Germany Shoots Self in the Foot with Eastern European Worker Ban

[Kampfbaer]

FORTRESS DEUTSCHLAND
Germany Shoots Self in the Foot with Eastern European Worker Ban
By Miriam Vogel and Torben Waleczek

A new report by two heavyweight economic think tanks says Germany is missing the boat on EU expansion. It warns that restrictive immigration rules are preventing Europe's largest economy from profiting from the EU's newest members.

The European Commission recently got a message from Berlin: Unfortunately Germany is currently experiencing a "serious disturbance" in its labor market -- which has made it necessary to keep its borders shut to Eastern European workers until 2011, German Labor Minister Olaf Scholz told the European Union's executive body in Brussels at the start of May.

His brief message made one point clear: Germany was making the most of the transition rules of Eastern European expansion. Aside from Austria, Germany is the only country which has kept its borders closed to Eastern Europeans.

But Scholz's decision has sparked mounting criticism. Economic experts say his controls on freedom of movement are a big mistake. Germany's restrictive immigration policies could turn it into a loser of the EU's recent expansion, the leader of the German Institute for Economic Research (DIW), Klaus Zimmermann, said on Wednesday.

Zimmermann and experts from the Institute for the Study of Labor (IZA) conducted research into migrant labor during the first five years following the 2004 expansion of the EU to include 10 new largely Eastern European member states. Romania and Bulgaria joined in 2007. A report released by the two organizations on Wednesday concludes that "countries which opened their borders early on have profited most."

The positive impacts were most striking in England and Ireland: "Migrants from Eastern Europe are to a large degree prepared to take on jobs and they often fulfill the requirements of the local job market."

The background to the discussion is freedom of movement for workers in the bloc. In principle, every EU citizen is allowed to work in any other member country. However, following the eastern expansion, a number of countries sought exceptions to the rule, fearful of wage dumping and increased competition in the labor markets. They obtained the right to tighten their borders with Eastern Europe until 2011 at the latest, preventing the inflow of workers from countries that joined the EU in 2004. That affects people from Poland, Hungary, the Baltic States, the Czech Republic, Slovenia, and Slovakia. Restrictions are also applied to Romanians and Bulgarians.

Sealed Borders

But DIW chief Zimmermann said the countries' fears had not been borne out by reality. "There is no evidence that migrants from the new EU states have displaced local workers, nor have they exerted pressure on earnings, or become more dependent on state aid (like unemployment or welfare benefits) than local workers," he said.

And while other EU countries are more accessible for foreign workers from the east, Germany's eastern borders remain sealed -- a missed opportunity in Zimmermann's view. Because of the restrictions imposed by Europe's largest economy, he argues, highly qualified workers are making a beeline for England and Ireland instead of seeking opportunities in Germany.

Moreover, the government in Berlin has deliberately prevented Germany from forging a reputation as a "country of immigration," the report claims. "Now a clear signal needs to be sent, showing that foreign qualified workers are wanted here and urgently," said Zimmermann.

He said the appeal is necessary, even in this time of economic crisis: A shortage of workers in Germany is already taking shape, he said, and it can only be remedied by an increase in immigration. The researchers view delays in the opening of Germany's borders because of the crisis as "short-sighted."

A Missed Opportunity?

Herbert Brücker of the Institute for Employment Research (IAB) in Nuremburg supports the DIW's position. "In the long-term Germany is losing out because it is not adopting freedom of movement rules for workers, even when, in the short-term, there may be a slight increase in the number of unemployed," he said. The border controls should have been relaxed in 2005 or 2006, he said: "The coalition government (of Chancellor Angela Merkel's conservative Christian Democrats and the center-left Social Democratic Party) already missed that chance."

Labor Minister Scholz has defended himself against the stream of criticism. At a conference organized by DIW in Berlin, the Social Democrat argued that since the start of the year academics, including Eastern Europeans, have enjoyed complete freedom of movement within the EU. "Since the start of this year, Germany has had the most open labor market for academics in the entire world," Scholz said, stressing it was already possible to lure qualified workers to Germany.

He argued that German businesses needed improved training programs. Instead of encouraging foreign workers to come to Germany, he argued, the country should improve the training given to young Germans, arguing that young people with an immigrant background need to be better integrated into the job market.

But DIW head Zimmermann responded skeptically, instead pleading for a greater opening of the country's labor market. He said Germany would not be able to create the number of trainee positions necessary to cover its labor market requirements.

http://www.spiegel.de/international/europe/0,1518,632504,00.html

[PeterG]

"countries which opened their borders early on have profited most."

