Migrating foreign workers - statement and experience of Czech employers

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1 1 Migrating foreign workers - statement and experience of Czech employers Globalization, positive economic development and increased mobility of workforce within EU meant growth of migrants and development of ethnically and culturally diverse environment in the Czech Republic Historically, territory of the Czech Republic was always a European crossroad but it became a homogeneous territory after the World War II. Therefore, inflow of higher number of foreigners and social processes related thereto are a relatively new phenomenon for the Czech Republic. Following 1989, the Czech Republic has rather liberal approach in relation to the migration. This is demonstrated by increasing number of foreigners. In 1990, 35,198 foreigners with residence permit lived in the Czech Republic and in 1999, the number increased to 228,862 foreigners. The OECD report on social and economic situation in member countries published in 2006 revealed that the Czech Republic was the OECD member country with the highest inflow of foreigners in Despite significant migration flow, the Czech Republic does not reach the migration level in developed European countries that is 8-10%. Today, the share of foreigners in the population of the Czech Republic amounts to 4% (about 410,000). If the development of the past years holds it would be possible to expected continuation of this trend. Attraction of the Czech Republic increased particularly after accession to the European Union in May 2004 and further in particular thanks to growth of the Czech economy. No work permit is required for citizens of the European Union, European Economic Area and Switzerland. Work permit is required for other nationalities. An assumption for the work permit and residence stay is an effective health insurance and accommodation.

2 2 Third country citizens may approach the labour market only if they hold longterm residence permit they may ask for after five years of their stay in the territory of the Czech Republic based on temporary or so-called "chain" permits. Highly qualified experts are exempted from this regulation and the period may be shortened to 30 months. Easier labour market access is provided for those foreigners who s working permit is based on a trade licence in the Czech Republic. Trade licence holders do neither have to submit their business plan nor to demonstrate minimum knowledge of Czech language. Therefore, this employment procedure is used also there where classic employment would be more relevant (e.g. construction workers). Czech Labour Exchanges registered 285,000 and 240,000 foreigners as of 31 December 2008 and 31 December 2007, respectively. The records include foreigners working here as employees, partners, members of statutory bodies of business companies. According to source from the Ministry of Interior of the Czech Republic, there were foreigners particularly from the following countries as of 31 May 2008: Ukraine (126 thousand), Slovakia (56 thousand), Russia (25 thousand), and Poland (21 thousand). It could be reasonably assumed the main drivers for migration were economic reasons. On the other side, authorities registered almost 150,000 vacated jobs offered to qualified applicants only. 65% of which applied to founders, metal toolers, repairers, blacksmiths, toolmakers, locksmiths, electricians and qualified employees from agriculture and forestry. 25% of which applied to technical employees, medical employees, teachers, IT experts, worker for banks and other financial institutions, administration experts. University degree applicants were sought after - architects, planners, physicists, doctors and vets 10% of these jobs. In the Czech Republic, this insufficiency was caused, in addition to unfavourable demographic development and dynamic development of

3 3 economy, by massive change to economy's structure, shift in social preferences and obvious inability of education system to produce graduates of quality and structure required by the economy, especially by the industry. It is interesting with this respect that so-called "soft factors" are considered insufficient, i.e. the personality of the graduates. It should be noted in this regard that e.g. in 2007, about 55,000 Czechs worked in the European Union according to EUROSTAT and they were mostly qualified for jobs vacated in the Czech Republic and not covered by migration. This situation finds its analogue across the EU. The EU will need more than 20 million qualified employees within 20 years because at this rate the European population will decrease while persons 65+ will account for one third of total population. Alberto Alesina, economy professor at Harvard University, wrote already in 2004: "Europe will die without fresh blood". Migration is a must should no massive economic downfall have to occur in the Europe and the discussion should not be focused on whether but how including the issue of preparing Europe for the migration. European "blue cards" or their Czech "green card" version were found as one of the solutions of scary insufficiency of qualified employees on the labour market. The "Green Card" project, which became a part of the Czech laws as of 1 January of this year, focuses on highly qualified employees of university degree and qualified professions. The goal is a flexible admission of foreign experts and reducing of red tape burden of foreigners and their employers. The project stems primarily from the needs of business entities. So-called "green card" is the main driver of the project being a dual document covering both work and residence permit.

4 4 Confederation of Industry of the Czech Republic believes the project will really help resolving insufficiency of qualified workforce that may not be resolved immediately from "home resources" due to non-governable demographic reasons. The project should also help in tackling with illegal employment. And what was opinion of the Czech employers of the green cards in 2008? 642 HR managers replied on jobs.cz portal as follows to the question of implementation of the "green cards": 54 % - it is the highest time, we need them 14 % - not applicable to us, we will not hire foreigners 32 % - does not matter, we can employee foreigners now despite that And 1260 visitors to this website responded the following questions: The government would like to facilitate employment of foreigners through the green card project. What do you think about that? 32 % - it is okay 52 % - I am set (rather) against 9 % - I don't care 7 % - I have no clear opinion In March 2008, Confederation of Industry of the Czech Republic surveyed its members regarding the need of qualified workforce from non-eu member countries migrants. 146 respondents from SME group replied. The respondents clearly preferred employees from language, cultural and value affinity countries to the Czech Republic (Slovakia, Poland, Bulgaria, Serbia, Russia, Ukraine) and potentially from other EU countries; some would welcome employees from other territories, e.g.: Korea, Yemen, India, Latin America where they operate. A special theme is employment of Vietnam citizens because thousands of them studied in socialistic Czechoslovakia. Their employers highly appreciate their work morale and expert level. But physical constitution and language barriers are the negatives for some professions.

5 5 The survey indicated that majority of companies realized right now the seriousness and depth of insufficiency of suitable workforce for their business and started to search for the solution by employing of foreigners. Many companies resolved immediate insufficiency of qualified workforce by time-limited stays of "experts" from operations outside the Czech Republic (either from their own or from partner's operations). In general, the need of about 5,000 employees was supposed by these 140 respondents within two years, of which two thirds of high and university qualification - e.g. machine adjusters, mechanists, electricity mechanists, electronic experts, designers as well as top or project management. * * * The green cards or any alternative according to the EU national laws are undoubtedly a suitable tool particularly for resolving of structural insufficiency of the labour market offer. Generally, quantitative insufficiency of labour force can not be managed by them (the Czech Republic may not unlimitedly increase its production capacities). Insufficiency of the labour force should be resolved by increased productivity. However now, the global economic crisis plays the game and upsides down the experience and arguments of recent years. For example in the green card system working from 1 January 2009, only tens of employees are demanded, of which more than one half of university degree applicants and the Government approved a mirror project to the green cards - it provides financial support to immigrants to return home. However, it seems to be clear now that neither massive performance drop/industrial employment rate due to the crisis will allow sufficiency of employees of structure required. For most companies, the crisis way out will be further modernization and increased demand for qualification of employees.

6 6 Conclusion: Let immigration still be a source for resolving of particularly structural tensions on the labour market because elasticity of workforce offer - either due to demographic or education reasons - does not conform in any way to pulsing needs of market economy. However, the immigration should be controlled, including solution for excessive of own workforce during economic downfall, i.e. so-called circular migration. Finally and in this regard, I would like to note Milton Friedman, who responded in 2002 to The Economist's question whether the USA should open door to everybody: "Unfortunately not. Free migration and social state are mutually incompatible."