Turning of the tide

Britain’s flood of cheap labour from the new member states is starting to dry up, and some regions are already seeing the economic fallout, reports Rumyana Vakarelska

Since the beginning of the year, large numbers of Poles and citizens from other new EU member countries have started to return home after several years working in the UK, Ireland and Germany. The turning of the tide has hit many small regional business or farms particularly hard: although the ever-improving economies of the new EU member states meant that workers were always expected to return home sooner or later, employers have been caught short, and are losing millions of pounds as they struggle to fill the vacancies.

In the UK, which together with Ireland and Sweden, was the only EU country to open its doors to workers from all the 2004 accession nations, eight per cent of employers have hired labour from these 10 countries plus Bulgaria and Romania, who joined in 2007, but were subject to tighter restrictions on worker mobility. Regions such as East Anglia, Kent and Scotland as well as towns such as Derby and Peterborough that have attracted large numbers of Poles are feeling the pinch: the number of Poles registering to work in the UK in 2007 dropped by 10 per cent compared to the previous year.

The numbers suggest that without making it easier for workers from other countries to stay and work – through improvements in their social conditions, better recognition of qualifications, etc. – then there are likely to be more gaps in the labour market in years to come. Yet changes are underway. The UK’s national union of horticultural workers has started lobbying for the removal of the new restrictions to the seasonal agricultural workers scheme (Saws) run by the UK border and immigration agency.

These changes allow access to Saws for citizens of Romania and Bulgaria only, but the weakening of the British economy has made the UK far less attractive to the two newest EU member states, and the agricultural sector is facing a shortfall of around 5000 workers – a gap that in the past would have been plugged by non-EU workers from Belarus and Ukraine, who are now no longer eligible. And while some 214,000 workers from new EU member states have applied to work in the UK, they are not interested in manual labour in the farming and construction sectors – the hardest hit by the returning Poles. Other sectors experiencing shortages include healthcare, IT and engineering.

Polish initiatives to attract workers back home, especially in the construction and services industry, have started to pay off – helped by the country’s booming economy, the 15 per cent devaluation of the pound against the euro and a 13 per cent rise in the Polish basic salary. Only those Poles who have chosen to bring up their families in the UK are likely to stay for the long term.

The lack of long-term planning by the UK authorities when it comes to ensuring greater integration of migrant workers – a factor influenced above all by an apparent lack of political will to accept the benefits that migrants bring to the economy – underlines the need for a more coherent approach by EU member states in a market of 27 countries. “Employers need to plan better immigration labour integration wherever it comes from,” says Elizabeth Collett, policy analyst at the Brussels-based European Policy Centre (EPC), co-author of a report on the role of employers in migrant integration. “In the case of labour shortages from the new EU member states, employers’ primary role is to replace skilled labour such as healthcare workers and engineers as quickly as possible.”

A recent report from the European commission, cited by the EPC, shows that the number of workers from the new EU countries in Germany dropped dramatically from 497,000 in 2004 to 134,000 in 2006. Arguably, Germany and its regions may experience less of a problem in the short term compared to the UK, as Poland is a neighbouring country and labour migration is therefore likely to be more fluid, but the figures show that even countries that have restricted access to the labour markets for workers from new member states have become increasingly reliant on them. Germany is reluctant to talk about labour shortages and link it to immigrant labour, but a survey of German employers conducted by Financial Times Deutschland showed that certain key sectors – such as engineering – have become heavily dependent on migrants, and that the country’s export boom is likely to be affected if migrant flows dry up.

The survey showed that last year it took as twice as long to appoint an engineer compared to the pre-recession levels of 2001 and that labour shortages are now starting to affect the country’s economic dynamism. Ireland is another country affected by the slowdown. Alan Ahearne, an Irish senior academic and economist at the Brussels-based think-tank Bruegel and the National University of Ireland, said that “the expected sharp slowdown in immigration from eastern Europe will further depress demand for housing in Ireland”.

More restrictive systems – such as those in France, Spain and Belgium, where workers need a work permit in order to stay (although not for much longer in France) – could, ironically perhaps, create more long-term prospects for migrant workers and employers alike. The difficult bureaucracy and skills-based permit system means that migrants have to work harder to get their jobs, and are more likely to be better suited for it, suggesting in turn that they are more likely to remain for the long term. This system could be more widely rolled out as a means of better planning for countries’ labour requirements in the future. The EPC for one believes that employers will certainly have to play a bigger role in ensuring that the demands of the labour market are matched with policies that are fit for purpose.

The EPC gives the example of French insurance group AXA in 2004, which introduced a diversity charter that allowed candidates to apply for jobs without giving their names, thus ensuring, in principle at least, that they are judged entirely on their merits. A similar scheme has also been launched in Germany, and this kind of voluntary measure, in the face of a lack of national or EU regulation in this area, is likely to become more widespread, the EPC suggests.

In the regions, meanwhile, the EPC suggests that employers should look to form partnerships with public bodies to ensure that new employees are more effectively informed about their rights and responsibilities, and to work towards measures such as standardised procedures for informing migrant employees across all companies and sectors, as well as greater participation of employers’ associations in the labour debate.