Migrating workers leave big gap in the East

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While workers from eastern and central Europe moving to EU-15 countries have little impact on those economies, their countries of origin may have to attract even cheaper labour east of EU borders, according to a World Bank report. 

“Governments would be well-advised to manage labour migration more proactively,” concludes the World Bank as part of its recommendations to boost European economic growth. It suggests that governments of the eight central and eastern European countries that joined the EU in 2004 (the EU-8) “should also consider phasing in  a more liberal regime for importing labour from countries further east” than the present EU border.  

The report finds that “post-accession labour flows from the EU-8 did have a significant impact on the sending countries”. It goes on to say that “massive outflows of workers may lead to labour shortages, signs of which are already visible in the Baltic States and Poland. The outflow of workers has already a visible impact on these economies and could slow growth in the medium term.” 

As a remedy, the report recommends that EU-8 countries turn east for even cheaper workers. “The main sending countries may be themselves forced to import labour.” In addition, the report recommends to use taxation to create a more friendly environment for those sectors where there is a shortage of workers. “In the fiscal sphere, EU-8 governments need to make room for additional spending on wages in sectors where public workers are in short supply (notably the health sector) and investment where private labour is becoming more expensive (notably construction).”

Regarding the labour markets in Great Britain and Ireland, the report supports the Commission’s finding that opening borders to workers from the East had a positive impact on the economy as a whole. It says that “migrants are attracted by labour market opportunities and not by social welfare systems”. Consequently, there is “no discernible statistical evidence to support the view that the inflow of EU-8 migrants is contributing to increases in unemployment claims in the UK”. The report also cites figures indicating that there is “little evidence of any impact of foreign workers on wages in the main receiving countries”. 

The World Bank, which is chaired by leading US neo-conservative Paul Wolfowitz, has recently come under attack for pushing a deregulation agenda in its reports. 

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