The positive impacts were most striking in England and Ireland: "Migrants from Eastern Europe are to a large degree prepared to take on jobs and they often fulfill the requirements of the local job market."

http://www.spiegel.de/international/europe/0,1518,632504,00.html

As far as i understood it, there is a sharp increase in unemployment in the UK, and the huge influx of minimum-wage eastern european workers are pushing wages down. Exactly what is the 'enormous profit' by it all?

Here in Norway, there have been some high-profile cases of entrepreneurs making millions in profit by hiring poorly paid eastern europeans.

When these eastern europeans lose their jobs, they are entitled to benefits - and thousands of them live on benefits here now. So, the entrepreneurs who hired them made millions. And i, and other taxpayers foot the bill for their benefits if they lose their job. We also pay for the child support and other things they are entitled to while working here. And Norwegian workers have a hard time finding jobs, competing with these very-low paid eastern europeans. Wages are pushed down. What exactly is the 'huge profit' to our society? I realize the rich people and corporations who hire them, are making a killing by it, but the rest of us?

I don't get it.... Can someone enlighten me?

[a_very_ex_STAB]

As far as i understood it, there is a sharp increase in unemployment in the UK, and the huge influx of minimum-wage eastern european workers are pushing wages down. Exactly what is the 'enormous profit' by it all?

Here in Norway, there have been some high-profile cases of entrepreneurs making millions in profit by hiring poorly paid eastern europeans.

When these eastern europeans lose their jobs, they are entitled to benefits - and thousands of them live on benefits here now. So, the entrepreneurs who hired them made millions. And i, and other taxpayers foot the bill for their benefits if they lose their job. We also pay for the child support and other things they are entitled to while working here. And Norwegian workers have a hard time finding jobs, competing with these very-low paid eastern europeans. Wages are pushed down. What exactly is the 'huge profit' to our society? I realize the rich people and corporations who hire them, are making a killing by it, but the rest of us?

I don't get it.... Can someone enlighten me?

Are you some sort of communist - how dare you criticise the glories of globalised capitalism! ;-)

[PeterG]

Are you some sort of communist - how dare you criticise the glories of globalised capitalism! ;-)

Indeed, i ask myself the same question sometimes.. I am at the far right on some issues, and to the left on others.

I honestly do question the glorious advantages of accepting a large number of cheap eastern european workers, saying how wonderful it is 'for the economy'. What is 'the economy'? I know that the millionaires who just finished some rather posh new apartments close to where i live, saved a lot - probably 60-70% of their normal costs, because they used these cheap workers.

The apartments still go for what the market is willing to pay of course. So we don't get cheaper flats. All the profit go straight into the pocket of the entrepreneurs.

I know Norwegian workers who used to have jobs at these firms, but can't compete with people who work for 1/3rd of a normal salary here, obviously. I suppose our own people aren't part of 'the economy'.?

Many eastern european workers also bring ther families - so there is added pressure on infrastructure, like public schools. We, the taxpayers, foot the bill of course. Also for child support and other benefits they are entitled to, while here. And unemplyment benefits after they lose their job.

Meanwhile, the rich entrepreneurs are making a killing. The rest of us are paying for it. If someone can tell me how exactly this is a 'good thing' for us, i'm all ears!

[Wojtop]

Not sure how it looks like in Norway but I used to work in UK. Poles over there do the jobs Englishman don't even want to touch. You can see MA degree holders collecting potatoes, doing weeding, loading heavy stuff on trucks, working on construction sites, being gardeners - 12 or 15 hours a day if needed for minimal salary etc. Very very few British guys ever want to take this kind of low paid, dull and hard job, there are much better options if only you speak perfect English - as most of Britons obviously do.
Your gains - cheaper food, cheaper transport, cheaper appartments, cheaper public services. When crisis started and jobs were lacking most of those emigrees started to flow back to Poland so no real worry for you.
Your right to dislike it but judge the costs and benefits fairly :)

[PeterG]

Not sure how it looks like in Norway but I used to work in UK. Poles over there do the jobs Englishman don't even want to touch. You can see MA degree holders collecting potatoes, doing weeding, loading heavy stuff on trucks, working on construction sites, being gardeners - 12 or 15 hours a day if needed for minimal salary etc. Very very few British guys ever want to take this kind of low paid, dull and hard job, there are much better options if only you speak perfect English - as most of Britons obviously do.
Your gains - cheaper food, cheaper transport, cheaper appartments, cheaper public services. When crisis started and jobs were lacking most of those emigrees started to flow back to Poland so no real worry for you.
Your right to dislike it but judge the costs and benefits fairly :)

If it had been a matter of getting someone from the outside to fill vacancies that can't be filled otherwise - fine! Everyone wins.

