The Political Economy of Managed Migration by Georg Menz (book review)

by Lucia Kurekova

Georg Menz. The Political Economy of Managed Migration. New York: Oxford University Press, 2009. 298 pp. ISBN: 978-0-19-953388-6. Forthcoming in Acta Oeconomica.

Migration continues to represent an important academic and policy issue, not least due to its critical implications for political, economic, social, demographic and cultural aspects of life of individuals as well as societies. Before the 2008 world economic crisis loomed in, labor and skill shortages in booming European economies incited ‘war on talent’, forcing the European governments to redefine the basic principles of their migration policies. A recent book by Georg Menz “Political Economy of Managed Migration” addresses a topical issue of development of migration policy in the EU, both at the level of the countries and at the level of the European Union, proposing a paradigmatic shift towards ‘managed migration’. His analysis of a range of traditional immigration countries - Germany, France and the United Kingdom – together with new immigration states - Italy, Ireland and Poland is a significant contribution to migration studies, international relations and Europeanization literature and to the field of political economy. Both the novelty in respect to theoretical cross-fertilization of different fields and the breath and depth of the evidence that the author assembles and presents about the issue of active migration policy make the book an important social science read.

The first part of the book engages with explaining and connecting the rationale of the three analytical angles: political economy angle, non-state actors angle and multiple arenas (Europeanization) angle. Acknowledging that migration in the EU takes on both security and economic dimension, an important contention of the book is that the states have moved towards ‘managed migration’ of labor while simultaneously taking more restrictive stand towards other forms of migration. The most crucial novelty that the work offers is an account of the factors that determine different predilections of the states in respect to preferred types of migrants in terms of their skill levels and occupational profiles. Advocating the competitive state thesis which is behind the convergence towards more open national-level labor migration policies, the author argues that regulation of migration is strongly influenced by differences in the systems of political economy across countries, namely the nexus of production strategies of corporations, the sectoral composition of the economy and labor market regulation. The major differences between prototypical liberal market economies (LMEs) and coordinated market economies (CMEs) are embodied in the preferences of labor market institutional actors, namely the employers associations and unions embedded in different systems of political economy that will seek to influence governments to adopt labor migration policies reflecting the profile of migrants deemed complementary to national production strategies. Along these lines, the active migration policy is treated as a case study of Europeanization processes where multiple arenas in which the governments play the games can be powerfully established but which essentially provides multitude of evidence of the bottom-up Europeanization and parallel rather than sequenced timing of the games.

After outlining the argument and methodological choices in the introductory chapter, chapter two engages with past legacies and experiences of the countries which play an important role in defining migration policies currently. However, the author deems traditional typology of post-colonial versus guest worker legacies in major immigration countries outdated. He contends that from a political economy angle, the similarities in labor migration regulation across countries are remarkable already in the after-war economic boom period, giving compelling examples of how (French) Renault, (German) Mercedes Benz and (British) London Underground conducted extremely similar recruitment activities in Algeria, Turkey and Barbados respectively. His analysis at this stage, however, makes the reader wonder in which way managed migration of the 21-st century is “a new paradigm” as he repeatedly argues throughout the work. The author’s own propositions suggest that if an attempt is made to understand migration policies in the context of economic conditions and fundamentals, it becomes evident that specific external and internal economic pressures make all governments susceptible to cater to the needs of big employers and drivers of job creation and economic growth.

Third chapter, a core of the book, outlines the logic of his two main hypotheses related to his innovative framework: 1) the varieties of capitalism and skill hypothesis and 2) the sectoral hypothesis. Using the extended typology of Hancke et al (2007), he anticipates that gradual innovation and concentration on high value added production in CMEs and relative to that more radical innovation in LMEs will induce the CME economies to be interested in migrants with specific skills and the LME employers rather to seek migrants that have general and transferable skills which are able to respond more readily to flexible corporate strategies. Further, the employers in the mixed and the emerging market economies (MMEs and EMEs) will resemble more divided strategies and their preferences will reflect the model that they are approaching. Sectoral hypothesis further contends that the employers will take into account the relative size of component sectors of the economy (primary-secondary-tertiary) and the relative importance of these sectors will affect the profile of economic migrants deemed desirable by employer associations. He sets out to evidence the predictions in the next two chapters. The author, however, succeeds only partly in providing sufficient evidence and clarity to his argumentation, which is partly due to a great density of information that he provides on each country study. In addition, an endogeneity issue of the sectoral hypothesis in relation to the varieties of capitalism theory needs to be raised – different preponderance towards secondary versus tertiary sector between the types of political economies is part of the VoC framework, deeming a separate hypothesis related to the effect of the size of sectors on migration policies essentially redundant and nearly inseparable from the first one.

