Bettina Wagner (Hertie School of Governance) – Dealing with low wage labour migration in Germany

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Labour Migration in Europe

Anke Hassel / Bettina Wagner

Dealing with Low Wage Labour Immigration Friedrich-Ebert-Stiftung Nordic Office and Arena Idé ConferenceNorra Latin, Stockholm14 November 2014

Labour mobility and migration in Europe is a successstory

• Strong increase of labour migration

• Economic assessment positive

• Further facilitation of labour mobility required and fostered:

– Recognition of qualification and skills

– Cross-border pension arrangements and income support

– Elimination of other barriers for mobility

There is a downside however….

• Revision of Posted Workers Directive as a response to abuses of the system

• Social Dumping debates in Belgium/ France

• Anti-migration sentiments in manymember states

• Cases of labour exploitation on theincrease including human trafficking

How can we improve the reality of labour migration withoutfalling into the trap of right-wing populism?

How can modern welfare states cope with high levels of inequality within the EU, high levels of labour mobility and maintain high social standards?

Immigrants, 2012 (per 1 000 inhabitants)

Kahanec, Martin (2012) : Labor mobility in an enlarged European Union, Discussion Paper series, Forschungsinstitut zurZukunft der Arbeit, No. 6485, p. 40

Kahanec, Martin (2012) : Labor mobility in an enlarged European Union, Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit, No. 6485, p. 43

200000

400000

600000

800000

1000000

1200000

1400000

2005 2006 2007 2008 2009 2010 2011

Figure 1: Number of postings within the European Union (2005-2011)

DE FR BE NL AT IT CH ES UK NO SE LU FI CZ PL PT DK RO HU EL SK IE BG SI LT EE LV MT CY LI IS

Figure 1: Postings by Destination Countries 2011 (in 1,000 )

from EU 15

from EU 12

0 5 10 15 20 25 30

Figure 2: Main destination countries for postings 2007/2011(% of all postings)

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/File:Median_gross_hourly_earnings,_all_employees_%28excluding_apprentices%29,_2010_%281%29_YB14_II.png

Median gross hourly earnings, all employees (excluding apprentices), 2010

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/File:Median_gross_hourly_earnings,_all_employees_%28excluding_apprentices%29,_2010_%281%29_YB14_II.png

Median gross hourly earnings, all employees (excluding apprentices), 2010

Wage differentials are main drivers for intra-EU posting of workers

Explanation for patterns of posted workers (2011)

UK and Ireland

– wage differential and differences in unemployment levels

– unemployment main driving force

Nordic countries

– strong negative relationship with posting and trade union density and collective bargaining coverage

Continental countries:

– Wage differentials is main driving factor (weaker effect than in LME)

– Collective bargaining coverage decreases posting

Southern and Eastern Europe: No strong effects found

Strong wage bargaining institutions diminish the arbitrage of wage differentials in Nordic and continental European countries

How to build a social Europe in the context of labour mobility and migration?

• Maintain and strengthen labour market institutions and social standards;

• Improve the administrative capacities at the level of EU and memberstates for law enforcement;

• Improve the monitoring of employers because of higher levels of vulnerability of migrant workers.

Dealing with low wage labour migration

Anke Hassel / Bettina Wagner

Dealing with Low Wage Labour Immigration Friedrich-Ebert-Stiftung Nordic Office and Arena Idé ConferenceNorra Latin, Stockholm14 November 2014

Source: EU Commission (2012). Posting of workers in the European Union and EFTA countries: Report on A1 portable

documents issued in 2010 and 2011, p. 12. Based on administrative data from EU Member States.

DE FR BE NL AT IT CH ES UK NO SE LU FI CZ PL PT DK RO HU EL SK IE BG SI LT EE LV MT CY LI IS

Figure 1: Postings by Destination Countries 2011 (in 1,000 )

from EU 15

from EU 12

Drivers for extensive use of posted workers in Germany

• Proximity to low wage countries

• History of labour postings from Eastern Europe

• Weak regulation of outsourcing

• Transition agreements on labour mobility

• Weak labour market institutions (low bargaining coverage, no minimumwage)

01020304050607080

United…

union density

United…

collective bargaining coverage

Challenges

• Lack of labour inspectorate

• Lack of union inclusion of migrant workers

• Lack of cooperation of migrant workers to prosecute

• High financial incentives to exploit migrant workers

• Path of dualization of workforce (i.e. works councils)

• High demand for migrant labour due to demographic change

• No sufficient law enforcement and prosecution

Bettina Wagner (Hertie School of Governance) – Dealing with low wage labour migration in Germany

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