Immigrant workers are expected to migrate en masse next year to escape poor living conditions that still plague parts of Romania and Bulgaria. But how can the benefits for business in the eurozone actually outweigh the burdens?
When the EU lifts any remaining residential and employment limitations on Romanian and Bulgarian migrants next year, it may result in no British-grown strawberries for Wimbledon fortnight 2014. It’s hard to imagine the British summertime without the quintessential fruit, but while strawberries are grown by British farmers in British soil, it is foreign immigrants who harvest them. The seasonal agricultural workers scheme currently in place in the UK sees 20,000 Romanians and Bulgarians escape poverty in their homelands to work in Britain for several months each year, before returning home again. When work permit schemes are relaxed in 2014, seasonal harvesters could migrate towards the cities in search of better-paid, higher-skilled and potentially permanent jobs. This will leave farmers hard pressed to find fruit pickers, leaving the supermarkets that usually boast ‘home-grown’ fruits and vegetables at a loss.
Romania and Bulgaria joined the EU in 2007, but several countries, including Germany, France and Belgium, have retained migration restrictions requiring Romanian and Bulgarian residents to apply for work permits. Spain has also maintained these restrictions, but only for Romanian citizens, as Bulgaria hosts a relatively small population of 7.5 million in comparison to Romania’s 21.4 million. However, these restrictions haven’t prevented thousands of migrants from obtaining visas, some illegally, to scour the Schengen area for work. It is predicted that many more will migrate in 2014, seven years after their accession, which will see all EU member states lift their employment barriers.
It is easy to jump on the anti-immigration bandwagon and sign the anti-Romanian and Bulgarian e-petition posted on the HM Government website, but it would be illegal for any country to backtrack on the enlargement agreement now. Freedom of movement is a fundamental right guaranteed to all EU citizens.
Ticking time bomb
The anti-EU political party UKIP have put up a countdown clock on their website, ominously ticking down to January 1st 2014, suggesting the issue of immigration is a ticking time bomb. Roma camps are often portrayed as stagnant eye-sores associated with thievery, and UKIP are not alone in fearing that immigrants may bring such traits with them. But a recent flux of highly skilled immigrants to the UK, working in innovate sectors such as information and communications technology, research industries, programming and broadcasting have proved the benefits migrants can bring.
According to the 2011 census, there are nearly six million foreign-born workers employed in the UK, a number that significantly increased in 2006 when the labour market opened to workers from the eight Eastern European countries (EU8), who joined the EU in 2004.
In 2011, the share of foreign-born people in total employment stood at 14.4 percent, mostly dominating low-skilled sectors such as product manufacturing, and domestic personnel positions; jobs that are often not appealing to British nationals.
The eurozone unemployment rate hit a record high of 11.8 percent at the beginning of 2013 with 18.8 million people out of jobs and youth unemployment at a new high. But entrepreneurial young migrants from Eastern Europe have proved they can stimulate local economies by setting up their own businesses and providing employment for locals. Michael Krajewski founded structural steel company Polsteel in 2009 when he came to London after attaining a Masters in Engineering from Warsaw University of Technology.
The enterprise is rapidly expanding and investing in emerging technologies to address growing markets, providing wealth and jobs from its Twickenham base. “In some other countries it’s so much about politics and pleasing those with influence when you run a business. Here you can get on with growing your business and be a master of your own destiny,” Krajewski told Business Matters magazine.