In the fourth chapter the author looks at the traditional immigration countries – Germany, France and the United Kingdom and offers a careful overview of how migration policy evolved overtime and across issues (labor, asylum seekers, and family reunion). He carefully traces the positions of interests groups and NGOs within the countries and maps the trajectories of more or less successful representation (depending on their organizational capacities, domestic actor coalitions and other issues) of their interests vis-à-vis home governments and potentially the EU level institutions through the governments. Chapter four carries out similar analysis for the new immigration countries: Ireland, Italy and Poland which was chosen as a representative case from among the new accession states. The chapter argues that organizational power of interest groups has critically shaped national strategies which, however, has been much less the case in the new accession countries where a strong tendency to adopt acquis communitaire in the area of migration and asylum policies, in spite of some clearly negative implications for these countries, has prevailed. Mimicking of policy choices has taken place more generally in the new immigration countries which, the author claims adding refinement to the argument, tend to look for policies and solutions to their neighbors which are structurally similar. In that respect, his contention that the new accession countries adopt measures similar to CME economies, namely Germany, is particularly interesting and potentially creates an interesting avenue for further enquiry.

The two chapters with country studies are critical to the testing of the book’s framework. While his carefully gathered material univocally confirms that economic perceptions of migration have prevailed, clearly due to the active input of employers and support of unions who have changed their no immigration stance, the most innovative parts of his theory are not evidenced sufficiently. While his argument goes that Germany (or France) should want to attract ‘specific’ skills while liberal market economies such as the UK (or Ireland) should frame policies which favor generic skills, it rather seems to be the case that while low-skilled immigration is left to be regulated by the market, the governments irrespective of its political economy fundamentals have converged on explicit policies towards bringing in highly skilled migrants, regardless of their skill specificity. This critique can be proposed not only because of the evident gap between the designed active migration policies and the success of their implementation (Germany but also the Czech Republic provide ample evidence of the policy ‘failure’) but also because the author failed to provide any hard data about the skill profiles of the incoming migrants into at least the prototypical cases of varieties of capitalism that he scrutinizes.

The evidence about the incoming migrants seems to be crucial in order to substantiate the major argument about different skill cohorts being attracted based on the underlying political economy structures and institutions of host countries. Leaving such evidence out shows that the author has committed an unfortunate fallacy in failing to acknowledge that migration is a dyadic relationship and that sending countries matter as much as the receiving countries in determining the profiles (skill, education) of incoming migrants. To be fair with the author, in this respect he can only be blamed for not advancing the boundaries of migration policy studies which tend to vastly underestimate both structural and institutional home country parameters in the analysis of migration patterns. Nevertheless, the overview of the structure of East-West after-accession migration provides ample evidence of the above claim and is in contradiction to the predictions of Menz’ framework. For example, evidence suggests that relative not only to domestic population but also to the other migrant groups, a bulk of EU8 migrants in the UK and Ireland have gained employment in secondary tier of economy (manufacturing industry and construction). Further, important differences in terms of migrant sectors of employment can be drawn if sending country is accounted for (CSO, 2008; Accession Monitoring Report, 2008; European Commission, 2008).

In sum, the weaknesses of Menz’s book are a corollary of his ambitious attempt to perhaps answer too many questions, at the expense of fleshing out his main arguments about the uniqueness of managed migration in the new millennium and about the implications of various political economy structures and institutions on the active migration policy sufficiently. First, while the evidence that the current world economic crisis is providing about migration policies supports his point about the crucial weight of ‘economics’, it also seems to elucidate that it is economic fundamentals such as growth and job creation rather than economic structures that are substantial determinants of the form and shape of migration policy. Second, it is somewhat paradoxical that while the author at one hand validly and interestingly brings the agency in through the role he assigns to labor market associations, he at the same time leaves it out via failing to attribute necessary attention to the account of the actual (rather than hypothesized) migrant profiles and to take seriously the push side of the migration equation. Third, while he contends that migration policy reveals that state and state policies continue to matter and that the state has not retreated but rather “a recast state with new priorities is playing role in engineering the construction of regulatory regimes ensuring a steady labor supply of desirable talent and skill portfolio” (p.37), his evidence partly suggest that state is hardly insulated from interest groups. This is particularly clear through his ample reference to dilemmas and even conflicts attached to allocating private but also public resources to retraining and upskilling domestic labor versus importing foreign labor which have important implications for future economic and social development of host (and home) countries.

Against this critique, however, the pioneering and innovative aspects of author’s research, partly introduced in his earlier contributions, must be fully acknowledged. The inter-disciplinary nature of the book as well as a serious attempt to conduct comparative work not only across (six!) cases but also overtime make the book everything that the migration discipline has been calling for. I have no doubt that the book is likely to entice rich scholarly as well as policy debate across different research areas that the author draws on and valuably contributes to.

References:
Accession Monitoring Report. 2008. May 2004 – December 2007. A Joint Online Report by the Home Office, Department for Work and Pensions, HM Revenue & Customs and Communities and Local Government.

CSO (Central Statistical Office). 2008. Census 2006. Non-Irish nationals living in Ireland. Government of Ireland. June.

European Commission. 2008. Employment in Europe 2008. DG Employment, Social Affairs and Equal Opportunities. Brussels.

Hancke, Bob, Martin Rhodes and Mark Thatcher. 2007. Beyond varieties of capitalism. Conflict, contradictions and complementarities in the European economy. Oxford: Oxford University Press.

