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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Observations about the administration of EU Structural Funds (in CEE)

By Lucia Kurekova

The experience of several old(er) EU member states shows that the EU structural funds are an important developmental tool for the less developed parts of Europe. In relation to the administration of the EU funds, Slovakia has recently been dealing with the so called ‘notice board tender’ (nastenkovy tender) which is an appalling case of the fraud of EU structural funds along party cronyism lines connected to the Ministry of Development and Construction and the Slovak National Party. The scandal broke out in full speed already last October but it was not until Brussels blew the whistle loud enough, threatening to stop the flow of the EU funds to the country, that some political accountability and redress were taken. What is interesting about the notice board case is the fact that the irregularities were pointed out very early on by a member of the Monitoring Committee for the Operational Program Technical Assistance 2007-2013 in the framework of which the tender took place. Rather than discussing the controversiality of the politics of the above developments, I would like to talk about Monitoring Committees which is a mechanism that allows scrutinizing the ways of EU funds allocation, but due to various reasons is not used to its fullest potential.

Monitoring Committees (MCs) are organs that exist alongside each Operational Program (OP) in every EU member state. The existence of MCs is stipulated by the Council Regulation (EC) 1260/1999 which defines basis principles on which it should be organized. However, an individual Ministry that runs the OP and to that related MC (Managing Authority) has much discretion in respect to the composition of the MC, the execution of its roles and the level of internal democracy. Because the MC is required to have members from local and regional governments but also representatives from the civic sector, one of important potential side-effects of the MC lies in the establishment of partnership principle. The general idea behind the work of the MCs, however, is to create national-level mechanism of accountability and control over the management and distribution of EU structural funds. The MCs usually meet several times a year. The minutes from the meetings are normally available publicly on the web pages of particular OPs. In the case of ‘notice board’ scandal, the minutes from June 2008 provide evidence of how a representative of the NGO sector in the MC demanded more information about the tender and was silenced by the Chair.

As part of a research project conducted at CEU, I had a chance to inquire into how a particular MC which distributes finances from the European Social Fund in Slovakia functions and I would like to share with you a set of general findings. The research revealed that the perceptions about the functions of the MC and understanding of what ‘monitoring’ means differ widely among the members of that MC. It was interesting to discover that the members seem to have internalized some of the not necessarily transparent aspects of how the MC functioned, which included non-accessibility of the minutes from their meetings to public. Generally, the members were not in favor of revealing what the problems and deficiencies in the administration of the ESF were to the wider public, justifying their stand on the grounds of disinterest on the part of the public and/or incapability to understand complex processes of EU funds administration. For most of them, efficiency (allocating as much funds as possible) seemed to be more important than transparency. Surprisingly, however, this relative stealth co-existed with a great degree of internal critique in respect to the Managing Authority from the non-governmental side but also from the other ministries that were members of the MC.

For the non-governmental members, the presence in the MC has proven crucial in lobbying for the interests of the groups of society they were representing and for most of them, unfortunately, that is how far their input into the monitoring part went. Interestingly, some members pointed out that the rate of activity and substantive input of the representatives from non-governmental sector has decreased with time and is generally much lower in the second programming period than it was in the first one (2004-2006). Nevertheless, part of the NGO sector took their potential effect in MCs seriously and proactively addressed the government when the MCs for the new programming periods were being created. The government responded in a very lukewarm fashion to the proposals of NGO sector for independent nominations to the MC and in several cases the ministries selected members of (marginal) NGOs with favorable leaning towards the current Slovak government, proactively ‘preventing’ problems that might arise by too active scrutiny from the more critically tuned NGOs.

In sum, it seems that while the MCs have the potential to be a tool of effective control over the administration of the EU funds and to connect different levels of the society, it is not fully utilized towards making the EU funds work better, with greater transparency and more efficiently. It seems that in this instance clearer and more specific guidelines on the part of the EU regulation in respect to the rules of the composition of Monitoring Committees could actually serve well. Making Monitoring Committees real watchdogs over accountability, control and dialogue leading to greater efficiency and transparency should therefore become a real effort.

