Austria and the golden east?

Tobias Spöri about the one-sided debate on migration from Central and Eastern Europe

Migration from Central and Eastern European countries to Austria has increased in recent years. Tobias Spöri from the Institute of Political Science of the University of Vienna on labor migration, economic backgrounds and the consequences for the societies in Central and Eastern Europe.

During Austria’s most recent elections, migration was a central campaign issue. In addition to the question of how to deal with refugees from countries outside Europe, limiting migration from within the EU was also a popular topic. The main concern is immigration from Central and Eastern Europe, which almost every party now represented in Austria’s National Council has described as a threat to the Austrian labour market.

Is intra-EU migration a problem?

In line with the motto “First Austrians, then Europeans”, the 2017 election manifesto of the FPÖ (Freedom Party of Austria) called for a labour market ban on “cheap labour from Eastern Europe.” The idea is that this will stop Austrian workers being crowded out of the market, tackle rising unemployment and prevent “welfare migration” (page 15). Similar calls for limiting labour migration from countries outside the EU and restricting social security benefits for EU citizens have also been made to varying degrees by the Austrian People’s Party (ÖVP), and by the Social Democratic Party (SPÖ) in its Plan A (page 30). Given that the expected coalition between ÖVP and FPÖ will have a very similar view on the matter, we can assume that measures of this nature will be included in the government’s programme.

It is true that migration from countries in Central and Eastern Europe to Austria has increased in recent years. Since 2013, the number of workers from Central and Eastern Europe has risen from around 180,000 to nearly 300,000. In August 2017, the majority of those workers came from Hungary (90,000), followed by Romania (52,000), Poland (40,000) and Slovakia (34,000).

According to a report published by Public Employment Service Austria (AMS) in February 2016, accommodation and food services, the construction industry, and administrative and support services employed a particularly high number of these workers. AMS says that administrative and support services mainly concern temporary contracts and cleaning services for buildings, streets and vehicles. Healthcare – specifically the care sector – is another area which employs a disproportionately large number of people (particularly women) from Central and Eastern Europe.

In Austria, all of these fields have a shortage of workers or are subject to particularly high pressure on wages. As a result, many of the occupations are poorly paid – despite the burden of the job being extremely high in some cases. The care sector demonstrates this especially well, since its low wages are at odds with the high workload and de-facto 24/7 working week. Very few Austrians are likely to agree to work under such conditions.

The wealth gap in the European Union

One of the driving forces behind labour migration from Central and Eastern Europe is the large wealth gap that still exists between the old and new member states. This causes migration from the economic (semi-)periphery to the centre. The following comparison of GDP per capita in purchasing power standard (PPS) shows that the difference between “East” and “West” still exists.

However, the chart also shows that the new member states have moved closer to the EU average (=100) over the past decade. In 2006, GDP per capita in PPS for EU member states in Central and Eastern Europe was around 59. By 2016, it had risen to nearly 70. Nevertheless, the process of catching up has taken longer than expected. This is partly due to the financial and economic crisis of 2008/2009, which hit the countries of Central and Eastern Europe significantly harder than their western neighbours. Since then, however, economic growth in Central and Eastern Europe has become much stronger and is now above the EU average.

Is Austria a victim of eastern enlargement?

Debates during the election campaign primarily focused on labour migration to Austria and therefore on Austria as a victim of the EU’s enlargement to the east. However, the fact that Austria is a major beneficiary of the single market, and especially of eastern enlargement, was rarely mentioned. A veil was also drawn over the fact that limiting intra-EU migration would infringe on the core values (and treaties) of the European Union.

The European single market is a central pillar of the European Union. Its aims are to ensure peace through economic integration and cooperation, and to increase prosperity in the European Union. The European single market is built on four fundamental freedoms: the free movement of services, capital, goods and people. The free movement of people allows EU citizens to live and work in other member states.

The countries of Central and Eastern Europe joined the European Union in stages (in 2004, 2007 and 2013). Supporters of the eastern enlargement stressed the historical dimension of the decision. Germany’s then chancellor Gerhard Schröder, for instance, said that the founding fathers of the European Union believed strongly that this Europe must not be allowed to end at the Iron Curtain. He also noted that the enlargement meant the “European family” was finally being reunited.