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The complicated politics of free movement

by Chris Wright, guest author
PhD Candidate, Department of Politics and International Studies, University of Cambridge, United Kingdom, cflw2@cam.ac.uk

Public policy-making invariably involves weighing the potential benefits derived from anticipated policy outcomes against the possible costs. This is particularly the case with labour immigration, which depending on the attributes of immigrants and the labour requirements of receiving economies, can deliver substantial macroeconomic benefits to host countries. But expansionary labour immigration policies can also deliver a range of unanticipated outcomes, and tend to be electorally unpopular. The balancing act between economic benefits and political costs was particularly apparent in the deliberations of the 15 Western European member states of the European Union (‘the EU-15’) when 10 Central and Eastern Europe states joined the EU in 2004 and 2007. The EU-15 states were permitted to restrict nationals from the new member states from freely working in their labour markets for up to seven years, but the transitional measures used by EU-15 governments were mixed and varied.

On the accession of the eight states that joined in on 1 May 2004 – the ‘A8’ states – Ireland, Sweden and the United Kingdom were the only three EU-15 states to allow free movement from the outset. When the EU further enlarged three years later to include Bulgaria and Romania (the ‘A2’ states), only Sweden and Finland opened their labour markets from the date of accession.

There is no straightforward explanation for the varying responses of EU-15 states to free movement, but domestic political pressures and economic institutional factors – not to mention the policy positions of other member states (1)– certainly played a part. This is evident in the case of the UK, which was the only large member of the EU-15 to allow A8 nationals to freely work, but subsequently prevented A2 nationals from being able to do so.

The majoritarian nature of Westminster democracy meant that Blair government had few political constraints in implementing a policy of free movement in 2004. This was a privilege that would not have been offered by the political systems of many other EU-15 states, but perhaps meant that the Blair government was more shielded from any discernable political costs, which were no lesser than elsewhere.

Nonetheless, economic considerations had the greatest bearing over the Blair government’s decision to opt for a policy of free movement. Labour shortages arising from low unemployment fuelled by over a decade of sustained economic growth meant that the competition for jobs between A8 nationals and UK residents was likely to be less of a problem than in other EU-15 labour markets. But whereas most EU-15 governments saw free movement as having a potentially adverse economic impact, the Blair government justified its position in terms of the benefits that could be delivered.

When announcing the Blair government’s intention to allow A8 nationals to work freely in December 2002, Foreign Secretary Jack Straw said such a move was “in the UK’s interest” because it would “attract workers we need in key sectors”(2). By contrast, the language used by leaders of the EU-15 states that imposed restrictions was often couched in terms of the potential costs that would otherwise be imposed on their more protectively regulated labour markets. For instance, German Chancellor Gerhard Schröder said that domestic labour markets, particularly those in areas bordering the accession states, would not be able to accommodate a large inflow of workers (3).

This contrast was also evident in the way that interest groups and the broader community responded to the prospect of free movement. While business groups and trade unions were hostile to such a position in states such as Germany and Austria, in the UK these groups were supportive. And although public opinion and press coverage towards immigration was similarly ambivalent in the UK and Germany, concerns about labour market impact were more apparent in the latter (4).

This was not simply a question of job vacancies and unemployment; there are also structural explanations for why free movement was a more appealing prospect in the UK than elsewhere. Rates of unemployment and/or labour market inactivity were in fact lower in a number of other EU-15 states that adopted restrictive policies – such as Austria, Denmark, Luxembourg and the Netherlands – than in the UK (5). But the more flexible nature of the UK labour market meant that it was better placed to absorb more workers without an accompanying increase in unemployment (6).

Despite both adopting open labour market policies with similarly low levels of unemployment, over 200,000 A8 nationals came to work in the UK each year following enlargement, compared with only around 5,000 to Sweden (7). While strong demand for labour in the UK was one reason for these disparities (8), weaker labour market regulation enabled employers to hire migrant workers on relatively lower wages and conditions, particularly compared with Sweden, where much stronger regulation afforded no such scope (9).

Moreover, various ‘system effects’ of the UK’s economic institutions had eroded the capacity of the government and employers to respond to labour shortages through orthodox strategies such as increasing wages, investing in labour-saving technology or training resident workers. As Anderson and Ruhs have argued, the self-reinforcing nature of the UK’s lightly regulated labour markets meant that many employers have been ‘unable or unwilling to train’ new staff, in part due to ‘a fear of poaching, the rise of self-employment and the consequent importance attached to on-the-job training and learning by doing’(10).

The decision of EU-15 states that imposed barriers to A8 nationals in the form of restrictions or quotas can perhaps therefore be interpreted as protectionist measures consistent with the regulatory characteristics of their labour markets, whereas the UK’s liberal stance was compatible with its more laissez-faire approach to market regulation. But why then did the UK opt to restrict free movement to A2 workers when the EU further expanded in 2007? Essentially because this time around, the Blair government saw the potential political costs as being greater than the economic benefits that it expected to garner.

Before the 2004 enlargement, the government had commissioned a report to predict the likely size of the migration flows from the A8 states. The authors of the report estimated, that between 5,000 and 13,000 people would arrive per year, but strongly warned that because of a ‘lack of good data’, there was, ‘a large potential error’ in their analysis (11). Nonetheless, these estimations gained much media attention, and indeed turned out to be rather inaccurate. The underestimation made the Blair government much more cautious about free movement for Bulgarians and Romanians.