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Philosophy, hope and crisis

by Lucia Kurekova

If you felt some disillusionment or even depresion after reading a recent post in The Economist about the world economic crisis dubbed "A glimmer of hope", perhaps you will find appealing (or even inspiring) the opinion piece by Alain de Botton in the last week Financial Times issue in which he tells us what we can adopt from the Roman Stoic philosophy and Christianity when dealing with crisis. Enjoy both.

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G20 summit, crisis measures and what is in it for EU10

By Zdenek Kudrna

The G20 leaders agreed on their London summit to the following commitments:

Restore confidence, growth, and jobs by:

• fiscal expansion in 2009 of up to $5 trillion, plus $1 trillion package added at the summit;
• exceptional easing of monetary policy by central banks;
• recapitalisation, liquidity and impaired assets removal from banks;
• commitment to cooperation in order to return to trend growth;
• promise of credible exit strategies to ensure long-term fiscal sustainability and price stability of the above;
• commitment to refrain from competitive devaluations.

Repair the financial system to restore lending by:

• establishing a new Financial Stability Board (FSB) with a strengthened mandate including all G20 countries, Financial Stability Forum (FSF) members, Spain, and the European Commission;
• ensuring that the FSB collaborates with the IMF to provide early warning of macroeconomic and financial risks and the actions needed to address them;
• reshaping regulatory systems so that the authorities are able to identify and take account of macro-prudential risks;
• extending regulation and oversight to all systemically important financial institutions, instruments and markets, including systemically important hedge funds;
• endorsing and implementing the FSF’s strict new principles on pay and compensation and supporting sustainable compensation schemes;
• taking action, once recovery is assured, to improve the quality, quantity, and international consistency of capital in the banking system so that regulation prevents excessive leverage and require buffers of resources to be built up in good times;
• ending the era of banking secrecy by taking action against non-cooperative jurisdictions (on OECD black list), including tax havens to protect public finances and financial systems;
• calling on the accounting standard setters to work urgently with supervisors and regulators to improve standards on valuation and provisioning and achieve a single set of high-quality global accounting standards; and
• extending regulatory oversight and registration to Credit Rating Agencies to ensure they meet the international code of good practice, particularly to prevent unacceptable conflicts of interest.

Strengthen financial regulation to rebuild trust by:

• providing up to $750bn of new funds to IMF which shall provide it via Flexible Credit Line and reformed lending and conditionality framework;
• completing the next review of IMF voting quotas by January 2011 and ensure open, meritocratic selection of leadership for IMF and the World Bank;
• deliberating on a new global consensus desirable on the key values and principles that will promote sustainable economic activity.
• Promote global trade and investment and reject protectionism by:
• refraining from measures that in their consequences reduce trade and investment flows (even though they may be acceptable under the WTO rules);
• supporting trade financing with to $250 bn channeled through export credit agencies and multilateral development banks; and
• remaining committed to Doha Round of WTO negotiations.

Build an inclusive, fair, green, and sustainable recovery by:

• limit the impact of the crisis on poorest countries and people by sticking to pre-existing commitments for development and social financing and using additional $6 bn of IMF surplus and proceeds from gold sales to this end over next 2 to 3 years;
• channel the stimulus funding towards sustainable green projects as much as possible.

What is in it for EU10?

