What happens next?

Nick Isles, an associate director ofThe Work Foundation, takes a look at accession and migration in the expanded European Union and what it means for the HR department

On 1 May 2004, 10 new countries joined the European Union. These countries – Poland, Malta, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, the Slovakia and Slovenia – have added 75 million people to the EU population, bringing it up to 450 million. The EU is now the world’s third-largest labour market after India and China.

Never in European history have so many been bound by common conditions of peace, democracy and the rule of law. In short, 1 May was a momentous day deserving of celebration. Yet, far from celebrating the accession of these countries, the debate in western Europe has been dominated by one subject – mass migration.

For many people, including many in the HR profession, the spectre of mass economic migration from accession countries to the West is a fearful prospect. To allay such fears, many western European Union countries have implemented strict controls over migration from the accession countries for the first two years following accession. After that, the rules will be reviewed and extended for up to five more years.

In the case of the UK, having first decided to keep borders open, the Government belatedly introduced a registration scheme, whereby individuals from all the accession countries, except for Malta and Cyprus, will have to pay £50 for a Home Office certificate confirming their eligibility to work in the country. This will lapse if they lose their job within the first year of work, and if they find a new job, they will need to renew their registration. After 12 months of continuous employment, such individuals will be able to work in the UK without any restrictions, and access jobseeker benefits if they become unemployed.

So much for the technicalities – what about the facts? Is western Europe likely to be swamped by migrant workers, or are such fears grossly exaggerated? The latest empirical evidence to be found in a range of studies shows that EU net migration, which stood at 2.2 per cent or roughly 680,000 people in 2002, was slightly below the global average of 2.5 per cent. Yet, richer western countries could look enticing for workers from accession countries, given average income gaps of around 60 per cent between eastern Europe and the west.

Econometric studies conducted in the 1990s calculated migration of around 3 per cent over a 15-year period, or around 3 million people, while others put the figure at between 5 and 10 million. And more recently, a European Commission study put the figure as closer to 4 million migrants between now and 2030.

But in October 2003, the UK Home Office told the Government that it expected economic migration to the UK from accession countries to range between 5,000 and 13,000 people each year in the initial period after accession.

Migrants in the UK

However, many of the migrants most likely to move to find work are already here. In 1998, there were 900,000 citizens of central and eastern European countries living and working in the 15 EU states. It is therefore arguable that much of the expected economic migration has already occurred.

Demographics plays a part. Both the existing 15 EU countries and the accession countries share similar demographic profiles. In fact, the accession countries have lower fertility levels and higher death rates, creating even more opportunities for the more highly educated and the highly skilled in particular to find good jobs in the countries of their birth.

The transfer of resources for economic development, increased trade and inward investment flows have all accompanied accession. As happened with Spain, Ireland, and to a lesser extent, Portugal and Greece, accession to the EU is making ‘catch up’ economic development speed up considerably.

There is little evidence to show that existing citizens of countries in the EU have been on the move migrating away from their countries of origin. For example, Portugal is welcoming back a net figure of around 13,000 nationals each year. We have not seen mass migration from Madrid to Manchester, or from Lisbon to Liverpool.

The EU has yet to enjoy US levels of geographic mobility, much of which is due to differences in language. But it also has to do with the slow pace of change around systems of doing business that the Lisbon process – the ongoing raft of policies agreed by all EU governments in 2000 to make the EU the world’s leading knowledge economy by 2010 – was supposed to cure.

In short, there is little hard evidence to support the contention that the original 15 EU countries are likely to be swamped by migrants from the accession countries (see box above).

For those who do make the journey to the UK, what are the implications for HR professionals? Will these new migrants make good workers? It is important to split such migrants into two broad groups: the highly skilled, and the rest. All the existing economic evidence shows that people tend to move to places where sectors are offering jobs that match their existing skills. With 500,000 job vacancies at any one time and employment reaching record levels of more than 28.3 million people in work, the Government and employers would welcome a new influx of relevant skilled workers. For the UK to continue moving up the productivity ladder, it needs to train and attract the brightest and the smartest. Low value, low productivity industries and jobs, are yesterday’s story.

But it is not only the highly skilled that the Government value. As the Treasury stated in the 2002 pre-Budget report: “The Government recognises that those with very high skills are not the only people who contribute to the economy. Migrants with lower and intermediate skills may also complement the skills of the domestic population and help raise productivity”.

For example, construction workers are in relatively short supply with the recent return of so much Irish labour to Ireland. The Government’s proposed housing expansion in the South East and other parts of the country will provide a magnet for low-skilled workers from eastern Europe and elsewhere, and the employers among the construction industry keen to employ them. And London’s service sector already enjoys the labour of many eastern Europeans, whether it be waiting on tables or offering affordable childcare to the capital’s dual income households.

However, in preparing for job enquiries from workers from the accession countries or in setting up operations in accession countries, HR professionals need to be aware of four broad requirements.

Rules for employment

The first is registration of accession country workers. It is the responsibility of the HR professional to make sure the person they hire registers within a month of taking up the job. Successful registration needs to be kept on file. Failure to register and monitor will result in a £5,000 fine.

To avoid hiring illegal workers, the Home Office is insisting that employers – that is, HR departments – must check passports, work permits, birth certificates, certificates of naturalisation or registration certificates, taking photocopies along the way.

There also needs to be a balance in recruitment. If all the best, highly-skilled people move west, the accession countries are less likely to grow at a faster rate, and the people coming into the UK will be in a stronger bargaining position regarding wage levels. Rather than keeping a lid on wage inflation, recruiting the highly-skilled workers too rapidly could have the opposite effect. A more diverse workforce also means that HR teams need to develop and adopt the latest thinking on ‘inclusion’ strategies.

Finally, some accession countries are behind in their compliance with directives, including works councils, data protection and working time. It is important that HR professionals working for companies operating in any of the accession countries don’t fall foul of the law, but observe the spirit of these directives in all the territories they operate in. The proposed EU services directive due to become operational in 2007 will help cut out unnecessary ‘red tape’, and make it easier for service businesses to set up throughout the expanded EU.

The new Europe is an exciting place: bigger, more diverse, with more opportunities for UK business to expand East and recruit to the West. That will be good for these countries, and it will be good for us.

HR Responsibilities

• To ensure that any workers that are hired are registered within one month of taking up the job. HR must check and cake copies of passports, work permits, birth certificates, certificates of naturalisation or registration certificates


• A more diverse workforce will require the development and adoption of inclusion strategies


• Ensure compliance with EU directives including those on works councils, data protection and working time


• Be aware of the EU services directive, due to be operational in 2007, which will make it easier for service businesses to set up throughout the expanded EU

Accession countries – some vital statistics
	GDP per capita (euros)	Population (millions)	Unemployment rate (%)	Life expectancy (2000)	Passenger cars per 100 inhabitants (2001)
Poland	9,410	38.6	20	73	27
Czech Republic	13,700	10.3	7.3	75	34
Latvia	7,750	2.3	12.9	70	25
Estonia	9,240	1.3	9.1	70	30
Hungary	12,250	10.2	5.6	71	24
Lithuania	8,960	3.5	13.1	72	32
Slovenia	11,200	2.0	6.0	75	44
Cyprus	17,180	0.7	5.3	76	37
Malta	–	0.4	7.5	79	50
Slovakia	13,300	5.4	19.4	75	24
UK	25,530	60	5.1	75	44
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