Speech László Andor: Labour mobility in the EU

Ladies and gentlemen,

My warm greetings to you all and my thanks to the University of Ghent for the invitation.

Today I would to talk to you about labour mobility in Europe.

I will argue not only that freedom of movement is an individual right, but also that labour mobility makes good economic sense. It contributes to the objectives of the Europe 2020 Strategy by making it easier to fill cyclical and structural labour shortages and offering people opportunities for upward economic and social mobility.

Then, I will explain how the European Union has been promoting labour mobility in recent years.

I will conclude by outlining how the EU aims to support the Member States in their efforts to face sudden influxes of migrants and to promote the socio-economic inclusion of disadvantaged groups, including Roma.

Let me start with the general picture.

Along with free movement of goods, services and capital, free movement of citizens, including workers, is one of the four fundamental freedoms enshrined in the Treaties and underpinning the Single Market. However, free movement of citizens is under attack today in some Member States.

Recently, and particularly during the European Parliament election campaign earlier this year, terms such as “benefit tourism” and “poverty migration” have been used. Sociologists refer to this kind of debate as “welfare chauvinism”: a populist discourse in the country of destination aiming to restrict access to welfare systems and public services for citizens from other EU countries. In addition, such political claims tend to portray foreigners as somehow less-deserving or even dangerous.

Let me stress that, under the EU Treaties, discrimination based on nationality is prohibited. The European Union consists of 28 countries whose citizens are equal and have equal rights, including the right to free movement, subject to the application of jointly agreed rules.

In addition, welfare chauvinism, as shown by some political parties and some tabloid press, goes against the values on which the European Union is founded, such as respect for human dignity, equality and respect for human rights.

Finally, recent discussions in Germany show that a sensible approach - in line with EU fundamental values and legislation - is possible. Although the number of workers moving to Germany has increased over the last few years - thereby contributing to Germany's economic success - labour mobility has recently been under attack over what some people perceived as "poverty migration".

If you look at the situation on the ground, it is true that some cities have to deal with high numbers of incoming migrants. Cities such as Duisburg report unacceptable living conditions, exploitation of workers, high numbers of children not attending school, and difficulties in providing healthcare.

In order to have an objective, fact-based discussion, the German Government set up a Committee of State Secretaries to look into the impact of labour mobility on national welfare systems. The report was presented on 27 August. The Commission welcomes that Germany reaffirmed its commitment to free movement of workers. The report includes useful proposals to tackle situations of abuse and to help municipalities faced with difficulties. The Commission is currently looking at these proposals to ensure that they are in line with EU law.

Now, I would like to tackle three myths which have been relayed by some political parties and tabloid press.

The first of such false claims is that there are huge flows of EU citizens between EU Member States.

The second is that flows of workers between EU countries have substantially increased during the crisis.

And the third is that migrants place a huge burden on the welfare systems and public services of the host countries.

Free movement of workers applies across the labour markets of the 28 Member States, although Croatian workers are still subject to transitional arrangements.

EU nationals have the right to look for work and take up employment in another Member State and to receive assistance from the host country’s public employment service when looking for a job.

They have the right to equal treatment as regards conditions of employment and as regards social and tax benefits and obligations.

Lastly, EU workers enjoy the right of residence for themselves and their family members.

But what is the scale of intra-EU labour mobility?

In 2013 there were around 7 million EU citizens — or 3.3% of the EU’s total labour force — working and living in a member country other than their country of citizenship ¹ .

In addition, there were just over 1.1 million cross-border or frontier workers ² .

And there are about 1.2 million posted workers in the EU. These are workers seconded to another Member State to carry short-term assignments.

So overall, the numbers are far from enormous.

Over the last ten years, two key developments have triggered new labour mobility patterns within the European Union.

First, the accession of ten Central and Eastern European countries in 2004 and 2007 led to substantial east-west flows, on top of the traditional south-north flows.

Secondly, the Eurozone crisis has increased imbalances on EU labour markets and led to significant labour outflows from the countries on the periphery of the euro area.

As a result, although east-west labour mobility dominates, south-north mobility is on the rise again.

However, workers’ mobility in the EU remains modest compared to the United States or Australia.

As shown on the slide, there are few countries where labour inflows are significantly above the EU average.

Luxembourg stands out clearly, followed by Cyprus and Ireland, and to a much lesser extent Belgium, Austria and the United Kingdom.