• The EU10 development models are crucially dependent on their connections to global economy via open trade and capital flows. Commitment to preserve the former and provide better institutional underpinnings for the latter must be welcome in EU10 capitals. EU10 economies are bound to benefit from increased demand for their exports that stimuli are likely to deliver, providing that their trading partners do not impose any "buy American" or "build in France" type of restrictions. This may be especially relevant in respect to stimuli focused on European car demand.
• Given that Hungary, Latvia and Romania depend for elementary macroeconomic stability on IMF lending, beefed up IMF is good news. It is likely that more countries will have to reach for a stand-by agreements. If they can do so under more creative and flexible conditions, then reforms of IMF practices are welcome.
• None of the EU10 economies is a member of G20 (although Czech Prime Minister was present in London as he holds the rotating EU presidency now). EU10 have limited role in global affairs and will have to adjust to whatever the new regulatory regime evolves. However, better regulation will definitely reduce the uncertainty stemming from gaping holes in the EU and global banking regulation that keeps host-country supervisors on the sidelines. In case of failures of foreign banks dominating EU10 financial sectors, the host country regulators, central banks and governments can only hope that their home-country counterparts, will succeed in restructuring and limit the spillover-effects on EU10 economies. Improvement of the international regulatory regime that would strengthen involvement of host-country authorities and define credible ex ante rules for burden sharing is better than current vagueness and uncertainty.

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5th CEU Graduate Conference in Social Sciences

PERG organizes panels on political economy at 5th CEU Graduate Conference in Social Sciences: “Old Challenges in a New Era: Development and Participation”

19-21 June, 2009
Central European University
Budapest, Hungary
www.ceu.hu/polscijournal


2009 represents a crucial year which is testing our ability to deal with substantial political and economic challenges. Bringing a continuation of the economic crisis, the deepening of the Israeli-Palestinian conflict, a new American administration, and a severe energy crisis for several of the EU members, this period is proven to be a problematic reality check for our policies and theories. Reality shows to be one more time ahead of scholars’ conceptualizations, politicians’ capabilities, and policy-makers’ solutions. With the many challenges ahead, we hope to generate interdisciplinary academic debates that tackle relevant topics in their fields of research. At the same time, we hope to connect different perspectives and approaches in order to produce high standard academic works.
We encourage graduate students and young faculty to contribute with papers and panel proposals on multiple topics. The working language of the conference is English.


Political Economy Research Group (PERG) at CEU has taken over the organization of the panels related to political economy, more specifically:

• Political economy of foreign direct investment
• Diversity between forms of capitalism in the world
• Political economy of the enlarged EU
• Political economy of development and poverty

For a list of all panels visit: www.ceu.hu/polscijournal

We particularly welcome panels proposed by scholars coming from different institutions. A panel can be proposed using the special panel form and should be accompanied by the titles and abstracts (maximum 300 words) of five papers included in the panel. Application forms can be downloaded from www.ceu.hu/polscijournal. All applications should be sent to gradconf2009@yahoo.com.

Deadlines:
- The deadline for panel proposals is April 1, 2009.
- The deadline for paper proposals is April 15, 2009.
- Accepted applicants will be notified by April 30, 2008.
- Applications after deadlines are not be considered.

The paper applications consist of:
- Completed application form (Including the abstract – max. 250 words)
- Short CV (maximum 2 pages)
- (Optional) Applicants for travel grant: Short letter for justification (up to 300 words)

The panel applications consist of:
- Completed application form
- Short CV of the panel chair (max. 2 pages). Panel chairs have the travel costs covered up to a certain amount.

Financial support:
There is no registration fee for qualified participants. Food and
accommodation are provided by the organizers. Applicants can apply for
a partial travel grant for the cheapest means of transportation. Those
intending to apply for a travel grant should write a short letter of
justification (up to 300 words).

NOTE: In case you do not receive confirmation within 72 hours please re-send your application.


For further inquiries about the conference please e-mail to: gradconf2009@yahoo.com.

For more details about PERG visit:

http://web2.ceu.hu/perg

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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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Roadmap for Czech tertiary education reform

By Katka Svickova

In January 2009, the Czech government adopted the White Book on Tertiary Education, a document which defines where the Czech tertiary education should be heading in the next ten to twenty years. It foresees a complete overhaul of the Czech tertiary system in terms of structure, governance and financing. In addition to their two traditional roles of education and research, tertiary education institutions shall play a third, equally important role: in the “production of knowledge and creation of the innovation potential of the society“.


