Germany's 2004 EU enlargement fears were unfounded, survey finds

  
Munich 2011 [digital cat/Flickr]
54% of German construction companies feel high domestic competition from Central and Eastern Europe according to a 2014 survey. Munich, 2011. [digital cat/Flickr]

German firms feared higher competition from companies in new member states after the 2004 Eastern enlargement of the European Union. But ten years later, hardly any of these fears have materialised, a new survey reveals. EurActiv Germany reports.

The 2004 enlargement had almost no adverse effects on German companies. In fact, hardly any changes took place, says a study recently concluded by the Cologne Institute for Economic Research (IW).

The purpose of the study was to compare two representative surveys conducted in early 2004, and in 2014. In the first stage, more than one-third of German firms surveyed in 2004 predicted that imports from Estonia, Latvia, Lithuania, Poland, Slovenia, Slovakia, the Czech Republic and Hungary would increase, having significant effects on their business.

Due to lower labour costs in the accession states, more than a third of western, and a fourth of eastern German companies predicted higher pressure to downsize.

But as early as one year after enlargement, German fears appeared unfounded. Pressure turned out to be less severe in early 2005 than forecasts predicted the year before. Predictions claiming higher competition due to imports, cheaper advance payments, or locally-based central and eastern European companies also turned out to be weaker than expected.

Among companies surveyed in early 2014, only 1 in 10 claimed to be under significant pressure from central and eastern European firms located in Germany, or imports coming from these countries. Almost two-thirds of those surveyed denied such effects, and other fears related to enlargement have also not appeared.

Still, looking at individual economic sectors, the study indicated that the industrial and construction sectors have been more strongly influenced by EU enlargement than service providers.

In the IW study, 44% of industrial firms reported slightly or significantly higher pressure for rationalisation in 2014. 54% of German construction companies say firms from central and eastern Europe cause considerably higher domestic competition for them.

But the 2014 survey also clearly showed almost no negative perception, or even a dramatisation of economic effects of eastern enlargement within German firms.

In light of the results compared in 2014, the researchers conclude that fears related to market opening and economic innovations often fail to materialise: a finding that could be game-changing in the discussion over further economic integration and skilled worker immigration.

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