Workers from 2004 EU-accession countries granted freedom of movement

As of May 2011, new rules on the freedom of movement for workers from eight eastern EU-accession countries took effect. These workers are now allowed to move to Germany and take up employment without any restrictions. This has sparked a debate between the social partners with employers welcoming the new freedom of movement as a means of overcoming skilled labour shortages, and unions voicing concerns about wage dumping. They have called for a national minimum wage.

Background

On 1 May 2011, freedom of movement granted to workers from EU-accession countries joining the union in 2004 took effect in Germany. This means that people from Latvia, Lithuania, Estonia, Slovakia, Slovenia, the Czech Republic, Poland and Hungary wanting to live and work in Germany now have free access to the German labour market. Workers from these eight countries no longer have to obtain a work permit before taking up a job in Germany, as they did during the seven-year transition period in which older EU-countries could regulate entry to their labour market for workers from younger EU-accession countries.

In a press statement (in German) issued on 1 May 2011, the German Federal Minister of Labour and Social Affairs Ursula von der Leyen, welcomed the latest legislative changes. The Minister estimates that around 100,000 workers, most of them young, mobile, well-educated and skilled, will come to Germany each year. However, the introduction of freedom of movement for workers has sparked a debate between the social partners, whose views on the topic differ greatly.

Social partners’ views

In February 2011, the Trade Union for Building, Forestry, Agriculture and the Environment (IG BAU) was already welcoming the new regulations and workers from the new EU-accession countries. However, in an article published the same month, the union described several ways in which these workers’ rights might be neglected and called for legal protection.

IG BAU fears that workers from the new accession countries will offer their work for lower wages in foreign countries, due to a lack of knowledge of the local situation and working conditions. The article also points to other concerns, such as German firms preferring to use temporary agency workers from Eastern Europe rather than from Germany, or German temporary employment agencies opening affiliates in Eastern European countries in order to lower their wage and social benefit costs.

This view has been echoed by Detlef Wetzel, Vice-Chair of the German Metalworkers’ Union (IG Metall). While he did not regard the easier entry of workers from newer parts of the EU to the German labour market as problematic, he nonetheless protested against the lack of regulation to protect all workers from downward wage pressures.

Similarly, Annelie Buntenbach, a board member of the Confederation of German Trade Unions (DGB), accused the German government of neglecting the fight against wage dumping in a press statement (in German). Ms Buntenbach insisted that freedom of movement for workers in Europe was a basic right which was not to be abused for the purpose of lowering wages. German and foreign employees had to be protected against such practices and against ‘exploitive employment relationships’. She has called for a nationwide minimum wage of €8.50 per hour, equal pay in temporary agency work and the inclusion of all sectors in the Posted Workers Act (Arbeitnehmer-Entsendegesetz). Similar opinions have been voiced by IG Bau and IG Metall.

The employers’ response

While unions advocate the protection of German and foreign workers, employer organisations have emphasised the advantages brought by the new legislation. In a reaction to the change in status, the German Confederation of Employers’ Associations (BDA) highlighted the fact that freedom of movement will increase prosperity in Germany in the long-run (in German, 600Kb PDF). German companies need skilled labour and have to compete for it with other European countries, the BDA says.

In this context, the BDA also presented figures showing that there is not only an imminent shortage of skilled labour, but that the situation will be aggravated over the next decade. The population aged between 20 and 64 is set to shrink by over 8 million by 2030. Workers from the new EU-accession countries therefore offer companies an opportunity to find and train future staff and fill vacant positions.

The BDA denies that the new freedom of movement for workers will have negative effects on the German labour market. While the new legislation allows workers from the 2004 EU-accession countries to work in Germany, posted workers from these countries are already covered by the minimum standards stipulated in the Posted Workers Act. The social partners in individual industries can also be covered by this act by concluding a collective agreement, and by having the German government declare it generally binding on the whole industry, thereby also protecting workers’ rights.

Finally, the BDA called for further reforms to secure the future availability of labour. Not only migrants, but also women and the disabled have to be integrated into the German labour market. Although the new rules on the freedom of movement for EU workers are an improvement, further steps have to be taken and there is a need for a comprehensive immigration plan based on the requirements of the labour market, the organisation says.

References:

Wir schauen hin: Arbeit ohne Grenzen. Gleicher Ort. Gleiche Arbeit. Gleicher Lohn. In: Der Grundstein, February 2011.

Sandra Vogel, Cologne Institute for Economic Research (IW Köln)