While the number of EU mobile workers has increased sharply in absolute terms over the last decade, in terms of the overall active population, it has only gone up one percentage point, rising from 2.1% in 2005 to 3.3% in 2013.

This is far from the "mass movement" referred to by some politicians.

The second claim concerns the alleged “surge” in intra-EU labour mobility as a result of the crisis.

In fact, intra-EU labour mobility flows declined considerably during the first phase of the economic crisis, when economic activity and employment declined in almost all Member States. In 2009 and 2010, mobility flows fell by 41% compared with 2007 and 2008.

The fall is due to a sharp drop in labour demand, especially for low and medium-skilled workers, and to decreasing mobility potential from Central and Eastern European Member States. This was logical, given the very high post-enlargement flows between 2004 and 2008.

During the second phase of the crisis in 2011 and 2012, intra-EU labour mobility recovered somewhat, increasing by 22% compared with 2009 and 2010. This was mainly due to growing outflows from Member States with high levels of unemployment. The countries experiencing the highest increases in labour outflows were Greece, Spain, Ireland, Hungary and Latvia.

Labour outflows from the southern Member States in 2011 and 2012 were 73% up on the previous two years, and that figure does not capture emigration to non-member countries, which is significant — for example, in Portugal’s case.

But as this graph shows, most intra-EU mobile citizens still come from the Central and Eastern European countries that joined in 2004 and 2007.

Over the last decade, intra-EU labour mobility has therefore been driven mainly by income and wage differentials between the eastern and western Member States ³ . More recently, it has also been driven by the growing differences in labour market performances, especially between euro-area members ⁴ .

In addition to such “push factors” as high unemployment in the euro-area periphery or the worsening political environment in some countries, the direction of labour mobility also depends on “pull factors”, such as language, the wage differential and the host country’s economic performance.

During the crisis, there has been a rise in labour inflows into the more resilient economies, such as Germany and Austria. ⁵

Conversely, there has been a decline in inflows into and an increase in outflows from the countries most affected by the crisis, such as Spain and Ireland.

When unemployment rose in countries such as Spain, Ireland and the UK, return flows to the eastern Member States or other countries of origin increased ⁶ . This suggests that labour mobility in the EU has played a certain role in helping labour markets to respond to economic shocks.

However, an increase of a few tens of thousands in the number of workers moving from southern Europe to the “core” euro-area countries is not enough to trigger a substantial reduction in the unemployment rates in the south, where millions have become unemployed over the past few years.

In addition, given its limited scale, labour mobility cannot significantly alleviate economic shocks of the sort that Europe has gone through since 2008.

Lastly, labour mobility does not provide an answer to restoring the growth potential of countries going through a downturn. When the most talented people leave, achieving an economic recovery in the countries of origin can actually become more difficult.

My conclusion is that the economic crisis has not brought about a major surge in labour mobility in Europe.

The third and most dangerous claim is that mobile EU workers — or mobile EU citizens generally — are a burden on the host countries.

In fact, mobile EU workers are more likely to be employed than the host countries’ nationals and they tend to be net contributors to the host countries’ welfare systems .

EU mobile workers overall help increase GDP and boost competitiveness. They improve the skill mix and work mainly in sectors and occupations where labour shortages need to be filled ⁷ - i.e. they are complementary to host countries' workers and do not take jobs away from them.

Mobile EU workers are on average younger than the population of the host country and can provide a welcome demographic boost if they actually settle there.

EU mobile citizens also have a higher activity rate than nationals (77% versus 72%).

Mobile EU citizens have a slightly higher unemployment rate than the host country’s nationals. But the key difference is the significantly higher employment rate of mobile EU workers (68%) than the host countries’ nationals (65%) or non-EU nationals (53%).

Furthermore, mobile EU workers also increasingly possess high qualifications: 36% of them had tertiary education in 2012 compared to 22% in 2000. This is due, in part, to the lack of job opportunities in some Member States, including Italy.

However, I am aware that there has been a concentrated influx of low-skilled mobile EU citizens and non-EU immigrants in certain municipalities, such as here in Ghent.

Mobile EU workers are often over-qualified for the jobs they perform in the host countries.

When you consider the demographic and educational profile of mobile EU workers, it is no surprise that studies show that labour mobility brings significant economic benefits to the host countries.

Post-enlargement mobility has boosted the long-term GDP of the “older” Member States (EU-15) by 1% ⁸ and even more in major host countries, such as Ireland, the UK, Spain and Italy.

