1 February 2002 • Effects of EU Eastern Enlargement on the Regional Labour Market • Peter Huber

Estimates put the potential of migration from the CEECs to all EU countries between 41,000 and 680,000 migrants annually. It is generally agreed that these estimates are too uncertain to allow any useful assessment. Most migrants from the CEECs (77 percent) will come to Austria and Germany.

Similarly, projections of the potential flow of cross-border commuters following eastern enlargement arrive at highly varying numbers. In studying this issue, the PREPARITY research programme on structural policy and regional planning in the regions along the EU's Central European border to prepare for eastern enlargement found a potential of about 85,000 day commuters into Austria, assuming that enlargement would be implemented without transition periods. The uncertainty of the figures is due to the relative appeal of cross-border as compared to domestic commuting on the one hand and to the maximum commuting distance on the other.

More accuracy is offered by projections regarding the structure of migration. Migrants from the CEECs are better qualified than those from the traditional "guest worker countries". Most CEECs migrants have completed an apprenticeship and more frequently hold highly qualified jobs (e.g., as technicians) than low-skilled jobs, compared with other foreign workers.

Migration extends the resource base of an economy, which in turn increases growth and welfare. Accordingly, migration offers benefits to the economy as a whole. Nevertheless, these benefits are not distributed evenly among the population. In general, highly qualified workers benefit from the migration of lower-qualified workers, whereas lower-qualified workers come under increasing competitive pressure from migrants. For men, migration means primarily lower wage growth among blue-collar workers, whereas wages for white-collar workers are hardly affected. Among women, it is mostly the less mobile workers who suffer wage losses. For men and women in the top income quartile, wage growth is enhanced by stronger migration, whereas it slows down for those in the lowest income quartile.

Migration has a greater effect on the risk of unemployment for men and women than on wage growth. Blue-collar workers in particular find the risk of losing their job rises with increasing migration. For all other groups, unemployment has highly heterogeneous causes. Workers newly migrated from the CEECs mainly compete with foreign workers who have arrived long before them; they also compete with domestic blue-collar workers.

As happens in most other countries, migrants in Austria prefer to settle in regions where they can join a large agglomeration of their own nationality. Thus, Slovenes tend to settle in the south of Austria, Czechs in the north. Western Austria has substantially fewer citizens from the eastern neighbours than eastern Austria. Citizens from Poland, which does not share a border with Austria, usually opt for Vienna and other major towns. In addition, the share of low-skilled foreign citizens is higher in central than in peripheral regions. For the latter, migrants thus offer a major human capital resource, whereas urban areas will find it necessary to improve the qualification levels and employment options of their foreign workers by integration, further education and training.

The findings of the analysis support the call for keeping migration under control. Control allows migration to be spread evenly across regions and to obtain a level of security in the enlargement process. In response to this call, defensive measures have been decided at the European level (transition period of, at most, seven years for the free movement of labour). Subsequently, the discussion of the consequences of eastern enlargement on migration policy will primarily serve to actively prepare for enlargement.

The transition periods are not only intended to keep migration under control for a limited period, but also as an opportunity to establish indirect instruments of control (e.g., for cross-border co-operation by the labour exchanges) which will enable effective labour market management once the transition periods have expired.