But when wer'e talking about jobs like builders, carpenters, electricians, plumbers - while our own are increasingly laid off...? That's a 'blessing' for us..? Pushing wages down, and adding to the cost of schools, etc. Various benefits.

It is NOT true here, that it's a case of finding someone to do the work we don't want to do ourselves. I can't speak for other nations.

But if i was a rich guy with my own business, like those who built the luxury condos close to where i live, i would applaud the glory of the EU as well, with the social dumping we see now.

[hsh2]

I honestly do question the glorious advantages of accepting a large number of cheap eastern european workers, saying how wonderful it is 'for the economy'.

I guess the whole "it's good for the economy" is the same as the "illegal immigrants from x 3rd world paradise are a plus to our society" mantra. It's this pathological craving for admiration with the wrong people and this pathological envy to show grandeur to god knows whom, "I'm above criticizing anything but my own, that's for the uneducated bigots". Said attitudes have transformed fast food workers in intellectuals for the last decade or so.

Thanks Daniel Cohn-Bendit and friends.

[shadowsrider]

Of course Germany are late. And what can be offered there is much less attractive than UK offer.
Although I compared my salary and level of living in Warsaw and in Germany (I am telco enginner) and it seems that in terms of purchasing power I am even richer in Poland while of course nominally I earn lower than German engineer.

[Eye]

Many eastern european workers also bring ther families - so there is added pressure on infrastructure, like public schools. We, the taxpayers, foot the bill of course. Also for child support and other benefits they are entitled to, while here. And unemplyment benefits after they lose their job.


So, liquidate social care and you will not have any reason to worry about your taxies.
AFAIK 100 years ago everybody could live and work in any European country or in US without so big restrictions or permissions like today. I'm not sure if we were more free 100 years ago or are we more free today.

[little icebear]

So, liquidate social care and you will not have any reason to worry about your taxies.
AFAIK 100 years ago everybody could live and work in any European country or in US without so big restrictions or permissions like today. I'm not sure if we were more free 100 years ago or are we more free today.

Dude... I don´t even know, where to start, so I´m just going to ask you what kind of stuff you´re using, so I can ask one of my German-Polish friends to fetch me some, when he or she visits the Grandparents...
Must be real good sh*t.


Many eastern european workers also bring ther families

I can only speak for Germany, but around here, mainly those who came either in the 80s, prior to the fall of the iron curtain, and those who came in the early 90s brought their family along.
And BTW - those Poles are immigrants from Paradise! They are practically German by now and better integrated into our society, than "Guestworkers" we´ve taken in 40+ years ago!
I have some Polish-German friends. One buddie of mine took me along for a visit in Poland where we spent some days with his grandparents. Grandma and grandpa are pretty much the only connection to polish society our Polish immigrants from that generation have got.

And Poles that came over to work here more recently generally don´t bring their families. They are literary "Guestworkers". They come alone, spend some time here working and afterwards they go back.
My own parents just visited our former housecleaner in Poland. She worked and lived at my parents home for several years and kind off became part of the family. She stayed and worked here until she had saved enough money to start her own business. That was around 1996 - 1999. She got married in 2004 and invited my whole familiy to Bielsko-Biała.

[Rapier55]

When you Euro's figure this out let your friends on the other side of the pond know how it worked out.

[Mr Gently Benevolent]

Not sure how it looks like in Norway but I used to work in UK. Poles over there do the jobs Englishman don't even want to touch. You can see MA degree holders collecting potatoes, doing weeding, loading heavy stuff on trucks, working on construction sites, being gardeners - 12 or 15 hours a day if needed for minimal salary etc. Very very few British guys ever want to take this kind of low paid, dull and hard job, there are much better options if only you speak perfect English - as most of Britons obviously do.
Your gains - cheaper food, cheaper transport, cheaper appartments, cheaper public services. When crisis started and jobs were lacking most of those emigrees started to flow back to Poland so no real worry for you.
Your right to dislike it but judge the costs and benefits fairly :)A lot of businesses (such as agriculture) do rely heavily on migrant workers but most including the last two that I have worked for just take them on because they a cheap and in one case just plain abuse them.

[Eye]

Dude... I don´t even know, where to start, so I´m just going to ask you what kind of stuff you´re using, so I can ask one of my German-Polish friends to fetch me some, when he or she visits the Grandparents...
Must be real good sh*t.


Fresh air is quite enough to see such obvious obviousness.

