EU expansion to 27 members altered the EU radically

I’ve written two posts about the history of support for the EU. And I covered the ground through the EU-15 period when Austria, Finland, and Sweden entered the EU.  Today, I want to continue the post series with the introduction of the next 12 Eastern European countries. But let me lead in with an article which the German-language Spiegel magazine just published because it hits on the theme of this post. My theme: the introduction of twelve member states over a short period of time changed the EU in profound ways that ensure conflict and a lack of cohesion in the EU.

Spiegel: Bulgarian worker sucked into exploitative cheap labor pool in Germany

Here’s my translation of key bits of the Spiegel piece (link here to the German original – titled “Lost in Europe”):

As Stanimir Panow [not his real name] got off a VW bus in Hamburg-Wilhelmsburg, in 2014 together with other Bulgarian migrant workers, he hoped for a late chance to fulfill his dreams. But today, his day-to-day consists mostly of waiting around.

At night, when darkness swallows the dirty streets of the Reiherstieg district, Panow stretches out on his moldy mattress and waits for his three roommates to fall asleep drunk at the table, so that he, too, can finally sleep a little. At five in the morning, after Panow gets up, he waits for someone to pick him up and take him somewhere to work on something.

Panow can install plasterboard and shingles, tile walls, and make walls. He says he can do pretty much anything. He is now 64 years old. His shoulders are still wide and his arms are still strong, but most of his hair is already missing, he is missing his first teeth, and a malignant tumor has recently been discovered in his prostate.

Panow has nothing to fall back on. And so, he fears the time when he will be too weak to work… and when the waiting for death begins.

Panow’s dreams have never been big — a house, a family, some money, that’s all he wanted. But he couldn’t even achieve that in crisis-hit Bulgaria. He left his home village of Borisovo, and left Bulgaria altogether, traveling around Europe like around two million of his compatriots, looking for decent-paying jobs. And, like many others, lost his way in the process.

He landed in the so-called worker line — a system of bogus self-employment, quasi-legal tenancies, and cheap labor — in a world with neither security nor benefits. This is a model that has increasingly solidified in Germany and other EU countries. And, it is a model that a central achievement of the European Union makes possible in the first place: the fundamental right of every EU citizen to work in every EU state.

The so-called free movement of workers has many advantages. It opens up new job opportunities for EU citizens, stimulates labor markets, increases the turnover of skilled workers and contributes to economic growth. But it also favors a shadow sector in which tens of thousands, if not hundreds of thousands, of people work in Germany. And the authorities only make half-hearted efforts to rein it in.

We wanted to understand this system of exploitation. Why do people like Panow land on the worker line? Why can’t they escape it? Why is illegal wage labor not combated more vigorously?

For our research, we interviewed dozens of Bulgarian migrant workers and reconstructed the life of Stanimir Panow in detail – in Hamburg-Wilhelmsburg and in Borisovo, Bulgaria. Gradually, a multifaceted picture emerged of one of the biggest social problems of our time. And a perspective, how it can possibly be solved.

Think of Eastern European migrants in western Europe as similar to Mexican migrants in the US

I wanted to flag this because the gulf between living standards in countries like Bulgaria and Romania and the richer western European countries is enormous, as are the wage structures. Look at Bulgaria versus Germany, for example.

Bulgaria GDP per capita.png

Germany GDP per capita.png

Germany’s per capita GDP is more than 5 times as high. That’s pretty much the same differential you see between the US and Mexico.

Mexico GDP per capita.png

United States GDP per capita.png

The key difference between the two situations is the free movement of labor within the EU. Every Bulgarian has the right to live and work in other EU countries because that’s a basic right that all EU citizens have.

It’s much the same way all Americans or Canadians have that right to work in any state or province in their respective countries. But, of course, Mexicans don’t have the right to live and work in the US (or Canada). That’s a big difference between Europe and North America.

Now, let’s look at the Eurobarometers

If you look at the Eurobarometer data from the period leading up to EU27 and just before the global financial crisis, there’s nothing that suggests the addition of 12 member states was having a negative impact on the EU. To the contrary, most of the numbers show improved support for the EU.

EU support 2007.png

(Source: Eurobarometer 67, 2007)

And it wasn’t because the new member states were more or less supportive of the EU than the older member states. The dispersion in support was wide in both new and older member states.

EU support 2007 by country.png

(Source: Eurobarometer 67, 2007)

Moreover, the period after the financial crisis was affected so significantly by the adverse economic conditions, I wouldn’t draw any conclusions from those data sets about what the EU expansion to 27 meant in terms of support for the EU.

The same is true regarding perceived benefits from the EU.

EU benefits 2007

(Source: Eurobarometer 67, 2007)

EU benefits 2007 by country(Source: Eurobarometer 67, 2007)

Look at the Spiegel narrative instead

So, I think you have to look to the narrative in Spiegel and ones like it to understand what happened when the EU was expanded to 27 members. For example, here’s a snippet of a November 2016 post entitled “The huge political cost of Blair’s decision to allow Eastern European migrants unfettered access to Britain“.

To understand why Britain became so opposed to migration from the EU, it’s key to understand a decision made by the Labour government in 2004, which has had lasting political repercussions.