Given the size of the economic differences between the EU’s old and new member states, the new members were integrated gradually. The labour markets in the old member states were initially only opened to highly skilled keyworkers. Later on, they opened up for seasonal workers and understaffed occupations, and eventually, on 1 May 2011, to all workers from the countries that joined in 2004 (Romania and Bulgaria gained full access in 2014).

Overwhelming support for intra-EU migration

Aside from considering Europe’s core values (and treaties), it should also be noted that support for intra-EU migration has been growing in Austria since 2015. In autumn 2014, the European Commission began issuing its half-yearly Eurobarometer surveys to ask European citizens how they feel about migration within the European Union. The results show that there is currently (as of May 2017) majority approval for intra-EU migration within almost all member states. Austria is 16th on the list, with a clear approval rating of 62 percent (EU average: 63 percent).

The chart below shows that opinions in Central and Eastern European member states are generally more negative towards intra-EU migration. It also shows that the average approval rating has been growing steadily since spring 2015 – from about 52 percent to just over 63 percent.

How the Austrian economy benefits from eastern enlargement

Another, little-considered aspect of the debate surrounding intra-EU migration from Central and Eastern Europe to Austria is that many Austrian companies are active in Central and Eastern Europe in a variety of sectors. These include finance and insurance, the property market, and goods processing. Aside from the access to new markets that came with the eastern enlargement, Austrian firms benefit significantly from the wage gap between old and new member states.

The Austrian Economic Chambers (WKO) estimate that every tenth job in Austria depends on exports to Central and Eastern Europe. In addition, Austrian firms generate some 25 percent of their profits in Central and Eastern Europe.

Consequences for societies in Central and Eastern Europe

An equally little-considered issue in Austria concerns the consequences for societies in Central and Eastern Europe. Since the Iron Curtain fell, almost all the new EU member states have lost around ten percent of their population as a result of migration. Destinations include the United States, the United Kingdom, Germany and Austria. These exoduses and their subsequent costs are one reason why opinions on intra-EU migration are more negative in Central and Eastern Europe than in the rest of the EU.

Losing highly qualified workers (known as brain drain) has particularly negative consequences for the countries because many positions remain unfilled. In addition, the wage gap within the European Union means that highly qualified workers from Central and Eastern Europe can earn more in Western Europe doing jobs that are below their skill level than they can when practicing the profession they trained for in their home countries (brain waste). This is the case in healthcare and IT, for example.

Labour market restrictions are unlikely and would have a negative impact

If, as was discussed during the election campaign, the Austrian labour market did discriminate against EU citizens, it would be a clear violation of the European Union’s core values and its treaties. Article 21 of the Treaty on the Functioning of the European Union (TFEU) does say that by “acting in accordance with a special legislative procedure”, it is possible to “adopt measures concerning social security or social protection.” However, the European Parliament must first be consulted on the measures, which must then be unanimously adopted by the European Council – in other words, by the heads of state and government of all member states – and would then apply in all member states equally. Given that these types of measures would not achieve a consensus across all 28 (soon to be 27) member states, an EU-wide regulation is unlikely.

Even if Austria’s new government did succeed in introducing this kind of measure, restricting the labour market would have far-reaching consequences and would receive a great deal of media attention in Europe. With Brexit underway and the EU’s direction unclear, this type of action would do further damage to the European project. Given that European policy is one of the contentious issues in the ongoing coalition talks, it is hard to see which position Austria’s future government will adopt on this issue.

In addition, the Central and Eastern European member states would not accept the measure lying down. It is conceivable that they would respond by increasingly fencing off their markets and introducing obstacles for foreign companies. That, in turn, would damage the Austrian economy in the medium and long term. This flipside – the negative consequences for the European project and Austria’s economy – should therefore be highlighted in any discussion of restricting intra-EU migration.

Original in German. First published on 12 December 2017 on Eastblog (Blog of the research group for Eastern Europe at the Department of Political Science of the University of Vienna) and on 13 December 2017 on
Translated into English by Jen Metcalf.

This text is protected by copyright: © Tobias Spöri. If you are interested in republication, please contact the editorial team.
Copyright information on pictures, graphics and videos are noted directly at the illustrations. Cover picture: Construction site Central Station Vienna. Photo: © iStock/tommy_wunderer.

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