Germany to lift seven-year freeze on Eastern workers | Business| Economy and finance news from a German perspective | DW | 29.04.2011
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Germany to lift seven-year freeze on Eastern workers

Now that Germany is finally lifting work restrictions for the EU nations that joined the bloc during 2004 eastward expansion, young, educated and mobile workers have already gone elsewhere.

A Playmobil figure with a drill

Labor restrictions had closed German borders for seven years

On May 1 Germany and Austria are finally opening up their borders to workers from the eight former-Soviet nations that joined the EU in 2004.

One of the biggest benefits of being a citizen of the European Union is supposed to be the freedom to live, work and travel anywhere within the 27 nation bloc without restrictions.

But when Poland, the Czech Republic, Hungary, Slovakia, Slovenia, Lithuania, Latvia and Estonia joined the EU, the bloc's wealthier core countries set up transitional measures to restrict labor mobility for up to seven years.

The restrictions generated a wave of resentment that spread from Tallinn to Ljubljana, since the right to work in any other member state is enshrined in the EU's founding treaty.

Some of the 15 established member states opened their labor markets to eastern workers immediately. Others followed suit a few years later. Only Germany and Austria opted to continue restricting labor mobility. But the seven years have elapsed, and now the two nations are required to lift the restrictions.

The Institute for the Study of Labor (IZA), a private think-tank in Bonn, estimates that the number of Poles and other eastern Europeans coming to Germany for work could be around 100,000 in the first year. That's nowhere near the millions Berlin once feared would roll in to take away local jobs, depress wages and possibly abuse the social welfare system.

Highly-skilled workers went to UK

"I would say it is quite naive that Germans expect Poles to flood in, because the decision to migrate is not an easy decision," Ulf Rinne, a labor economist at IZA, said.

A woman in a doctor's coat walks down a hallway in a hospital in Berlin

Workers in highly sought-after industries such as medicine have gone elsewhere

"People do not just wait in Poland for the opening up of the border and free labor mobility. Those who are willing to migrate already migrated to other countries."

Berlin's decision to impose restrictions for the maximum seven year period contributed to a skills shortage in sectors ranging from engineering to healthcare, Rinne said.

"Those highly skilled people mainly went to countries that opened up their labor markets, like the UK, Sweden and Ireland," he explained "The issue is: there's global competition for those highly skilled people. Germany definitely missed an opportunity to attract those needed in the labor market."

The irony is that Germany's work restrictions, designed to prevent an influx of low-skilled, cheap labor, were a hindrance to highly qualified professionals, but did little to stop low-skilled migrants who used self-employment loopholes to circumvent the restrictions.

Laborers who set up their own one-man businesses in building trades such as tile-laying were able to work in Germany legally, but salary or wage-earners faced restrictions, making it difficult for businesses to hire much needed personnel.

Qualified caregivers needed

The fall of work barriers on May 1 is therefore a boon for companies like Marseille Kliniken, one of Germany's biggest providers of health-care and residential services for the elderly.

"We have hired agents in Poland and the Baltic states to look for people willing to work in Germany," said Ulrich Marseille, founder of the publicly listed company. Besides actively recruiting from abroad, Marseille also hopes to tap into the huge informal labor pool that already exists in Germany.

"There are about 120,000 people today working in private homes or private facilities, nursing old people in a family. They get their money right away, but have no social security, no insurance, nothing," Marseille said. "As of May 1, those people have the right to work legally. The change from illegal to legal [will enable] them to earn much more."

But Magdalena, a young Polish woman who asked that her surname be withheld and works as a supervisor in a Bonn nursing home, believes that Poles and others will not be rushing to snap up jobs as certified caregivers in nursing homes.

Policemen at the Polish-German border

Germany is home to an estimated 120,000 illegal workers who will become legal on May 1

"I've seen so many colleagues come and go. Some recommended by the Labor Agency are simply overwhelmed by the demands and special skills required on the job, and they leave altogether... Too few qualified people are applying for jobs," she said.

Once the Poles and others are no longer need work permits, one more bureaucratic hurdle remains for employers in the healthcare industry. Nurses and medical technicians who were educated in Eastern Europe still face some barriers in transferring their degrees and certifications to Germany and often wind up in jobs for which they are overqualified.

Marseille said a fully certified nurse from Poland, who is "just as good as our nurses" might only be able to work as an unskilled nurse's aide.

Low-skilled won't flood labor markets

Low-skilled workers who do not face qualification barriers are unlikely to come to Germany in droves either, IZA data says. One reason is that they are already here.

In spite of work restrictions, net migration from Eastern Europe more than doubled after accession in 2004 compared to the four year period prior to enlargement. Annual net immigration peaked at 50,000 annually in 2006.

Official data often don't take into account the hiring of seasonal workers; a common practice in the hotel and food service businesses. But low wages make jobs in the industry unattractive anyway, according to Guido Zeitler from the NGG hospitality union, who said the impact of the labor market changes would be limited.

"We expect to see more job-seekers along the border regions - Bavaria, Saxony, Brandenburg - places where it is possibly to commute for work but still live outside Germany," Zeitler said.

A plate with euro notes instead of food

The cost of living in Germany is higher than elsewhere

But elsewhere, the high cost of living in Germany is a disincentive. "Rents in cities like Hamburg or Munich are very high, while jobs in the hospitality sector are among the lowest paid," he continued.

Minimum wage calls

Even though Poles and Czechs will soon have the automatic right to work in Germany, that doesn't mean their employers will stop paying them under the table either.

"Black market labor is unfortunately a widespread phenomenon in this industry. That's not going to change overnight on May 1. What we desperately need is a legal minimum wage standard across the board," Zeitler said.

The good news is that Germany's current economic climate is likely to weather any pressure to reduce wages because of more workers coming in from the East.

Since 2006, the unemployment rate has been falling steadily and remains in the single digits. Some sectors are experiencing a labor shortage and industry is complaining it can't get enough skilled workers to meet demand.

Work restrictions for Bulgarians, Romanians

The bad news is that Germany has sent the wrong message to young, educated, mobile eastern Europeans. The engineers and qualified caregivers Germany needs left Poland or the Baltic states for other countries years ago.

"If you send signals you don't want those people and place restrictions on labor mobility, that's clearly an indication you won't be welcome in that country," said Ulf Rinne of the IZA.

And then there's still the matter of Bulgaria and Romania, the two newest states to join the EU in 2007.

Migrants from those countries traditionally go to Spain or Italy anyway, which are closer both geographically and culturally. But they will continue to face work restrictions in Germany until at least next year and possibly until 2014, when all barriers to labor mobility will be lifted throughout the EU.

Author: Diana Fong
Editor: Sam Edmonds

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