Migration and Irregular Work Judit Juhász Panta Rhei Social Research Bt. Budapest Tel./fax: +(36-1)

Debates Economic, social and political significance Economic, social and political significance Regulation Regulation Possibilities of measurement Possibilities of measurement

Diversity of definitions different estimates Lack of elaborated methodology conceptual uncertainity Problems of definition, terminology Problems of definition, terminology

Illegal/irregular migrant worker Legal category Legal category Economic determination Economic determination socio-demographic interpretation socio-demographic interpretation Same activity might be qualified/classified differently

informal economy informal economy - all economic activity which is not officially reported, registered is neglected when calculating the GDP of the economy. irregular employment „black labour” : Employers fail to register their employees (evading taxes and contributions) Employees accept the omission of registration, (and fail to pay their taxes and contributions) the employee does not report that they are not entitled to unemployment benefits (as they are working); employing foreigners without a permit “Grey labour” : registered labour, where the actual employment differs from prescribed conditions. (eg. registering at minimum wage,, but in practice paying more, and the difference is transferred tax-free from pocket to pocket. )

Methodology Secondary analysis of existing information (research, literature, statistical data, press) Secondary analysis of existing information (research, literature, statistical data, press) Empirical research Empirical research  Expert surveys (Delphi method combined with a standard questionnaire) – 303 respondents  In-depth interviews (experts, migrants, employers) 35 experts: 16 governmental bodies 6 local governments 4 members of parliament 4 trade unions and 3 unions 2 organisations for Hungarians living beyond the borders 42 foreign emloyees 6 Hungarian employers Mailed and filled in by the experts themselves

Scale EU: 7-16% of GDP Hungary.: 20-30% of GDP Public opinion: part of everyday norms Black work: 37% does not strictly condemn 28% would take part

The proportion of illegal work in the whole economy: 25-30% ~1,000,000 ps. in the whole economy: 25-30% ~1,000,000 ps. Within this 15-20% is from foreigners. (2000: 30%) Within this 15-20% is from foreigners. (2000: 30%) The range of the estimates is large: The range of the estimates is large: 30% of experts: less than 20 thousand, 30% of experts: less than 20 thousand, 30% : more than 100 thousand. 30% : more than 100 thousand. Average:panel: 115,000 fő entire sample: 80,000 fő

Causes high level of taxation and labour costs high level of taxation and labour costs high social acceptability of irregular work high social acceptability of irregular work weak internal mobility weak internal mobility difficulties of getting permits difficulties of getting permits the basic problem relates not to foreigners but to irregular employment in general

Effects Positive a possibility to fill less attractive and poorly paid jobs. (70%) With flexibility and low wages contribute to the economic development. (45%)With flexibility and low wages contribute to the economic development. (45%) Negative loss of taxes and revenuesloss of taxes and revenues distortion of competitiondistortion of competition it affects the social insurance system negativelyit affects the social insurance system negatively conserves poor working conditionsconserves poor working conditions

Past trends declining trend of increase

Future trends (expectations) The rate of growth is decreasing on According to the estimations after 5-10 years the growth stops Period1 strongly decrea ses 2345 strongly increas es NMean Distribution of answers (panel)panelall resp. next 5 years , next 5-10 years

Composition by citizenship and nationality 90% from the neighbouring countries, 60% Hungarian CitizenshipOf which Hungarian Transylvanian Hungarians38 RO5569 Transylvanian Romanians12 Romanian Gypsies5 Transcarpathian Hungarians12 UA1864 Ukrainians6 Hungarians from SK6 SK872 Slovaks2 Hungarians from Ex-Yugoslavia4 YU673 Non-Hungarians from Ex-Yugoslavia2 Chinese88 Other55 Together100 59

Illegal work and qualification Qualification requirement of irregular labour (% of unqualified work) HungaryAustria (from all countries) Austria (from EU-8) Construction Agriculture Catering, entertainment Industry Households (care) Households (cleaning, repair)

Sectors Construction – need for qualified and unqualified workers Construction – need for qualified and unqualified workers Agriculture – seasonal works, multitudinous need for labour force Agriculture – seasonal works, multitudinous need for labour force Catering and entertainment Catering and entertainment Trade, vending Trade, vending Textiles Textiles Households Households Highly qualified emloyees Highly qualified emloyees

Employment by sectors Source: HCSO, National Employment Office

Foreign or Domestic Irregular Labour? Is there any difference? not different (1)slightly different (2)essentially different (3)MeanN Distribution of answers (%) Type of work Conditions of work Quality of work Type of work (2000*) Advantages of foreign irregular labour (%) most importantone of the two most important Considered as an advantage in 1999 advantage(s) There’s no Hungarian labour Lower salaries They’re more undemanding towards working- conditions The supply is more flexible N=61

Labour-market competition mean* Foreigner are formally employed in jobs requiring lower qualification but in reality their qualifications are used 3.7 Unemployed Hungarians in general do not want to work when sent to a workplace, they just ask for the certification needed for getting unemployment benefit 3.3 Irregular employment of foreigners pushes down wages3.3 The works done by foreign irregular workers Hungarians would not do3.2 Employers prefer native irregular workers to foreigners3.0 Cheap foreign irregular labour makes harder the employment of native unemployed2.8 Foreigners take away jobs from Hungarians2.1 * 1-Fully disagree, 5-Fully agree

Why? Reasons for the irregular emlpoyment of foreigners in general Munkáltatók Munkavállalók The role of factors (distribution of answers, %)Considers as most import ant (%) 1-no role at all very impo rtant role Mean Taxes and charges on labour are higher than in other countries in the region black work in general is widespread and widely accepted Internal labour mobility is rather weak Issuing permits is slow and difficult The regulation of seasonal and occa- sional work of foreigners is ineffective Regulation and sanctioning is not strict enough Control is weak Entering Hungary is too easy (as a tourist) Recovery of fines is not appropriate Getting the permits often requires bribing

Why? The main reason for employing foreigners irregularly (panel) Reasons for workers

Reasons of migration

Why Hungary ? Distance, knowledge of the language, simplicity Distance, knowledge of the language, simplicity Relatives and aquaintances in Hungary Relatives and aquaintances in Hungary Hungarian nationality, emotional reasons Hungarian nationality, emotional reasons Almost a mother country (related to other countries) Almost a mother country (related to other countries) Personal motives  Providing existencial needs  Looking for adventure, getting rid of the ties  Long-run plans, existance, substantiating the career

Conditions Conditions for work – lack of safety; high intensity of work; working overtime Conditions for work – lack of safety; high intensity of work; working overtime wages – usually but not always worse than for the Hungarians wages – usually but not always worse than for the Hungarians Conditions for housing – cheap Conditions for housing – cheap The employees are losers in this deal

Accommodation of Romanian irregular workers at the edge of Budapest

The accommodation inside „They are rather grateful for it ”

Ways out reduction of costs and difficulties of legal employment increase the flexibility of regulation This includes the adoption of differentiated exceptions aiming at the “whitening” of the informal economy and black labour decentralizing the decision making mechanism based on the principle of subsidiarity and increasing the capacity and effectiveness of the administration efficient enforcement of the existing legislation on the basis of clearly stated political aims and commitment, supported by appropriate organisational, human and financial resources vocational training well conceptualized, close European cooperation