The White Book promises to let fresh wind into the whole system that faces similar problems like systems in the whole Europe (also in my post from May 2008). However, given the low proportion of tertiary educated people in the population and comparably low spending on education overall, the overhaul is particularly pertinent in the Czech Republic. How to make tertiary education more open and accessible while at the same time not to undermine the quality of teaching? How to make tertiary education more sustainable financially? How to increase the volume and quality of research and its application in the economic sphere? These are just examples of questions that the White Book promises to answer. So what does it propose?

The Czech Republic is an EU leader in inequality of access to tertiary education by social background. The proposed solution focuses on lifting the disadvantages of a student´s social background on the one hand, and broadening of the educational offer on the other. The first goal should be achieved, above all, through a change in the financing of the tertiary system – instead of all public finances going directly to the educational institutions, part of them should be redirected to the students themselves in the form of educational grants and special educational loans. This shall allow students to pay tuition fees, enable students from socially disadvantaged families that cannot afford to support their child at university to cover his or her expenses, and bring more competition for students among tertiary education institutions. The second goal of broadening the educational offer should be achieved by a greater diversification of tertiary education and expanding considerably the two and three year long bachelor programs both in terms of capacity and variety of offer. The bachelor degrees should be practice- and profession oriented.

The White Book also correctly posits, though, that the solution to the problem of accessibility lies to a large extent outside the tertiary education institutions. Decreasing the selectivity and improving the quality of primary and secondary education are also of key importance, together with spreading the culture of overall appreciation of tertiary education and the aspirations for acquiring it in all groups of the society.

The diversification and the financing reform (increase in financing from both public and private sources, the latter predominantly in the form of tuition fees, but also better spending of these resources) shall go hand in hand with a change in governance of the tertiary sector towards more autonomy. This autonomy will also relate to internal structuring of the individual institutions and allocation of funds in research-related activities inside them. The White Book also seeks to eliminate barriers between the university research and the private sector whereby higher autonomy should create the necessary space for finding the best arrangements for individual tertiary institutions.

Of course, the brief summary above cannot go into all the complexities of the reforms outlined in the strategic document. And surely, the White Book does not address all needs of the tertiary sector in sufficient detail and thoroughness. What the document does, though, is a fair attempt at an analysis of the strengths and weaknesses of the current system, perceiving them in their complexity and inter-relatedness. The reform outlined on this basis reflects these complexities well.

In all, the document is well thought-through and well argued, taking clear positions e.g. on the above mentioned overhaul in the financing structure of tertiary education and introduction of tuition fees, on broadening of the bachelor level education and connecting it with practice, or on the concept of universities as places of “knowledge production” for the market. This poises it to become a subject of controversy among experts and politicians – and rightly so given the pertinence of the issue. It would be a pity if the current financial crisis pushed such a debate too much into the background. A high-quality and well-functioning educational system is not only one of the essential ingredients of a sustainable, diversified and sophisticated domestic economy but can also serve as an important social cushion. Tertiary educated people have generally better chances on the labor market and so far, the lay-offs in Central Europe caused by the crisis have taken their toll predominantly among the lower educated labor force (see one of my previous blog posts on this topic). Even though this might change as the crisis unfolds, tertiary education can significantly increase one´s chances of finding another job.

The problems that the Czech tertiary education is facing and the directions proposed in the White Book do not differ substantially from the situation and debates in other European Union countries. However, hidden in the text of the document is a precondition for undertaking and success of the reforms outlined: the existence of healthy and well-financed tertiary sector institutions in which teaching as well as basic research are at high level and independent of commercial activities. Reaching this standard alone is a daunting task: yet we all should wish and care about its successful completion.

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Reforming Slovak primary and secondary education. Or not really?