Opposition was more widespread and vocal to the prospect of free movement than it had been in 2004, and although the institutional capacity of the government to override this opposition was no weaker, the economic benefits were less obvious than they had been three years earlier. The Blair government saw the economic impact of A8 workers as positive and a reason to consider continuing a policy of free movement. But it believed that changes in the UK economy, and different attributes of Bulgarian and Romanian workers, meant that the economic case for opening the labour market once again was less compelling.

Ultimately, the response of the UK and other EU-15 governments shows the complex and often entangled considerations that inform labour immigration policy-making. While such decisions invariably involve balancing anticipated economic and political benefits and costs, these benefits and costs are more apparent in some circumstances than others.

Notes:
(1) Kvist, Jon (2004) ‘Does EU enlargement start a race to the bottom? Strategic interaction among EU member states in social policy’, Journal of European Social Policy, 14(3): 301-318
(2) Quoted in The Independent (2002) Castle, Stephen, ‘UK lifts bar on workers from new EU countries’, 11 December: 12
(3) Jileva, Elena (2002) ‘Visa and free movement of labour: The uneven imposition of the EU acquis on the accession states’, Journal of Ethnic and Migration Studies, 28(4): 694
(4) Boswell, Christina, Chou, Meng-Hsuan and Smith, Julie (2005) Reconciling Demand for Labour Migration with Public Concerns about Immigration: Germany and the United Kingdom, Anglo-German Foundation for the Study of Industrial Society: London, 27
(5) OECD (2005) Employment Outlook, Organisation for Economic Cooperation and Development: Paris, 237-239
(6) Somerville, Will and Sumption, Madeleine (2009a) Immigration and the labour market: Theory, evidence and policy, Equality and Human Rights Commission/Migration Policy Institute, available at: www.migrationpolicy.org/pubs/Immigration-and-the-Labour-Market.pdf, 13
(7) Drew, Catherine and Sriskandarajah, Dhananjayan (2007) ‘EU enlargement in 2007: No warm welcome for labor migrants’, Migration Information Source, 1 January, available at: www.migrationinformation.org/feature/display.cfm?ID=568
(8) Krings, Torben (2009) ‘A race to the bottom? Trade unions, EU enlargement and the free movement of labour’, European Journal of Industrial Relations, 15(1): 54
(9) Ruhs, Martin (2007) ‘Greasing the wheels of the flexible labour market: East Central European labour immigration in the United Kingdom’, in Smith-Bozek, Jen (ed) Labour Mobility in the European Union: New Members, New Challenges, Center for European Policy Analysis: Washington DC, 24
(10) Anderson, Bridget and Ruhs, Martin (2008) A need for migrant labour? The micro-level determinants of staff shortages and implications for a skills based immigration policy, Paper prepared for the Migration Advisory Committee, September, available at: www.ukba.home office.gov.uk/mac, 38-42
(11) Dustmann, Christian, Casanova, Maria, Fertig, Michael, Preston, Ian and Schmidt, Christop M. (2003) The impact of EU enlargement of migration flows, Home Office Online Report 25/03, available at: www.homeoffice.gov.uk/rds/pdfs2/rdsolr2503.pdf, 58

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Anti-crisis policies in the Czech Republic and Slovakia: what do they have in common?

By Lucia Kurekova and Katka Svickova

Czech Republic and Slovakia have diverged in their developmental paths and policy choices over the course of transition. In spite of common institutional legacy and very similar export profiles, sixteen years after separation, the policy choices frequently differ, perhaps not least because of opposing political orientations of their governing elites during different periods of transition. This is the case also today, when individual countries are facing the world economic downturn in their local shapes and forms: Slovakia is governed by social democratic/third way SMER in coalition with centre-right HZDS and nationalist SNS while the Czech Republic is headed by a centre-right government of Miroslav Topolanek. In spite of many similarities in how the crisis has been affecting these two countries, which are both heavily dependent on automotive industry, the remedies that the governments have passed are quite different.

The governments of both countries, however, shared a similar initial denial that the global crisis might have any significant effects on their domestic economies. In both countries, too, the opposition was coining a different message and suggesting their own recipes for a remedy. And in both countries, the governments have not been really listening to these voices. While the wounds to the economies of both countries have been caused by a deep dip of external demand for their exports of consumer durable goods, the reactions of both countries in the form of adopted anti-crises measures have been different. Is the reason for these different reactions an underlying difference in the state of these economies, as persuasively argued in the last week’s issue of the Economist, or is it purely an outcome of different ideological orientations and tastes of the governments steering the countries?

