Unemployment, Labour Market, Migration Group: C3 14 th April 2008

Unemployment, Labour Market and Migration Free movement of person, Accession Treaty, EU Member States, Migration Economic Background (tables, migration, unemployment)‏ Poland, Ireland Summary

Free movement of workers Free Movement of Persons = one of the four fundamental freedoms provided for in the EC Treaty - The right for EU nationals to move to another Member State to take up employment and to establish themself in the host State

Free movement of workers The Accession Treaty - signed on 16 April lays down transitional arrangements concering the free movement of workers within the enlarged Union - arrangements continue for up to seven years - Preference rule - priority over nationals of countries that do not belong to the Union

Member States - free movement of workers (1November 2007)‏ EU-15 x EU-8 No restrictions: Luxembourg, Spain, Finland, Portugal, Italy, Great Britain, Ireland, Sweden, Greece, Netherlands Partial restrictions: Belgium, Denmark, France, Germany Full restrictions: Austria

Member States - free movement of workers (1November 2007)‏ EU-25 x Bulgaria, Romania No restrictions: Estonia, Finland, Cyprus,Latvia, Lithuania, Poland, Slovak Republic, Czech Republic, Slovenia, Sweden Partial restrictions: Denmark, France, Italy, Luxembourg, Hungary, Germany, Belgium Full restrictions: Ireland, Malta, Netherlands, Austria, Greece, Spain, Great Britain, Portugal

Migration + having beneficial effects on the economies of the Member States which have opened up their labour market  improving industrial competitivness, reducing undeclared work, helping to raise economic growth rates and create more new jobs, generating higher tax revenue for the host countries' budgets

Migration - Transitional periods:  higher levels of illicit working and sham self- employment will increasingly lead to regionally acute wage pressure and unfair working conditions, as well as to discrimination against and the exploitation of migrant workers

Unemployment – economic aspects Simple definition: - the proportion of unemployed people over the sum of total workforce

Dynamic approach towards labour market Q: Why do some people stay unemployed? A: Different reasons exist: - frictional unemployment - people changing their job - structural unemp. - structure of the national economy - cyclical unemp. - phases of the business cycle

Structural unemployment DL = SL, that means the number of jobs available equals the number of people searching for a job x BUT - unemployed people exist, due to: - disharmony between qualification offered by employees and requested by firms - disharmony between allocation of workers and allocation of job-opportunities (regional aspect) - Structural unemployment can cause migration!‏

Migration – impacts on the home economy Positive: - decrease in unemployment (the structural part)‏ - remittances (financial transfers to the home economy) contribute to the growth of GDP improve the balance of payments Negative: - “Brain drain”

Unemployment of the EU states in 2007 (CIA World Factbook)‏

Situation in Poland Unemployment rate for the age group <25 ~ 40% too many graduates and not enough jobs Motives for departure: - work experiences (easy to find low-qualified job)‏ - higher income (monthly salary in Poland is just 1/3 of the EU average)‏ One of the biggest post-war “exodus”: About 2 million of Poland's 38 million people have opted to leave home…(UK, Ireland, Sweden)‏

Implications for Polish economy (I.)‏ Unemployment Source: Positive effect on the decrease of unemployment can be identified

Implications for Polish economy (II.)‏ Source: The structure of polish economy is underdeveloped, qualified labour force is desperately needed; lack of labour in some industries.

Implications for Polish society Social dimension – depopulated areas, older people left alone Demographic dimension – population is getting older “Brain waste” – migrants` qualification is not recognised

Conclusion Positive impacts: - rate of unemployment has decreased Negative impacts: - lack of qualified workers - social dimension, demographic dimension, “Brain waste” - qualification for “bus drivers” … ? Poland needs its migrants back

Ireland Traditionally a country of emigration In the 1990's, economic success led to an influx of immigrants: 1999: 6,000 non- Irish workers 2003: 50,000 Only one third of non-nationals are from outside the EU

The “Celtic Tiger” In the early 1990's Irish emigrants began returning home, this led to increased unemployment: From 1990 – 1993 unemployment increased from 13% - 16% However, economy began growing at a fast pace: From 1995 – 2000 real GDP growth averaged around 9% By April 2000, unemployment had fallen to 4.3%

Immigration policy Social benefits rather than unemployment was the main issue regarding EU expansion. Two year period in which immigrants are not eligible for social benefits 2004: Habitual Residence Condition

Immigration After Enlargement Open immigration for EU-10 By 2005, 3.8% of the working population from EU-10 Unemployment has continued to fall after enlargement: EU-10 nationals in Ireland have a higher employment rate than Irish nationals (currently around 85%). Less than 1,000 EU-10 nationals on the unemployment register (March 2006)‏

Problems with immigration Inflows of workers has put stress on housing and infrastructure Successes of immigration has been dependent on rapid growth and job creation Perceived problem of job replacement Social problems

Literature and other sources: EU Commission Report on the Functioning of the Transitional Arrangements set out in the 2003 Accession Treaty (period 1 May 2004–30 April 2006)‏ Holman, Robert. Ekonomie. Praha: C. H. Beck, Soukup, J. - Pošta, V. - Neset, P. - Pavelka, T. - Dobrylovský, J. Makroekonomie. Moderní přístup. Praha: Management press, The Economist, European migration: The brain-drain cycle, December 10th

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