By Katka Svickova

After the summer holidays, the roughly 830 thousand Slovak pupils and secondary school students should return into a different school than the one they left at the end of June. At least this is what the new Law on Education passed by the Slovak Parliament in May 2008 envisages. And at least for a part of the pupils at first, as the law will be implemented gradually. However, what this new school will ultimately really be like, and how new it really will be, is uncertain as the real changes can only be seen in the classroom and in a few years at the earliest. In spite of this uncertainty (or perhaps facilitated by it), the reform triggered a strong critical reaction.



Main features of the Slovak educational reform

On paper, the reform goes with the freshest winds of change blowing across Europe: education should be based on new, creative approaches, explorative, project- and problem oriented methods, on own activity and participation of the pupils in their education, on new content of subjects stressing competences and capabilities rather than memorized knowledge. The number of pupils or students per class should be reduced. Schools are promised more autonomy in determining the content and the form of the subjects taught. Parents, pupils and representatives of employers´ organizations should obtain more space for direct participation in the governance of schools and in the creation of educational programs. Last but not least, the choice between schools should be free and so should be the offer of educational opportunities. So can the pupils be looking forward to an educational paradise unfolding over the next few years?

Not really, say the critics. While they agree that the educational reform is long overdue, most of them call for its further postponement – for reasons connected both to its content and to the capacity of the current system to implement it. Indeed, the reform was really fast, and there was little time for a thorough public debate: the draft was presented in September 2007, the law was passed in May 2008 and its implementation starts in September 2008. In other countries, a similar process took normally between 3 and 4 years. In the Czech Republic, for example, the educational reform, launched in September 2007, was more thoroughly debated in its preparation phase and schools got more than 2 years to get ready for it.

Given the almost astronomic speed of the reform in Slovakia, the question is how significant changes it indeed brings. And if it really signals a watershed change - breaking with the traditional centralised system oriented at pupils cramming and reproducing facts - why the scope for the discussion was deliberately so limited. Reform of the educational system turns almost all members of the society into stakeholders. One would hardly find a person today, who would doubt that education is of crucial importance for the development of the individual as well as the whole society. Yet even the short time allowed for public debate could hardly hide lack of interest from the public.

What is really in the magic box?

The critics, who raised their voice most loudly, pointed out that the new law is not a reform at all but rather a bundle of atomistic and often second-rate regulations. Moreover, its effect will be contrary to the one promised. Instdead of more autonomy, it will bring more centralization and control. Yes, individual schools should create their own educational programs. Yet according to the critics, the binding framework educational programs set by the Ministry of Education, prescribing obligatory content and conditions of education, do not give much space for schools to add their own content. As a representative of a secondary schools association said, the secondary schools will copy the ministerial framework educational programme to 95 %. And yes, the law proclaims more freedom of choice; yet at the same time, there will be always only one textbook available for free for individual subjects, approved by the Ministry. The freedom of choice of school will allegedly be limited by the power of the Ministry to set limits for the number of pupils in the individual study programs of secondary professional schools. The critics also say that the reform does not address a serious problem of inequality of chances in education. (However, besides a call for personal assistants and an improvement of the quality of elementary education, they also do not suggest any concrete proposals how to solve this complex problem). In all, despite the huge need for reform, the new law does not deviate too much from the old system.

Perhaps, the character of the law was best pronounced by the Minister of Education, Jan Mikolaj, when presenting its draft: „Do not search for liberal values in this reform, I openly say, I think that we are not in such a deep mess.“ But perhaps, the audience should look for nationalistic values instead. The Ministry of Education is in the hands of the Slovak National Party, whose leader, Jan Slota, is (in)famous for numerous anti-Hungarian statements. The Hungarian minority in Slovakia feels the limitation in the choice of schoolbooks as a measure against them. No wonder - after a statement by Slota who called Stephen, the Hungarian king and saint who is depicted on the cover of a current textbook used by the minority, “a Hungarian clown on a horse.“ In its introduction, the law also states that one of the aims of education is to enhance the respect to national traditions, values and state language by all citizens.