To summarize, the set of Czech anti-crisis measures has a strong pro-business flavor while the Slovak government has concentrated more on supporting the ‘ordinary citizens’ and keeping employment almost at any cost. Further, while the Czech measures are partially forward-looking and have a modernizing aspect (support for environmental measures, increase of R&D investment), this can hardly be said about any of the three Slovak anti-crisis packages. While the government of Robert Fico fiercely refuted any opposition calls to decrease further the 19% flat tax rate, the “tax package” that it passed in the end will make most of working Slovaks richer by about 10 euro per month via the raised tax deductible minimum. The Czech Republic, on the other hand, will not only reduce the corporate tax by another 2% in the next two years (only reaching, however, the current Slovak level of 19 %) but has also decreased social insurance deductions on salaries for employees by 1,5%. Instead of up to 2000 euro ‘srotovne’ (bonus on buying a new car and recycling an old car) passed after its success in Germany last week also in Slovakia, the Czech Republic decided to reduce the VAT for cars. Additional changes to the administrative and institutional business environment in the Czech Republic include an amendment of the insolvency law, faster depreciations, an abolishment of the obligation to pay an advance on income tax for self-employed and small enterprises (below 5 employees) or enhancing the provision of export loans to businesses and loan guarantees for SMEs. The overall goal is to reduce the cost of labor and thus, desirably, preserve employment and facilitate the cash-flow for businesses. Fairly enough, Slovakia passed a handful of pro-business oriented measures too, among them easier book-keeping for self-employed and SMEs, faster depreciations, a quicker return of VAT to businesses or state guarantees for loans (up to 55% of the loans for companies employing less than 100 people).

However, the core of Slovak anti-crisis tools is in its ‘social package’. The leitmotif of the government is ‘keeping employment at any price’, which is not surprising in the light of the Slovak structural (read “high and persistent”) unemployment nightmare that has been present during the whole transition. Yet the set of job creation measures passed by the government is not only extremely complicated, but there are fears that many of them are very corruption-prone and might lead to more – rather than less - red tape. Measures such as state help to employers who are experiencing serious operational problems to cover the compulsory health and social insurance payments for their employees for a maximum of 60 days, or intentions to subsidize new jobs for a period of 12 months up to 15% of the costs of a new job in Bratislava region and 30% in the other regions of Slovakia are only examples of ways where crony practices and potential waste of money are likely to loom in unless the system is properly monitored and the support is given to enterprises with good prospects of future growth and innovation. The law on the support for one-man businesses started during the crisis, for example, had to be amended shortly after it came into effect following cases of its misuse.

There are a few instances, however, where the countries seem to stand out in a positive way. Bratislava has been praised for keeping its investment incentives to foreign firms - and extending them to domestic investors. Czech Republic, on the other hand, plans to invest more into R&D, a field where nearly every country has been trying to save during the crisis. Both of these measures are forward-looking. And although they are unlikely to act as immediate fire-fighters against the slump, which is projected to be the deepest in the next moths, the countries will be grateful for them in the mid-term to long-term period.

To answer our question from the beginning on the cause of the divergence of policy reactions in the two countries, the color of the governing coalitions seems to explain a lot of the outlined differences. At the same time, however, Slovakia has a long-lasting experience with high unemployment to which the society is extremely sensitive. In addition, both countries will need to deal with the issue of migration, but from very different ends: the Czech Republic is trying to figure out how to send back some of its foreign labor that has served it well until now, while Slovakia should start monitoring who and in which proportions is coming back to the country from nearer (Czech Republic) or farther abroad (Britain and Ireland). Lastly, Slovakia, now an EMU member, is not spending any of its energy on defending its currency, while the Czech Republic is less lucky in its respect. But then – it has one more tool at hands in dealing with the crisis cycle and its exporters are more competitive than the Slovaks exporters.

This brief comparison of reactions to the domestic repercussions of the world economic crisis in two Central and Eastern economies also contributes to underline a broader trend of divergence in the development of the countries from the whole Central and Eastern European region, despite a shared legacy as centrally-planned economies.

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Migrants during the economic crisis: blessing or burden?

By Lucia Kurekova

It is no secret that in times of an economic downturn, such as the one we face today, migrant-based employment serves as a buffer in dealing with needed re-adjustments in the markets. When the working opportunities decline, migrants often decide to return home or governments implement policies the goal of which is to facilitate the return of migrant labor to home economies. A look at migration in the context of no or negative growth and severe lay-offs of cross-sectoral nature around the world invites us to re-think the nature of the possible impact of migrant employment both at sending and receiving economies. This issue is particularly topical in the frame of East-West migration in the EU. Already before the bad news of world-wide crisis fully broke through, media coverage increasingly commented on Polish – and other – migrants’ increased tendencies of return migration. Let us briefly think of whether or how the return of migrants is a blessing or a burden on the home economies of Central and Eastern Europe which are escaping the crisis no less than the rest of the advanced world.


In the countries where the out-migration was one of the factors behind the record downfalls of unemployment levels after the EU accession (such as Poland and Slovakia), the economic and social impact of returning migration is not entirely clear. It however certainly requires more policy attention than it seems to have attained so far. Preparing sets of economic crisis packages, the governments in negotiations with social partners and businesses understandably concentrate on ways of how to freeze the existing levels of employment and seem to think less of ways how to integrate the returning labor. Yet, if only half of the labor migrants who had gone to the West decide to come back, we are talking about thousands of people whose homes are in the more depressed regions of these countries where unemployment problem has never been alleviated even during the time of an economic boom. While the workers who had gone to the UK or Ireland are mostly young and single, those CEE migrants who had been working in the automotive sector in the neighboring CEE countries (Slovaks, Poles or Romanians in the Czech Republic or Hungary), tend to be middle aged males with families to support. Those, again, can be counted in thousands.