The effect of post-enlargement mobility on the unemployment rate and wages in the host countries has been estimated to be marginal, at least in the long term ⁹ . And competition from mobile EU workers tends to be short-term, moderate and concentrated on specific groups, particularly the low-skilled ¹⁰ .

In any event, there is no evidence that mobile EU citizens receive more by way of social security benefits than the nationals of the host countries .

I hope that I have shown that intra-EU labour mobility is not the massive phenomenon it is claimed to be; that it has not risen significantly as a result of the protracted economic crisis; and that it does not endanger the integrity of the host countries' welfare systems.

I will now explain what the EU has done to promote free movement of workers and labour mobility. I will also explain how the Commission supports both the countries of origin and the countries of destination to promote the integration of disadvantaged groups, such as Roma people.

EU policy on labour mobility pursues three main aims:

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  Removing obstacles to labour mobility;
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  Supporting labour mobility and cross-border matching of jobseekers and job vacancies, and
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  Tackling economic and social challenges related to labour mobility.

There are many reasons why EU cross-border labour mobility is rather low.

Some of them — such as language, family ties, culture, the functioning of the housing market and even climate — are not directly linked to the way the labour markets function.

Others - such as differences in social security and taxation systems and lack of harmonisation of professional qualifications - are closely linked to the labour market.

In response to the protracted economic crisis and rising unemployment, the Commission has boosted employment policy at EU level. In 2012, it presented an Employment Package in order to promote a job-rich recovery.

One of the drivers of such a recovery focuses on developing a genuine European labour market. This stems from the recognition that cross-border labour movements can be useful both in terms of coping with cyclical downturns and overcoming structural skills mismatches.

The Employment Package set out a number of measures to support intra-EU labour mobility.

The first point involves removing the remaining obstacles to free movement of workers.

Thanks to existing rules on social security coordination, previous periods of social security insurance, work or residence in other member countries are taken into account when a person claims pension or other social security benefits.

But EU rules on social security coordination so far did not cover supplementary pension rights , such as occupational pensions.

It is therefore good news that the European Parliament and the Council adopted a Directive in April 2014 to improve the acquisition and preservation of supplementary pension rights for mobile workers ¹¹ .

Another obstacle to labour mobility is the difficulty in getting recognition of qualifications in certain regulated professions, such as doctors or architects. Again, the good news here is that the European Parliament and the Council reached an agreement in 2013 on updating the common rules to facilitate recognition ¹² .

Secondly , the Commission supports labour mobility and cross-border matching of jobseekers and job vacancies.

EU workers often have difficulty in obtaining information about their rights and lack assistance in having them enforced.

That is why the Commission proposed in 2012 a Directive to facilitate the exercise of rights of mobile workers ¹³ .

According to the new rules adopted in 2014, bodies should be established at national level to provide mobile EU workers or jobseekers with advice and assistance in enforcing their rights.

The EU also works to ensure better matching between the needs of jobseekers and those of companies. The European Network of Employment Services, known as EURES, has over 1.7 million job vacancies and over one million CVs on line.

EURES aims to increase transparency on the European labour market and help EU citizens make informed choices about job opportunities in other Member States.

The challenge today is to make sure the EURES network is up to speed with technological developments. This means putting more vacancies on line and using the possibilities of automated matching of jobseekers with vacancy profiles.

Thirdly , the Commission supports the Member States in tackling the economic and social challenges resulting from EU labour mobility.

At local level, inflows of mobile EU citizens may result in additional pressure on public services, such as healthcare, housing, education and transport, especially where such services need to respond to a rise in the population over a short period ¹⁴ , such as here in Ghent.

In such cases, the right answer is to invest in the provision of the public services concerned, which will benefit the native population too. Meanwhile, the countries of origin may face skill shortages when many talented people leave to work abroad.

The European Social Fund can help alleviate the difficulties in both the countries of origin and the countries of destination. Between 2014 and 2020, Member States will receive some €80 billion from the ESF.

We also need to address concerns arising from “ social dumping” if mobile EU workers can undercut wages and employment standards in the countries of destination. In addition, mobile EU workers may be subject to abuse and exploitation — for instance when they are trapped in undeclared work or when rules on posting of workers are not complied with.

The Member States’ enforcement authorities, especially labour inspectorates, have a key role to play in enforcing minimum wages, other applicable working conditions and terms of employment to prevent "social dumping".

In addition, the Commission recently proposed the introduction of a European Platform to prevent and deter undeclared work. The proposal, which aims to step up cooperation between national labour inspectorates, is currently being discussed by Parliament and Council ¹⁵ .

