Where is the Polish plumber? Myth and reality on immigrant flood from the East Page ( 81,9 KB )

 

With extension of EU to East, an invasion of workers from new member states was feared. What has actually happened?

  The reference to the «Polish plumber» came to the fore during the French campaign on the European Constitution. It reflected the fear that a wave of people from the new member states of the European Union (EU) from Central and Eastern Europe would take jobs away from nationals of the 15 countries making up the EU before the extension coming into force on May 1, 2004.

  This fear has come about every time a relatively less prosperous state has joined the EU, as in the case of Spain and Portugal in 1986. The fact that in the case of Spain, to cite a relevant example, there was no significant movement of workers was due, according to those who are in favour of establishing some restrictive mechanism on the free circulation of persons, to the fact that Spain’s per capita income level at that time stood at two-thirds of the EU average. Now, the new member states as a whole scarcely reach 40% of that average.

  This reasoning ended up led to all the member states of the EU-15, with the exception of the United Kingdom, Sweden and Ireland, opting to restrict the free circulation of workers during a transition period which, if fully applied, could last over a period of 7 years up to 2011. Is this fear and restriction based on objective reality? Is there indeed a flood of immigrants taking place from Central and Eastern Europe to those countries where there are no restrictions? Are they taking jobs away from national workers? Are they pushing wages down in the countries that accept them?

Flow of immigrants

  To answer these questions calls for prudence in using the few statistics available, statistics which were not specially conceived for recording those flows. Of the three member states to which the new European citizens may freely immigrate, the British case is the one that is of most interest, both because of its economic size and the fact that it has precisely introduced a specific permit to control worker immigration from the new member states. As a result, workers from Slovakia, Slovenia, Estonia, Hungary, Latvia, Lithuania, Czech Republic and Poland (hereinafter called the EU-8) must register in the Worker Registration Scheme (WRS) during the first 30 days of occupying a job. According to available figures, between May 2004 and September 2005, some 290,000 workers from the EU-8 settled in the United Kingdom.

  This figure must be taken with some caution as it is upwardly biased. A considerable number of EU-8 nationals who were already living in the United Kingdom before May 1, 2004 opted to register in the WRS. According to some estimates, this group could represent a third of the total, that is 100,000 persons. In any case, even taking the official figure as it is, this is a group which scarcely represents 0.4% of the British population of working age. In fact, in 2004, the first year of the extension, the number of Polish plumbers in the United Kingdom was a mere 95 persons. It does not seem that the anti-European slogan has any bearing on reality or that British plumbers are seriously threatened.

  Nevertheless, before the extension, the government put out forecasts for the entry of workers from the EU-8 that were substantially lower, of the order of 15,000 persons a year. These estimates were surely a combination of wishful thinking intended to ease acceptance of a socially controversial measure and economic analyses available at that time. In most cases, available estimates gave a figure of the order of 200,000 immigrants a year for the whole of the EU-15 in the early years following the extension which would then drop substantially with the trend finally turning around over the long term. One of the factors that could explain the error in the forecasts is that the setting of restrictions in practically all cases of the EU-15 has diverted immigration to those few states with no restrictions.

  This has brought about a lively debate in the United Kingdom, especially on the need now to establish restrictions on the free movement of workers from those states which will make up the EU in the future. Specifically, both social spokespersons and politicians are suggesting the application of measures to limit the entry of workers from Romania and Bulgaria which are to join the EU in 2007.

  Finally, and here we refer to the possible flood of immigrants, the conclusion to be reached is that indeed the arrival of persons has been higher than forecast but, if we take into consideration the size of the British economy, it does not seem that there are any significant problems in absorbing those workers.

Taking away jobs

  The second fear, namely the replacing of national labour by new recent arrivals, is quickly discounted if we analyze the British case. If the replacement of one group by the other had taken place, the employment rate of the group of workers from the EU-8 in the United Kingdom would have shown an increase whereas that for British nationals would have decreased. According to an analysis by Portes and French there has indeed been an improvement in the employment rate of workers from the EU-8 in the United Kingdom since the opening of the borders with the figure going from 60% to 75% approximately.(1) Nevertheless, this improvement does not appear to have taken place at the cost of British workers given that in this group the employment rate has remained at 75% since the extension.

  There are two explanations for this phenomenon. First of all, the EU-8 workers are settling into sectors where there is a scarcity of labour. A second factor is that the work qualifications of the immigrants is precisely that suitable for the labour markets of the receiving countries. It is noted that labour immigration from countries of Central and Eastern Europe is clearly complementary in nature and not a substitute for national labour.

Wages

  Finally, the third case of fear, that immigration would depress wages, has not been proven, according to available reports. According to the study by Portes and French quoted earlier, average wages in the British economy have continued to grow at the rate they showed before May 2004. Indeed, in the farm sector, where a large part of employment of workers from the EU-8 is concentrated, we note a growth trend in wages. In fact, these are logical results if we take into account that, as mentioned earlier, the arrival of immigrant workers from Central and Eastern Europe has been relatively small and is not a matter of workers who displace but of workers who complement. For this reason, the possible pressure on wages must also be moderate or nil. In any case, both in terms of the effect on employment and on wages, empirical analysis is complex, given that it is very difficult to evaluate how these variables may have changed in the absence of immigration.

  Up to what point can these conclusions based on the British case be extrapolated to the countries of the European Union as a whole? Available evidence, while limited, would suggest that most of the above results hold for the other member states. According to a recent study by the European Commission, the hypothesis of the complementary nature of immigrant workers and the local labour force holds up at the level of distribution by sector and skills.(2) As in the British case, this is a matter of coherent results involving a relatively moderate movement of persons.

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