What can pupils expect when they return to school in September?

Based on the Czech experience, where educational reform, on paper very similar to the current Slovak one, has been implemented since last September, not much groundbreakingly new should be expected from the initial phases of the reform implementation. The Czech discussion shared some similarities with the Slovak one. Its conclusions and lessons learned from a year of implementation indicate that much more depends on the individual teachers and school directors than on what is written on paper in the Ministry. Many schools started experimenting with new methods and new teaching approaches much earlier than they were told by the law. Those which did not want to or could not do this, just produced and handed in the obligatory school programe, and (with a few cosmetic changes) continued their business as usual. This might be the case of many Slovak schools too. Since indeed, the teachers and schools got very little time to prepare for the changes.

Although the critics of the educational reform in Slovakia pointed to some pertinent (but at the moment unresolvable) issues, the attention left several other, equally if not more important ones, in the background. In particular the issue of school financing, governance and teachers´ remuneration (and the level of autonomy schools really have here), the education and motivation of teachers (ensuring that they also actually have the competences they are expected to develop among the pupils in the classroom), or active involvement of stakeholders (especially parents).

All worth, at least, of prospective blog posts ;)

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From brawn to brain-based economies? Welcome to the Knowledge and Skills section

Have you ever heard the term “knowledge-based economy?“ And about how much knowledge, ideas and skills matter for economic competitiveness - a precondition for economic growth and prosperity? If you are reading this blog you probably have, and probably more than once. Yet what is a knowledge-based economy really? And are the Central and Eastern European countries on their way from brawn-based to brain-based economies?

According to the World Bank’s Knowledge Economy Index 2007, Sweden is the most knowledge-based economy out of some 140 economies ranked. From the countries of Central and Eastern Europe (CEE), Slovenia occupies the 23rd rank, followed closely by Estonia (25th), Hungary (28th), and the Czech Republic (29th). Lithuania, Latvia, Poland and Slovakia did not make it into the first thirty, but are close. What is more, both these Baltic countries made an impressive jump since 1995, according to the index. Romania and Bulgaria rank only behind countries like Barbados, Chile or Malaysia. Slovakia has been the only country out of the CEEs which backslid. index definition, out of the CEEs, Slovenia has the most conducive environment for knowledge to be used effectively for economic (and social) development. This means that its economic and institutional regime provides incentives for efficient use of existing and new knowledge. It has an educated and skilled population that can create, share and use knowledge well. It has an efficient innovation system of firms, research centers, universities or consultants that can tap into the stock of global knowledge and assimilate and adapt it to local needs or create new knowledge. And, last but not least, it has information and communication technology that facilitates creation, dissemination and processing of information. Again, in the CEE environment.

Without going into the nitty-gritty of this index, I used it because it shows a variation in the performance of the countries in the region of my interest. It also indicates that there are interesting stories of change over time. In my blog entries, I would like to tell something more about these stories and about the individual elements of which the Knowledge Economy Index consists. I will write about the skill- and knowledge-formation policies in the countries of the Central and Eastern European region. These include education and R&D policies and reforms but also broader measures targeting the labor market and enterprise support, which foster skill acquisition and utilization in the economy.
However, (and at the same time), my understanding and interpretation of all the above-mentioned issues goes beyond the notion of a high skills economy. Rising productivity in the twenty-first century does not only depend on new technologies, research and development, or the level of funding devoted to education and training, but also on how these are embedded in ´institutional´ and social relations. In line with Brown et al (2001), therefore, I prefer and adopt the concept of high skill society.

Katka Svickova

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Join us at the CEU graduate conference

Join us at 4th CEU Graduate Conference in Social Sciences on

Global Transformations: Integration, Transition and Development

June 20-22, 2008 - CEU, Budapest, Hungary

PERG will organize two panels:

1. Political economy of foreign direct investment

2. Diversities of Central and Eastern European Capitalism

Application are closed, but if you are around in Budapest
you are welcome to join our panel

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