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SPEECH/11/227

Mr. László ANDOR

EU Commissioner responsible for Employment, Social Affairs and Inclusion

" Arbeitnehmerfreizügigkeit - Öffnung nach Osteuropa – Chance oder Risiko?"

Conference on Free Movement and the end of the transitional arrangements

Berlin, 30 March 2011

Minister,

State Secretary,

Ambassador,

Representatives of the Social Partners,

Ladies and gentlemen,

I am grateful for the opportunity to speak to you today. I want to thank the Bavarian Representation in Berlin for their kind and timely invitation – exactly one month before the transitional arrangements expire.

The freedom of movement for workers is a fundamental principle of the European Union. Together with the free movement of goods, services, and capital, it is a cornerstone of the Single Market, and has contributed to the success of the European project.

Nonetheless, this fundamental principle has been subject to restrictions during certain periods. Over the last seven years, the accession treaties made it possible to restrict the entry of workers from Member States that joined the Union in 2004 and 2007.

May I point out that what I am talking about here does not affect restrictions on workers from Bulgaria and Romania, which joined in 2007. Restrictions applying to them will continue until the 31 December 2013.

Until 1 May, freedom of movement for workers from EU-8 — the eight new members in Central and Eastern Europe that joined in 2004 — is subject to restrictions in Germany, Austria and (to a lower degree) in the United Kingdom, as this slide shows. On 1 May, that seven-year transitional period will finally expire.

Free movement and transitional arrangements

Ladies and gentlemen,

I realise that people here in Germany have mixed feelings about that date. In times of economic difficulty, calls for protectionism often resonate more strongly with the popular mood. And I know that, before the 2004 enlargement, the potential negative impact of free movement on the labour market and social situation of the Union’s then 15 Member States caused much concern.

The 10 countries that joined in 2004 had a combined population of 74 million, which increased the EU population by almost a fifth — 19% to be precise. The big differences in per capita income and labour market conditions in the ‘newer’ Member States — plus their geographical proximity — kindled fears of a massive surge in east-west labour flows.

But the data show that nationals from the 'newer' Member States account for only around 0.7% of the working-age population in the ‘older’ member countries. By contrast, non-EU nationals account for around 5% of the working-age population of the EU — a much higher percentage. So the overall influx into the ‘older’ Member States from the Member States that joined recently has been relatively limited.

Of course, the situation varies from one Member State to another. The United Kingdom and Ireland opened their labour markets to workers from the ‘newer’ member countries as from the date of accession, and had large inflows of people. In Germany the figures are around 1% for nationals from the 'newer' Member States, and almost 7% for non-EU nationals.

Over the last few years, the Commission has monitored the impact of enlargement. Our research highlights three major findings.

First, the overall economic impact of recent intra-EU mobility has on balance been positive, and has not led to serious disturbance of the labour market — even in Member States where there was a relatively large influx of workers.

Secondly, from 2004 to 2007, local workers’ wages continued to rise in both the countries of departure and those of destination. Moreover, before the economic crisis started, unemployment did not increase significantly after enlargement, but actually declined in many countries.

Thirdly, we need to remember that workers from the ‘newer’ Member States came to the countries of destination to work. They have made an important contribution by alleviating labour shortages in sectors and occupations where demand for labour was high and could not be met by national workers alone.

Another positive result has been the combating of undeclared work, because workers that can make use of the free movement integrate in the host labour markets in a legal way..

All in all, intra-EU labour mobility has been brought economic benefits for both the host countries and the EU as a whole.

Impact of crisis

Ladies and gentlemen,

So far I have not spoken about the impact of the crisis and how it has affected the flow of workers from the Member States which joined in 2004.

The financial crisis and the economic downturn have had a significant impact on economic activity and on the labour market.

Thankfully, we are seeing signs of recovery, though average EU unemployment remains high — at 9.6%, the latest figure available for February.

More worrying is the fact that recovery is uneven. Just look at this slide and compare the developments in Spain and in Poland. The Polish Prime Minister spoke of "Poland as the green economic island" at the Tripartite Social Summit last week in Brussels and I commend Poland for its success, Mr Ambassador.

Germany has weathered the employment crisis particularly well. It is one of the few countries where unemployment was stable in 2009 — at 7.5%, only 0.2 percentage points above the rate in 2008. In January this year, unemployment in Germany was down to 6.5% — not only the fifth lowest rate for the EU, and the lowest among the larger Member States, but also the lowest German rate since 1992.

