrictions will apply).
Which EU countries currently impose restrictions for workers from Croatia?
The 13 Member States applying restrictions are:
- The Netherlands
- United Kingdom
Croatia has imposed reciprocal restrictions on nationals of these Member States.