Hopes that the returning migrants will be a blessing to the economy are thus potentially false. Equally questionable are also the anticipations that they will easily integrate into home labor markets after their return as they have advanced their human capital while living and working abroad. This would have partly been the case had they returned in the period of acute labor shortages which was the most severe labor market problem merely a year ago and had we continued to live in economic prosperity and prospects of growth. At that time, the prospering automotive and electronics companies were tackling the lack of available labor force by importing workers from nearer or further abroad - Central Asia to Vietnam. Unsurprisingly, these ‘imported’ workers from non-EU countries were the first ones to feel the impact of the crisis in Central and Eastern Europe. Had then the today laid-off Slovak workers from Hungarian Audi or Czech Skoda wanted to work in the KIA factory near Zilina (for example), they would have been well paid and appreciated. Today they are and will remain redundant. The degree to which the young and well-educated migrants (see my older post) who are returning from Britain or Ireland will settle back well is equally questionable. While their skills seem to be more transferable, the type of working experience – gained in low skilled and low paid jobs - is unlikely to ease their labor market integration or give them comparative advantages in the competition for relatively scarce jobs during the time of economic crisis.

To know which form and type of job creation to support in order to handle the return migration is a difficult question. Returning migrants are a great potential, if for nothing else, then for being young and wanting to work – that is what they had been doing abroad. The avenues are hence several and would range from easing and supporting the self-employment opportunities to even establishing publicly funded knowledge-intensive centers which would provide prospects for the most skilled.

Providing capital and administratively easing avenues for establishment of own businesses is likely to create a fruitful ground for the young and relatively well-educated migrants who left for the West and gained there confidence and potentially sets of new business ideas. At the same time, the CEE countries should use the crisis as a window-of-opportunity for allowing the best of the best to find at home the infrastructure that will allow them to develop further their specific high-profile skills. There are many who have been employed in research and development segments of various industries abroad and will be at risk of loosing their positions as R&D is unlikely to be supported much during the crisis. That would mean creating assets for the time after the crisis. Whether we can – both mentally and financially - look that far head is a real challenge but perhaps it is an issue to have in mind once the most urgent crisis measures are in place.

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On Roma minority in East-Central Europe: From Political Correctedness to Balanced Employment Activation Approach

by Lucia Kurekova

Roma minority is among the most populous and the most problematic in the East-Central European countries (CEE). In spite of various work activation attempts and welfare tightening efforts implemented by the CEE governments in the near past, Roma population has largely remained out of the labor force. This has been so in spite of buoyant labor markets and vast labor shortages which were troubling domestic and foreign-owned employers. Logically, in the situation of high labor demand caused both by successful and rampant economic growth as well as by high rates of out-migration of human capital from CEE to the UK and Ireland, one would expect improved possibilities of employment even for those alienated from the labor markets during the periods prior to the EU accession, such as Roma.


While Roma are certainly among the disadvantaged (largely due to their educational and skill levels) and discouraged (not looking for work) workers, hard data about the extent and the character of their joblessness are scarce. Quantitative information about Roma in CEE which would be comparable to the majority population is nearly non-existent. This is so largely due to the push for political correctedness among the EU and other international authorities on the Roma issue which has in turn illegitimized the inquiries on Roma ethnicity in survey questions. Equally scarce is the estimation of the possible impact of various policies and labor market developments on Roma social inclusion or exclusion.

To fill the gap in data about their Roma citizens and to understand better the forms and channels of Roma labor market exclusion, the Czech government together with the World Bank carried a unique research project in order to estimate how Roma fare in the Czech labor market and to determine labor market barriers in their complexity. The Czech Roma World Bank study in my view breaks down a number of stereotypes, re-iterates some of the hunches which have not yet been robustly empirically confirmed, offers a complex assessment of the problem and – most importantly - a series of rather provocative policy recommendations.

On the basis of comprehensive survey carried out in the marginalized localities and targeted at the Roma, the Report finds – perhaps unsurprisingly – that Roma living in marginalized communities in the Czech Republic continue to face severe and multiple forms of labor market exclusion. The empirical findings put forward nuanced evidence on the multifaceted nature of Roma labor market marginalization. Starting with pointing out that Roma situation surpasses the categories of employment versus unemployment and moves to the arena of discouragement (not searching for work), the survey confirms that Roma suffer from low educational attainment. Leaving aside the reasons for this outcome, it has been found that majority of the Roma lack even basic functional and numerical literacy which in effect makes them absolutely unsuitable for the knowledge-biased new employment opportunities emerging in the CEE economies. These facts are complemented by strong gender and generational aspects to Roma labor market exclusion. While a good share of Roma men are employed (mostly in precarious and casual jobs), this is hardly the case for Roma women. Most strikingly, the survey results have revealed a strong generational dimension of the problem – there is a mounting evidence of the worsening of educational attainment and a significant downward mobility among Roma raised during transition.