[JCR]

I wouldn't say we have less poles than the UK.
A large number of polish people have german passports, so they don't count as "Poles" on paper.
These range from people who become more or less german (Podolski ;)) to people who just discovered their german roots to get a work permit.
But generally we don't need that many people for the better paid jobs (engineering, construction) the UK is offering to Poles as our education system is maybe a fail, but not such a total fail as the british.
Asparagus and grape pickers and other very low paid seasonal jobs are usually done by Rumanians or even Moldovans nowadays, and it wouldn't surprise me if the more well off parts of Poland employ their own guestworkers from Ukraine or so as well.
Generally germans had to become less picky about low wage jobs because of stricter social benefit legislation, so there are not as many jobs in that sector anyway.

[wigon]

Ah you guys are complaining about what we've had for decades in America. Get used to it. Globalized capitalism means free flow of labor and jobs. Supposedly its supposed to all balance out within the laws of supply and demand as long as government gets out of the way. At least thats what they keep teaching us in America. Its really a religion here. Your immigrant problems in Germany are very much like ours with Mexico. (Watch South Park episode on Mexican immigrants).

However with time, German works will become accustomed to working at the same wages as Eastern Europeans. Why? Because they'll have to. Supply and Demand.
Along with this goes the unspoken issue that publicly traded corporations MUST maximize profits. If they are not continuing to grow revenue-wise, then their stocks decline in value usually unless they are going through some type of expansion. However with hiring and firing cycles, profit margins are balanced while epansion is done via LOTS of credit in order to insure that on paper, quarterly earnings look nice and fat (despite mounting debt).
Despite this, this pressure to maximize profits forces all costs to be cut as much as possible meaning that salaries must be cut to the bare minimum that a company can legally get away with. Likewise the supply and demand for particular jobs helps to factor in what that salary will be in comparison to competing job markets in other nations (especially neighboring ones). In short... if Germans want the jobs bad enough, they'll work at the lower wages Eastern European workers will work at. That's just the laws of supply and demand in capitalism. Socialist practices of wage control and laws regarding benefits and other worker protections go against capitalism as it makes such countries not able to compete with nations like China who do not have many such laws and protections of its workers (despite calling themselves communists). With that said, their jobs requiring education and greater technical skills do have such protections mainly because the shortage of employees in those fields demanded such benefits in order to attract talent. Unskilled labor however is in abundance there so such workers can either not work and be beggars or they can work and feed their families. So basically, China has been able to expand rapidly economically after throwing off the shakles of socialist principles regarding labor and capitalism. Economic measurements are primarily about how rich a nation is in total, not about how exploited the lower classes are. The only limitations to this exploitation of workers is essentially how much a population is willing to put up with it and the level of social unrest that occurs past a certain point. Likewise during economic down-turns, the poor feel the pinch the most. Hence one could aregue that certain economic safety nets are needed to prevent widespread social unrest.

Germany is going the other way and will lose in the global economy that they are linked into as their EU counterparts embrace further the American/Chinese style of capitalism.
Meanwhile in a capitalist system based on the concept of infinite profits in a world of finite resources (with technology and innovation seen as the key way to maintain growth), we are using up rapidly all of the world's resources as the developing world seeks to emulate the dominant 1st world nations and their lifestyles.

Personally my opinion is that we are all experiencing one massive rejection of reality and intentionally indulging in a fastasy world based on short-term economic gains while ignoring long term consequences. My hope is that the EU, China, America, and other major economic powers will look more at how to develop self-sustaining economic models that can be tested. Until then, enjoy the ride while it lasts.

Wigon

[ting]

As far as i understood it, there is a sharp increase in unemployment in the UK, and the huge influx of minimum-wage eastern european workers are pushing wages down. Exactly what is the 'enormous profit' by it all?

Here in Norway, there have been some high-profile cases of entrepreneurs making millions in profit by hiring poorly paid eastern europeans.

When these eastern europeans lose their jobs, they are entitled to benefits - and thousands of them live on benefits here now. So, the entrepreneurs who hired them made millions. And i, and other taxpayers foot the bill for their benefits if they lose their job. We also pay for the child support and other things they are entitled to while working here. And Norwegian workers have a hard time finding jobs, competing with these very-low paid eastern europeans. Wages are pushed down. What exactly is the 'huge profit' to our society? I realize the rich people and corporations who hire them, are making a killing by it, but the rest of us?

I don't get it.... Can someone enlighten me?

Sure. If these employees pay taxes, they are entitled to the benefits that entails.
I have yet to hear about anybody loosing their jobs because there is cheaper eastern Europeans available. Also the Unions are quite powerful, and with the current government in charge, entrepreneurs not paying what is deemed acceptable have a hard time.