Benefits not burdens
Politically speaking, opinions on immigration within the EU are torn, but from a business perspective, immigrants skilled in Romania and Bulgaria’s main industries – the automobile, petrochemical and electronics sectors – could benefit the economy in the eurozone. There are fears of poverty migration and benefit tourism stemming from the impoverished Roma minority, who have tainted Romanians’ reputation all over Europe by imposing financial and social difficulties on various cities, particularly the German cities of Duisberg, Berlin and Hamburg. Furthermore, the reputation of Eastern Europeans seeking residency in the UK to reap state benefits is misconstrued: in 2011, 17 percent of immigrants from the 15 countries in the EU prior to the 2004 accession (including France, Germany, Sweden and Spain) claimed benefits, compared to just eight percent of Eastern Europe’s EU8 immigrants. Dr Heaven Crawley from the Institute for Public Policy Research said: “The economic benefit of immigration is very clear. It boosts GDP. The benefits are significantly higher than the costs.” In the fiscal year 2008-09, EU8 immigrants paid 37 percent more in direct or indirect taxes than they received in public goods and services. This is a positive outlook for 2014, especially considering that eco-technology and digital economies are on the rise and in need of fresh workforces. The 2012 Olympics briefly lifted the British economy out of the recession, albeit only for one fiscal quarter, and with more sporting events such as the 2014 Commonwealth Games looming, it is estimated more than 660,000 additional people will be needed to work in tourism and hospitality by 2020.
As Europe tries to crawl out of recession, immigrants can benefit growing businesses. Those migrants who welcome any form of labour (over the abysmal conditions in their own countries) can help independent companies to flourish by taking on work that many local residents on benefits will not do. If statistics from the German Marshall Fund translate over to other job markets, immigrants may bring some promising economic prospects with them, with 80 percent of migrants from Bulgaria and Romania who have gone to Germany since 2007 gainfully employed. Approximately 22 percent of these migrants are highly skilled and 46 percent skilled, pursuing those professions that Germany urgently needs to bolster its economy.
A cultured choice
Despite a report by campaign group Migration Watch UK estimating that 70,000 immigrants could come to the UK in January to join the 140,000 Hungarians and Bulgarians already settled in British communities, the UK may lose expected migrants to other EU countries due to cultural ties. The Migration Observatory at Oxford University reported that most Romanians are expected to choose to go to Italy, Spain and France, where they have linguistic and cultural links, over the UK. Those deterred by the high rate of youth unemployment in those countries are more likely to move to Germany and the Netherlands. It is also unlikely there will be an overwhelming influx of migrants to the UK as there was in 2004, because then the accession only saw the UK, Ireland and Sweden open their labour markets to new EU arrivals. In 2014, all EU countries are lifting any remaining visa restrictions.
There are fears of poverty migration and benefit tourism stemming from the impoverished Roma minority…
The fact that 68 percent of Romanians and Bulgarians who settled in Germany in the last six years were skilled or highly skilled shows the potential for economic growth in other EU nations, when the political borders are lifted at the beginning of next year. As was proven with Polish immigrants, the new wave of settlers may send money back to their home countries, potentially kick-starting their economies and allowing them access to the EU trading markets that they so desperately need. Foreign workers can also have a positive affect on their contemporaries. In 2008, UK supermarket chain Sainsbury’s described its East European employees as industrious and conscientious, stating that they could have a positive effect on their domestic colleagues in the long term.
It is, however, a real possibility that there may not be enough immigrants heading to some countries that are looking to expand their business prospects next year. Approximately half of the EU’8 migrants who arrived in the UK in 2004 had left by 2008. If social and economic situations improve in Eastern European countries as a result of migrants sending money home, in addition to the number of different EU labour markets that have opened up, countries like the UK may look less attractive to the recent wave of young, hard-working migrants. The UK may be forced to either reduce domestic production and export jobs, or import workers from outside the EU.
So the clock on the UKIP website may not be counting down to an immigration apocalypse, but perhaps a brighter future for innovative entrepreneurs and businesses hiring willing workers, that will boost the EU’s economy. As long as there is a balance of skilled workers arriving from Romania and Bulgaria whom are able to support the families they bring with them and the ones they leave at home, there is no reason to believe industrial economies will be crippled by having to pay support to benefit tourists. Although there is good reason to be concerned about a potential lack of strawberries next summer unless more farm hands come to the rescue.