In May 2004, the EU welcomed ten new member states – the majority from Central and Eastern Europe – in what was the largest expansion in the history of European integration. The UK was one of only three member states, alongside Sweden and Ireland, to open its labour market to these new EU citizens immediately…

While the number of migrants from Central and Eastern Europe into the UK was predicted to be in the region of 5,000 to 13,000 on the assumption that other member states would also open their labour markets, most didn’t. And the flows turned out to be over 20 times the upper end of this estimate.

In 2004 and 2005, 129,000 migrants from the A8 countries entered Britain, according to research by migration researcher John Salt that takes into account various ways of measuring immigration.

CEE immigration to the UK.png

In Germany, Austria, France and Italy, months of public debate led to the imposition of transitional controls, largely because of fears over job displacement, and in turn pressure from trade unions. Despite the early rhetoric of embracing free movement from these “old states”, at the eleventh hour, 12 out of 15 of them imposed restrictions to varying degrees, with Germany and Austria imposing the maximum seven-year period. This meant that citizens of the new member states had to wait until 2011 until they could freely work in Germany and Austria.

Yet, we see in the Spiegel article that there’s definitely a problem in Germany regarding the way migrant workers from Bulgaria are treated, exploited largely because they can be due to the gulf in living standards. As I read the Spiegel account, I thought of Mexican workers at US chicken farms or in the US building industry. And it was almost as if you could replace Germany with the US and Bulgaria with Mexico and the account would read the same.

Almost a year ago, the New York Times was reporting that “Europe’s Thirst for Cheap Labor Fuels a Boom in Disposable Workers“.

Across Europe, nearly 55,000 agencies recruit hundreds of thousands of temporary workers each year for cheap manual labor and service jobs. The agencies allow employers to tap into a more flexible work force — and avoid some of the region’s more onerous labor costs.

Those agencies recruiting manual labor scour the Continent for people willing to pick vegetables in Britain, pour concrete in France or work assembly lines in Eastern Europe. While they receive monthly pay, they often work long days, so their wages can average out to as little as 3.50 euros, or about $4.10, an hour — less than the minimum wage in some of the countries. Some agencies control entire labor supply chains, transporting recruits across borders, lodging them, busing them to and from job sites, and then moving them elsewhere when they’re no longer needed.

But, by May the BBC was reporting that the EU had tightened laws on foreign temporary workers.

In France, the UK and Germany there have been complaints of unfair competition from cheaper eastern European labour, said to undercut locals.

It was an issue for the Brexit lobby.

Brexit campaigners argued that EU freedom of movement was undermining British workers in sectors such as construction and food processing, with some firms cutting costs by importing workers from the newer EU states, such as Poland and Romania.

That, of course, creates an opportunity for workers like the Bulgarian man in the Spiegel account to be exploited on the black market.

This problem isn’t going away

Just as with the migrants entering the EU from outside the EU, mainly from Africa, the draw of higher wages and a safe and stable living environment cannot be stopped simply by changing laws or stepping up border controls. But, with the intra-EU migration issue, given open borders within the EU, the issue is potentially more problematic because it erodes cohesion.

Why is it, for example, that when the EU looks for a solution to the migrant issue, Eastern European countries are unwilling to engage in any burden sharing? Five Star politicians in Italy were even threatening Hungary with EU budget cuts because of the issue. That’s ironic given what’s happening now regarding Italy’s own budget.

The sense I get is that the problem is two-fold. First, the recent history for the former communist countries in the EU in dealing with any migrants, let alone ones from Africa or Afghanistan, is limited. These have been countries of out-migration. Second, the out-migration is a consequence of the gulf in living standards within the EU and the struggles Eastern European countries have had in narrowing that gap. Why would they take in a horde of refugees or economic migrants when they themselves were trying to better their lot?

That’s the same question the Greeks have been asking. But, the Greeks have more recent history dealing with inbound migrants than, say, Hungary or Slovakia.

But the recalcitrant stance on migration in countries like Hungary and Slovakia is certainly a prime reason for the disintegration of legitimacy of the EU. If you’re a supporter of the AfD in Germany, you ask yourself why Germany is the biggest net-payer into the EU budget when it cant even get solidarity on the migrant issue from countries to the east who are all net receivers. This, invariably, leads to euroscepticism and weakens the EU. The same is true in the Netherlands and Austria.

Final thoughts

One topic I haven’t really touched on is the ‘competition’ between the likes of Greece, Portugal and Spain on the one hand and the newest EU member states in Eastern Europe on the other. In the lead-up to the euro, the southern EU countries were big net receivers of the EU’s budget. That helped them catch up quickly.

But now, it is Eastern Europe where the EU’s largess is increasingly directed. Moreover, when the wheels came off during the sovereign debt crisis, the newest Eastern European member states were the hardest of the hard-line EU members arguing for austerity and economic pain for the likes of Greece, Spain, Ireland and Portugal.

These conflicts are always going to be in the background as the wrangling over the migrant crisis continues. Don’t discount the enmity these conflicts and competition have created within the EU, weakening its ability to solve problems in the future.

And, in the end, getting 27 or 28 countries in a loose federal system without a powerful executive to agree on something is a hell of a lot harder than getting 6 or 9 or 12 countries to agree on something. Watch to see how this plays out as Italy’s budgetary crisis smolders.

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