Indeed, i ask myself the same question sometimes.. I am at the far right on some issues, and to the left on others.

I honestly do question the glorious advantages of accepting a large number of cheap eastern european workers, saying how wonderful it is 'for the economy'. What is 'the economy'? I know that the millionaires who just finished some rather posh new apartments close to where i live, saved a lot - probably 60-70% of their normal costs, because they used these cheap workers.

The apartments still go for what the market is willing to pay of course. So we don't get cheaper flats. All the profit go straight into the pocket of the entrepreneurs.

I know Norwegian workers who used to have jobs at these firms, but can't compete with people who work for 1/3rd of a normal salary here, obviously. I suppose our own people aren't part of 'the economy'.?

Many eastern european workers also bring ther families - so there is added pressure on infrastructure, like public schools. We, the taxpayers, foot the bill of course. Also for child support and other benefits they are entitled to, while here. And unemplyment benefits after they lose their job.

Meanwhile, the rich entrepreneurs are making a killing. The rest of us are paying for it. If someone can tell me how exactly this is a 'good thing' for us, i'm all ears!

What are you talking about? You are talking incoherent nonsense.

Those apartments near you, they passed inspection without problems? I doubt it. Using non Norwegian speaking labor tends to be problematic due to different rules and regulations being in Norwegian. They also have huge problems adopting to the Norwegian way of doing things. I have rarely met Norwegian construction workers who have the patience and time to explain all that needs explaining to someone that can not understand the way they speak.

1/3 of normal salary? Call the Union, any union, call VG or Dagbladet, they'l be there before you know it. Call the arbeidstilsynet and they will be there the next week and close that place down after ten minutes.

Social dumping is a NO in Norwegian society. The rules are full of holes, but companies who get discovered exploiting those holes get a **** load of bad press.


If it had been a matter of getting someone from the outside to fill vacancies that can't be filled otherwise - fine! Everyone wins.

But when wer'e talking about jobs like builders, carpenters, electricians, plumbers - while our own are increasingly laid off...? That's a 'blessing' for us..? Pushing wages down, and adding to the cost of schools, etc. Various benefits.

It is NOT true here, that it's a case of finding someone to do the work we don't want to do ourselves. I can't speak for other nations.

But if i was a rich guy with my own business, like those who built the luxury condos close to where i live, i would applaud the glory of the EU as well, with the social dumping we see now.


The construction workers I know have no problems. One of my best friends is a carpenter and even now he is working himself to exhaustion. His company has lost contracts to companies using cheaper labour, but they can't compete on quality. People who save a little on using these kind of companies usually end up paying a lot more due to the work not being as advertized.

What are you Trøndere doing up there? Us Bæringer are able to compete on quality why can't you guys? To busy trimming your mustaches and driving around in your Opel Mantas?p-)

I admit that social dumping is an issue, and I hate it when rich assholes are able to get rich by exploiting loopholes, but the situation your describing is far removed from the Norway I know.

There will be less of these problems as time goes by, unless FRP gets into government. They are all for cheap foregin labour, just check their party manifesto.

[Derbedeu]

Guess what, it's a two way street. I know for a fact that currently there is only 1 bank in all of Romania that is Romanian owned. The rest is owned by Greeks, Austrians, and Germans. It is the same with many other industries. Other key industries are now owned by Western European countries. Not to mention the ex-pats who buy land in these countries for their retirement and thus drive up the prices to levels that preclude most people from Romania being able to afford buying the land. I'm sure that this is probably the same in other Eastern European countries in the EU. Part of joining the EU meant that we had to privatize a ton of stuff and inevitably the Western European countries profited from this (I don't necessarily resent this myself, though I do have friends who often complain of this stating that we "sold ourselves").

That's why it annoys me when I see things complaints against Eastern European workers. The fact of the matter is that they usually end up taking jobs that native workers don't want to touch. They also integrate well in their new country. I have family friend in France, Spain, Italy, Germany, Switzerland, and Belgium, and all of them are are contributors to their community.

Most of you aren't looking at this in the long-term. Currently Eastern Europe standards of living is lower than in Western Europe (thanks Communism!), but in the future things will change for the better. Who's to say that in the future a Dutch won't be looking to get a job in Slovakia, or German in Poland? Look at how the UK was seen as the "sick man" of Europe in the 70's or Spain in the early 80's after years of Franco's rule. I'm sure all these countries were seen as a burden at the time, but their integration into the EU has proven to be a beneficial one. Same with Eastern Europe. Just keep in mind that progress doesn't come overnight.