On the issue of posting of workers: a major achievement under my mandate has been the adoption of a new Enforcement Directive on the posting of workers . The new Directive will improve protection for posted workers, and provide a more transparent and predictable legal framework for service providers .

It will provide Member States with more efficient ways of detecting and preventing abuse and of checking compliance with EU and national rules. And it will improve the protection of posted workers in subcontracting chains in the construction sector by introducing new joint and several liability obligations.

Ladies and gentlemen,

While I believe that intra-EU mobility remains modest and labour mobility brings overall economic benefits, I recognise that some municipalities, such as Ghent, encounter difficulties when faced with large numbers of mobile EU citizens or non-EU migrants, including Roma people.

Flows of marginalised, often poorly educated Roma are prompted by a combination of extreme poverty and discrimination in their home countries.

Such marginalised communities face both huge and specific challenges. We therefore need to make particular efforts to tackle discrimination and to promote their inclusion in society, in mainstream education and in the labour market. Of course, solutions have to be adapted to the local situation.

But because freedom of movement for EU citizens is one of the fundamental freedoms, our policy response cannot be simply to curtail it.

We need to deal with the causes.

The Commission supports efforts to promote the inclusion of Roma in both the countries (and municipalities) of origin and in host countries in five distinct ways.

First, in line with the Social Investment Package , the Commission works closely with the Member States to apply a social investment approach to reducing poverty and generating inclusive growth. It means supporting Roma at all stages of life, starting with ensuring that Roma children have access to quality mainstream early-childhood education and care. It also means putting in place integrated and individualised services to promote Roma inclusion, covering, among other things, language training, financial counselling, job-search assistance, social and health services.

Secondly, under the EU Framework for National Roma Integration Strategies , the Commission called on the Member States to develop strategies to address the challenges of Roma inclusion more effectively. To succeed, such strategies should:

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  involve all stakeholders, including associations representing Roma people;
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  they should have sustainable financial resources;
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  they should explicitly but not exclusively target Roma people;
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  they should be properly monitored;
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  and they should be closely connected with mainstream policies.

Under the Framework, the Commission monitors implementation and issues policy guidance, publishes annual reports; it has set up a network of national Roma contact points; and it holds regular bilateral meetings with the Member States.

Thirdly, under the European Semester process of economic policy coordination , the Commission gives guidance on how to improve inclusion of Roma people. In 2014, five Member States — Bulgaria, the Czech Republic, Hungary, Romania and Slovakia — received Country-Specific Recommendations which highlighted the need to adopt measures to:

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  guarantee Roma children effective equal access to quality inclusive mainstream education from an early age;
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  tackle the extreme poverty and exclusion of Roma;
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  promote their integration into the labour market.

Fourthly , the new rules governing the European Structural and Investment Funds contain various innovations to improve the use of EU funds for Roma inclusion.

They include:

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  the requirement for each Member State to allocate at least 20% of European Social Fund resources for social inclusion;
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  a specific investment priority under the European Social Fund dealing with the integration of marginalised communities, such as Roma. Flanders has proposed to invest about €25 million between 2014 and 2020 on this priority.
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  the need for Member States, as an ex-ante condition for the use of funds, to adopt appropriate national Roma integration strategies;
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  and the possibility of promoting community-led initiatives or integrated local development strategies;

When negotiating operational programmes with the Member States, the Commission aims to ensure that Roma inclusion is a key investment area in line with the guidance in the Country-Specific Recommendations.

Fifth, transnational cooperation between Member States and municipalities is crucial to finding effective solutions for Roma inclusion.

I would like to thank the city of Ghent for its active role in the Eurocities Roma Taskforce and for the support it provides to several municipalities in Bulgaria to promote Roma inclusion.

Conclusion

Ladies and gentlemen,

Cross-border labour mobility is not a cure-all for the widening divergences between Member States in terms of labour market performance. However, it can help boost employment and economic output.

Free movement is first and foremost a right. People should not be forced to move to another country for economic reasons, nor to escape discrimination and exclusion in their home country. However, the EU should support people who decide to move to another Member State to work or look for work.

I think that all of us - the EU, the Member States and local authorities - should counter false claims about labour mobility, while dealing with the challenges it raises and ensuring what I would call "fair mobility". And we should all work together to put an end to the continuing exclusion of Roma - Europe's biggest minority - to improve their lives on the ground across Europe.

Thank you for your attention.