These differences are a challenge for the EU as a whole, and I am happy to discuss our efforts to address this challenge including the famous Euro Plus Pact in our discussion later on.

Nevertheless, there is cause for optimism. Unemployment and employment expectations are fairly positive and job demand is increasing. Unfortunately many of these jobs are part-time or involve temporary contracts. This casts some doubt on the quality of the job recovery and highlights the uncertainty facing businesses.

There are some groups whose situation gives cause for concern. The job crisis has hit young people particularly hard, and their situation remains difficult. In November last year, unemployment among young people reached a peak of 21% across the EU.

It stands at less than 10% in only three countries — Germany, the Netherlands and Austria. Elsewhere it is dramatic: in the Baltic States, Ireland, Greece and Slovakia, unemployment among young people stands at 30% or above. And in Spain, it is more than 40%.

So while I do not want to belittle the problems facing young people in Germany, the situation here is undoubtedly much better than elsewhere.

Impact of free movement after 1 May

Ladies and gentlemen,

The key questions are: Is the opening a chance or a risk, as the organisers of this event ask us? What will happen after 1 May this year? Will there be a big surge in numbers of workers arriving from Eastern and Central Europe?

First, the issue is only relevant to Germany and Austria. In all other ‘older’ Member States, workers from the Eastern and Central European countries can already enter the labour market freely.

Secondly, since the 2004 enlargement, the number of people from the EU-8 Member States residing in Germany has increased only moderately. The number of working-age nationals of those countries residing in Germany rose from 250 000 in 2004 to 420 000 in 2007, and has stabilised at around 470 000 since 2009. It means that the potential influx into Germany from those countries has largely taken place already.

This is also confirmed by recent studies, which suggest that there will be no massive influx into Germany or Austria from the new members in Eastern and Central Europe.

Thirdly, there has been a significant rise in national per capita income, earnings and employment in the main Member States of departure in recent years and there is evidence that this is already dampening the incentive to seek work abroad.

Fourthly, and maybe most importantly, full labour mobility between Member States will in fact help to address the challenges and imbalances facing European and in particular the German labour market. Germany lacks engineers, master craftsmen, doctors and many more.

You can read it in the newspapers everyday that German employers currently struggle to fill vacancies because they cannot find people with the right skills. Not only does this highlight important skill shortages, but it also shows that there are persistent mismatches between the skills available and the needs of the German labour market.

In recent years, the labour market participation and employment rates of mobile workers have been higher than those of the overall population in both the countries of departure and those of destination.

Mobility is also highly valued by employers: studies show that more than 40% of employers attach importance to experience gained through studying and working abroad.

And yet, cross-border mobility is still a very minor phenomenon in the EU. Only 2.8% of EU working-age nationals reside in a Member State other than their home country.

We therefore need to remove the remaining barriers to occupational and geographical mobility. We need to give workers who want to make use of freedom of movement — and who are usually between 25 and 34 years old — the opportunity to do so. Germany is undertaking steps in this direction by approving legislation to recognize qualifications and degrees from foreign institutions, making it easier for foreign professionals to find work in Germany. But obstacles remain. I will discuss, for example, our proposal for the portability of supplementary pensions with Minister von der Leyen tomorrow.

At the same time we launch initiatives to better protect mobile workers. One of my strategic initiatives for 2011 is a directive to better enforce the Posting of Workers Directive, which will cover inter alia the prevention of abuse and address concerns regarding the exploitation of vulnerable workers and subcontracting chains. Another example is the EU Directive on temporary agency workers, which has to be fully transposed into national law by December this year. According to the Directive agency workers have to be treated equally as of day 1, unless Social Partners agree otherwise.

Ladies and Gentlemen,

You won't be surprised to hear my conclusion: The opening-up of the German labour markets will not lead to a dramatic increase in outflows from the Central and Eastern European Member States and is a great chance for your country !

After seven years, the transitional arrangements for workers from eight Member States in Eastern and Central Europe are close to expiring and the Commission considers they have fully met their purpose.

It is now time for the fundamental freedom of movement of workers to apply fully across the EU.

It offers a great opportunity for the German economy and for Germany generally, and one that needs to be grasped.

Es ist eine große Chance für Deutschland !

Vielen Dank !


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