Central and Eastern Europe’s emigration challenge

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

Central and Eastern European countries, long lands of emigration to the West, are beginning to see these flows reverse as economic growth and opportunity shift eastwards, argues Stratfor.

Stratfor is an Austin, Texas-based global intelligence company providing geopolitical analysis and commentary.

"Between 2004 and 2007 the Czech Republic saw an increase in the number of immigrants from Ukraine and Russia; Hungary received an influx of immigrants from Serbia; and Romania experienced an upsurge in the number of immigrants from Moldova and Turkey.

These immigrants considered the new EU members to be a port of entry into the European Union. The population inflows were accompanied by high economic growth and consistently low unemployment rates (below 8%) in each of the host countries. The Czech economy, for example, grew at an average of 6% annually between 2004 and 2008.

During the economic crisis, in the Czech Republic, emigration more than doubled from 2007 to 2008, most notably to Germany and Poland. In Hungary, emigration nearly tripled between 2007 and 2010, with most emigrants moving to Germany and Slovakia.

After becoming a net immigration country for a brief period after its 2007 EU accession, Romania returned to its status as a net emigration country in 2009, with most Romanian emigrants leaving for Germany, France, Italy and the United States.

The Polish Anomaly

In Poland, migrations followed the opposite logic. Entry to the European Union meant a mass exodus of Poles to other EU member countries with stronger economies. The United Kingdom and Germany were, by far, the main destination country for Polish workers.

However, the international economic crisis caused the trend to reverse for two main reasons. First, the employment market contracted in most Western European countries. Second – and most important – the Polish economy outperformed most of its EU peers after the crisis began.

Poland had solid economic growth from 2004 to 2011 (more than 4% annually with the exception of 2009, when Poland's economy grew 1.9%) and unemployment went down from 19% in 2003 to 9.7% in 2011.

There are several reasons for Poland's economic performance. Poland benefits from its proximity to Germany, Europe's largest economy. Germany absorbs one-quarter of total Polish exports and shares 116 miles of the Oder River with Poland, allowing investment to be easily allocated on both sides of the river.

Moreover, Poland is outside the eurozone, which means that Poland's floating national currency, the zloty, has helped keep Polish products competitive on the global market.

Poland's good economic performance has led to fewer people leaving the country during the crisis and to a modest increase in immigration. Population inflows to Poland come mostly from the neighbouring countries of Ukraine, Belarus and Germany. While Poland is still technically a country of net emigration, the gap is closing quickly.

Profile of the Central and Eastern European Emigrants

Emigrants from Central and Eastern European countries are mostly young men and women between 18 and 35 years old. Many of the emigrants travelling to countries like Germany or the United Kingdom are willing to "downgrade" their occupational status by working in jobs that do not reflect their qualifications. In the United Kingdom, for instance, workers from Central and Eastern European countries earn an average of 12.5% less than their British counterparts.

There are several reasons for this. First, most of these workers lack language skills. This prevents them from fully using their formal qualifications and expertise. Second, these workers are willing to accept low-skilled jobs and low wages upon arrival because they hope to upgrade to more skilled work in the future. Third, discrimination often prevents foreign workers from receiving equal salaries.

Some immigrants manage to move to better employment, especially those workers who decide to stay in their new country for several years. However, new migrants are often overrepresented in low-skilled jobs with limited career prospects, which tends to greatly restrict their upward mobility.

Finally, migration from Central and Eastern European countries is highly fluid; migration flows respond to the economic conditions of the destination country. Moreover, migration from these countries is often circular: It is very common for Central and Eastern European workers to leave and return to their countries frequently, which makes it difficult for emigrants to rise in career status.

Demographic Effects of Migratory Flows

The populations of the Czech Republic, Poland, Hungary and Romania are expected to decrease after 2020 and, in some cases, even sooner. In absolute terms, Poland is expected to have the largest population decline in the next four decades, from roughly 38 million people in 2010 to approximately 32 million in 2060.

The situation is similar in Romania, whose population is expected to drop from 21.4 million people in 2010 to some 17.3 million in 2060. While the Czech Republic and Hungary will also face declining populations, their reductions are expected to be less severe.

The developments in Western European populations will be mixed. While populations in core countries such as Germany, the Netherlands and Italy are expected to contract in the next four decades, other countries like France, Belgium and Denmark will actually see their populations increase. Overall, the EU population is expected to continue growing at a moderate pace through 2060.

All European nations, particularly Central and Eastern European countries, face the challenge of coping with aging populations. According to Eurostat, more than 30% of Poles, Romanians, Hungarians and Czechs will be more than 65 years old by 2060 — above the European average of 29% of the population estimated by that date. This is particularly serious in Poland and Romania, where more than 34% of the population will be 65 or older.

According to the Migration Policy Institute, the population decrease in Central and Eastern European nations will be proportionally larger than that of Western European states. Two factors can explain this: Emigration in Central and Eastern European countries is higher and life expectancy is relatively lower.

To an extent, the presence of highly educated workers could lead to an increase in per capita productivity that could compensate for the shrinking workforce, but only if educational systems produce the right type of workers, such as technicians and engineers, and if countries are able to attract high-skilled foreigners.

Europe's diminishing populations and the resulting reduction in workforce will lead to a regional competition between Western European and Central and Eastern European states for highly skilled workers.

Traditionally, Central and Eastern Europe provided skilled and unskilled labor to Western Europe. In broad terms, this trend will hold. But the economic growth of countries like Poland and the decline of traditional emigration destinations such as Spain and Ireland indicate that the trend could reverse in coming decades.

So far, Central and Eastern European countries have not implemented policies designed to attract foreign workers. Often, countries appeal to their diasporas through legislation granting rights to foreigners with blood ties to nationals. In other cases, countries implement mass legalisation of illegal immigrants, as Poland did in December 2011.

However, in the next two decades, these countries will be forced to attract specific segments of the labor market and will thus need to develop unique solutions that will meet their individual needs.

Central and Eastern European countries are still behind Western Europe in terms of education, infrastructure and wages, but they are catching up quickly. Moreover, Central and Eastern European economies are growing at a faster pace than their Western counterparts. As a result, the competition for workers, both domestic and foreign, is likely to increase in the coming decades."

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