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EU: Report Says Enlargement Does Not Threaten Labor Market

The European Union released a report yesterday (Monday) that says the union's enlargement will pose no major threats to the EU labor market as a whole. Germany and Austria, however, would bear the brunt of any labor force exodus from Central and Eastern Europe. RFE/RL correspondent Ahto Lobjakas reports from Brussels.

Brussels, 23 May 2000 (RFE/RL) -- The European Commission yesterday sought to ease the concerns of EU member countries who fear that enlargement would swamp them with immigrant workers. A report, released on Monday, says the lifting of restrictions on the free movement of labor between the EU and candidate countries would not result in any severe tensions in EU labor markets.

The report was written by a group of independent experts led by the Deutsches Institut fuer Wirtschaftsforschung (German Institut for Economic Research). Its release comes as the six leading EU candidates -- Cyprus, the Czech Republic, Estonia, Hungary, Poland, and Slovenia -- are scheduled to open talks with the EU on the free movement of labor this Friday.

Kirsty Hughes is a well-known expert on enlargement and senior aide to the EU's employment commissioner, Anna Diamantopoulou. Hughes says enlargement will not produce a large influx of Eastern workers.

"What this study tells us is that as these [applicant] countries join, if we had all 10 joining together, we might have up to 350,000 people per year coming into the European Union in the first year. That's people in total, workers are a much smaller share of that."

Hughes says that even if all 10 candidates join at once, the yearly expected immigration rate would fall under 150,000 in eight years time, says Hughes. If the applicant countries join in stages, the flows of Eastern European workers would be smaller.

Germany, the report says, would take in most of the Easterners -- perhaps 220,000. Yet the share of Eastern Europeans in Germany's population would not exceed 3.5 percent in 30 years, and 1.1 percent in the EU as a whole.

Hughes says that in the long term, workers from Central and Eastern Europe might prove a blessing. Demographic studies show that the EU's population is aging rapidly, and the percentage of workers is falling. If the EU's employment rates do not rise very quickly, she says, workers will have to be sought from outside the EU.

Despite the upbeat report, the Commission is being very careful not to rule out the possibility of a transition period, during which free movement of labor between the old and new EU members might be restricted. Hughes says this is a political decision for EU member governments to make.

"The question of transition periods of some sort or temporary arrangements of some sort is for the negotiators to talk about and decide in negotiations. We have of course seen in previous enlargements some transition periods. In the case of Spain and Portugal, there were six- to seven-year transition periods, though, in fact, in the accession of EFTA [European Free Trade Area] countries, Sweden and Finland, there were no transition periods."

The report notes that once the restrictions applying to Spain and Portugal were lifted in 1991, migration flows did not increase significantly. It adds, however, that the income disparity was not as large as it is between EU members and current candidates today. At this point, the average income in Central and Eastern European candidate countries varies between 20 percent and 70 percent of the EU average. According to the report, full convergence of EU and candidate income levels will not be achieved for another 30 years.

The published version of the report does not mention the issue of "commuting" -- when workers in candidate countries who live near present EU borders could enjoy lower living costs at home and higher wages across the border. Austria and Germany, in particular, fear that commuters from Hungary, Slovakia, and the Czech Republic could price many of their nationals out of the labor market.

To prevent that, both Austria and Germany have demanded a transition period of restrictions on the free movement of labor. Last Friday, EU negotiators signed a common position paper on the issue, saying that these concerns will have to be taken into account, but at a later stage.

Diplomats say negotiations on this issue will take at least a year.