Drawing Roma into education and into employment – the goals that the governments in the region have been trying to follow – scores again as a clear first-hand solution to the problem: the level of educational attainment, acquired skills and previous on-the-job experience predict well the success of Roma on the Czech labor market. In the Czech case, literacy and numeracy skills increase the probability of employment by a factor of two. If we seem to know where the solutions lie, the question emerges why have the attempts seen only very limited success so far?

The World Bank suggests that the culprit should be sought in (lack of) the quality and targetedness of the policy interventions aimed at Roma. To be precise, the limitations stem from the fact that the policies and approaches aimed at employment activation and labor market inclusion have not been sufficiently aimed at Roma. The policies have failed to recognize multifaceted nature of their distance from the labor market (lack of skills, welfare trap, heavy indebtedness, mismatch between jobs and skills, other labor market barriers) and to individualize the employment services. Welfare adjustments and public works program have not proven effective in providing longer-term solutions and bringing Roma out of poverty trap into labor market. The World Bank calls for a more balanced policy activation approach based not only on the responsibilities of job seekers but also on enhanced performance of the Labor Offices which need to focus on client profiling, integration of services in order to address multiple disadvantages, more culturally sensitive provisions and the introduction of performance measurement and evaluation of public servants. The policy adjustments further call for an enlarged partnership with private and NGO sectors and the enhanced focus on the next generation of Roma youth.

The fact that the recommendations coincide both in timing and in content with the basic principles and interests of the EU structural funds allocation is very good news for the CEE governments.

Reference:
Czech Republic: Improving Employment Chances of the Roma. Report No. 46120 CZ, The World Bank. October 2008.

Read more on On Roma minority in East-Central Europe: From Political Correctedness to Balanced Employment Activation Approach

'Return Ticket to Dublin Please'

by Colm Kelly, Ireland (PERG blog guest author)

From my experiences working in two major Financial Institutions, which are primarily involved in the funds industry, I have noticed a rapidly growing number of vacancies are being filled by Central European Immigrants. The majority of whom come from Poland with the remainder hailing from countries like Hungary, Lithuania, Slovakia and the Czech Republic. From my view point there are three main factors in the influx of CEE workers:

Firstly, financial companies based in Ireland are made up largely of American and Japanese firms which enter the European markets at the place of least barriers. Ireland provided least barriers to entry approx. 15 years ago through substantial tax breaks/incentives and a highly educated and young workforce. This highly educated workforce is now also highly paid and such companies now seek other opportunities to minimise costs and first on the list is to relocate. Relocate where though? China? Too far removed from their market place. Australasia? Already possesses a fully developed financial services industry and wages will provide a huge problem. So what about Central Europe? Relatively low wages. Good infrastructure. Close to the target market and also possesses a very highly skilled and educated workforce. So what is the best way to kick-start the transition? Attract the target CEE workforce to your current location, allowing them to receive the perfect on the job training while preparing the company for a move to CEE.

This leads to the method of attraction, the second reason. My current employers, the global market leader, selected a target demographic and advertised heavily in local and national newspapers and also targeted university graduates. By offering good wages and helping with accommodation costs they attracted a large group of Polish recruits which were brought over to the Irish office and settled into the working environment with ease, largely due to their excellent grasp on the English language and because of their strong work ethic.

What lead to their easy integration into the Irish workforce was the third reason. The governments ’open door’ policy allowed the importation of EU8 workers without any restrictions or limitations. It was quite literally a ’help yourselves’ policy. Whereas other immigrants, Nigerians for example, had to apply for visa’s and re-entry visa’s anytime they’d like to return home for a holiday, the CEE workforce were free to come and go as they pleased without restriction.

Other factors which helped promote the influx include, word of mouth, a 100,000 strong Polish community which has fully integrated into Irish everyday life and the opportunity for CEE immigrants to enjoy a high standard of living with many opportunities to discover other European cities through quick and easy local airlines. As more and more Polish workers arrived and integrated into Irish life, word would spread back home and would also filter through other countries such as Lithuania. About 3 years after the initial influx of Polish workers, other nationalities started arriving in greater numbers. I now work in a newly acquired company which is made up of 50% CEE workers, all hailing in equal numbers from all of the above named countries. From many conversations with these workers, they all have common reasons for migrating to Ireland. The opportunity to earn a higher wage and save enough to return to their home countries with a sufficient nest-egg. The lifestyle played a major part in their choice of destination with a solid CEE base community now living and working in Dublin, many immigrants find it easy to settle into life over here.

So what does this mean for us Irish? Well in the eyes of our employers we have now become a highly educated but also highly overpaid workforce. While I have seen no restriction in the progression of immigrants up the corporate ladder, most have not been here long enough to have climbed very far so now is the ideal time for these foreign companies to relocate as wage ‘cut backs‘ in high positions are now possible. By chance, my company just happened to be building a new European base in Poland over the last 3 years which has just recently opened and a large portion of the Irish based work and Polish workforce have been redeployed to Krakow. The global recession has also timed itself perfectly to allow such a company to justify the move to its Irish hosts, who are among the worst hit by the credit crisis and housing market collapse. This is routine business strategy for a global player though and it was our turn to play our part as grateful hosts for ten or so years and to now accept our fate. Now I believe CEE states will play the very same role as we did and hopefully they will last longer than we did.

Read more on 'Return Ticket to Dublin Please'

Nine “Truths” about Central European Migrants or "Who they are and how they fare?"

by Lucia Kurekova

Not much attention has been given to unraveling the backgrounds of the EU8 migrants in Britain and Ireland, the two countries which attracted the most labor from the new accession states. While the magnitude of flows from EU8 and the disputes about the impact of these flows on the labor markets of host countries has generated much new research, the investigations remain to work with aggregate categories. This in essence means that most of the knowledge we have about who the Central European migrants are and how they fare at the labor markets exists in the aggregate form for all EU8 countries together. Hence, while we cannot really establish whether or how are the Czech migrants different from the Slovak migrants, here is what we know about them as a group from the transition economies so far:


1. A great majority of all EU8 migrants are between the age of 18 and 35.

2. Male migrants slightly prevail over female migrants.

3. Nearly two thirds of migrants, when registering, claim that they do not intend to stay (in the UK) longer than 3 months.

4. Most frequent sectors of employment for EU8 migrants (in the UK economy) are: administration; hospitality and catering; agriculture; manufacturing; and food/fish/meat processing.

5. EU8 migrants earn the least relative to other migrant groups (in the UK).

6. EU8 migrants are on average the most educated relative to other migrant groups (in the UK).

7. EU8 migrants have not been entering the host country economy in order to succumb to the welfare system.

8. The social and wage mobility of EU8 migrants seems to be so far very low.

9. The success of EU8 migrants is strongly defined by the knowledge of English language.


If you come from any of the EU8 countries or happen to be living in one of the host countries, these facts are perhaps not much of a surprise to you (if they are, please let me know). Nevertheless, all together - as they are and if we are to believe them - they seem to point to a number of failures. Among other things, they raise a series of questions about the quality of education in ex-transition economies, about the ability of home governments and markets to provide opportunities which would allow freshly educated teachers to teach in Presov (eastern Slovakia) rather than serve beer in Cardiff as well as about the ability of host governments and markets to use ‘well’ the human capital they have at hand. Still, the story is clearly more complicated and definitely more interesting once we look behind the dry numbers and facts. For that I recommend the post of my guest writer, Colm Kelly from Ireland.

Data based on:
Accession Monitoring Report. May 2004 – June 2008. A Joint Online Report by the Home Office, Department for Work and Pensions, HM Revenue & Customs and Communities and Local Government, June 2008.

Pollard, Naomi, Maria Latorre and Dhananjayan Sriskandarajah. “Floodgates or turnstiles? Post-enlargement migration flows to (and from) the UK.” Institute for Public Policy Research. April 2008.

Drinkwater, Stephen, John Eade and Michal Garapich. “Earnings nad Migration Strategies of Polish and Other Post-Enlargement Migrants to the UK”. Paper prepared for the presentation at the European Ecnomics and Finance Society Annual Conference, Sofia, May 31 – June 3, 2007.

Read more on Nine “Truths” about Central European Migrants or "Who they are and how they fare?"

Talent on the move : Welcome to EU Migration section

If you are a young Central European, there is a high chance that you have worked abroad, perhaps even higher than the chance that you have worked in your home country. If you are a young Pole, Slovak, Latvian and Lithuanian, the chances that I am right in my guess are much higher than if you are Czech, Slovenian, Hungarian or Estonian. Contrary to traditional concept of migrant, a young Central European migrant tends to stay and work abroad short-term and temporarily. And in spite of relatively good education – most of the time higher secondary or tertiary – tends to get employed in low skilled, low-qualified, or “3D” (dirty, dangerous and dull) jobs.

Why do (some) people move to work abroad - that is - what are the causes of migration – is a question which has occupied academics and policy-makers already for few decades, most of the scholarship being developed on the case of the US. Then, once we (somewhat) understand the causes, a further pressing question to ask is one of the effects of migration, both on host and home countries and communities. Clearly, understanding the causes can better inform us about the effects and it can also help us to understand why – still – majority of people in the world and in the EU does not move. These will be the issues discussed at this blog, looked at from various angles in order to understand what exactly is going on in the EU27 mobility-wise, how to estimate the magnitude, under what conditions to worry or to rejoice of the dynamics we see, which benefits and which problems have we already reaped and what have the firms, individuals and governments been doing and plan to do about it. The lens of my enquiries will come from and will be set on the region of Central and Eastern Europe, which in spite of the ‘demise of transition’ keeps posing puzzles and challenges for the theories developed elsewhere.

So, if you are interested to learn more about the role that Central and Eastern Europe has been playing in the global war on talent (note this down: a catch phrase of this and the coming eras!), why do Slovaks migrate and Czechs much less so, how to understand the role of industrial, education or social policy played out in the context of (not-only) post-EU enlargement migration flows, and about many other issues, please keep coming back. I will offer a cross-country and cross-discipline approach, in a language accessible to everyone (yes, even to economists :)

Lucia Kurekova

Read more on Talent on the move : Welcome to EU Migration section