'Neo-liberalism, labour migration and the "race to the bottom" in the enlarged Europe'

'Neo-liberalism, labour migration and the "race to the bottom" in the enlarged Europe' Charles Woolfson University of Glasgow Wissenschaftszentrum Berlin für Sozialforschung Workshop, 29-30 November 2007 High wage and low wage countries in production networks of the automobile industry Relocation, development chances and risks, and the consequences for work and employment

Is there a race to the bottom in labour standards? EU Enlargement Labour market indicators Labour exit from NMS Ethno-politics, labour shortages A race to the bottom?

EU Enlargement

Today every fifth person in EU is from a CEE New Member State

EU enlargement: A win-win? Irreversible political repositioning of former communist societies ( triumph freedom and democracy) Access to investment opportunities and much-needed labour resources for European capital Growth of economic prosperity in CEE through economic reconstruction and FDI inflows Institutional transfer of European social model/dimension to NMS - economic development combined with guaranteed floor of labour standards/social protections

Eastern Europe overtakes East Asia on Ease-of-Doing-Business Thanks to reforms of business regulation, more businesses are starting up, finds Doing Business 2008 Countries in Eastern Europe and the former Soviet Union reformed the most in 2006/07 along with a large group of emerging markets, including China and India. Baltic States EE, LV, LT in the top 30 Source: http://www.doingbusiness.org/documents/press_releases_08/db_08_global_english.doc

Inward FDI stock as percentage of GDP

EU15 FDI outflows to NMS (2003-2005) millions EUR source Eurostat: http://epp.eurostat.ec.europa.eu/cache/ity_offpub/ks-sf-07-106/en/ks-sf-07-106-en.pdf

Real GDP Growth Rate (2006)

COMPLEX EXPORTS SHARE IN TOTAL EXPORTS (%) Source: Bohle and Greskovits, 2007. based on United Nations COMTRADE database. Complex exports are SITC 5 (chemicals) and 7 (machinery and equipment).

Labour productivity per person employed (EU 25)

Catch-up estimates Source (Yves Jorens,Enlargement: a common European social model?, Social Europe after Enlargement,Ghent 13, 14 May 2004)

Labour Market Indicators

Labour standards in CEE Delay or non-payment of wages Requirement to work unpaid overtime Extended working hours and work intensification Poor health and safety conditions Authoritarian work regimes/victimisation Bogus self-employed status, growing temporary/agency contracts Envelope wages/lack of written contracts or individual contracts Ineffective legal enforcement

Informalisation Shadow Economy as % GNP 1999/2000 Source: Schneider, 2002

Did your employer provide cash-in-hand payments for overtime or other work in the last twelve months?

Share of undeclared labour by sectors: Latvia

Source: Crowley, S. East European Labor, the Varieties of Capitalism, and the Expansion of the EU

Unionisation/Collective Agreement Coverage

Average number of working days not worked due to strike action per 1,000 employees, EU25, 2000 2004 Source: European Foundation, Industrial Relations in EU Member States 2000-2004 p.23.

Working environment Health and safety is at risk because of work Source: EF 4WCS 2007

Index of Fatal Accidents at Work 1998-2005 (per 100,000 employees) source: Eurostat

Labour exit from NMS

The dis-embedding of post-communist labour The Baltic States, notably Lithuania and Latvia, registered an outflow of over 3.3% and 2.4% of their working age populations, respectively from May 2004-Dec 2005. In Slovakia, Poland and Estonia, the scale of outflow was somewhat smaller about 1% from May 2004-Dec 2005. LABOR MIGRATION FROM THE NEW EU MEMBER STATES: World Bank, EU8,Quarterly Economic Report, PART II: Special Topic, September 2006,World Bank Report p.22

No danger says European Commission Expected mobility from the three Baltic countries and Poland is significantly higher than that from the rest of the Member States, but this is unlikely to pose major and lasting challenges for the labour markets of the receiving countries. (European Commission, Employment in Europe 2006,p.17) Laval, Viking Rosella, Irish Ferries

Source: European Foundation for the Improvement of Living and Working Conditions

Differences in average gross annual earnings (industry and services EU15=100) Source Eurostat

The Happy Worker Syndrome Migrant workers more motivated, reliable and committed than domestic workers. more likely to: demonstrate lower turnover and absenteeism; be prepared to work longer and flexible hours; be satisfied with their duties and hours of work; and work harder in terms of productivity and speed. more likely to be happy with the minimum wage (as it was higher pay than in their home countries).

Non-circular migration

Ethno-politics, labour shortages and the chain migration

I work here you can come too!

Labour shortages in health sector The Latvia Minister of Health recognises that the shortage of healthcare workers is real and that the situation will grow worse in the coming years, because time is needed to educate and train new workers. However, there is not a specific policy for addressing this situation through immigration, except for the intention not to facilitate or encourage the inflow of cheaper healthcare workers from, for example, Belarus, Ukraine or Russia. EMN Synthesis Report: Managed Migration and the Labour Market The Health Sector. European Migration Network November 2006 http://www.ocma.gov.lv/images/documents/emt1.pdf) p.13.

Latvian xenophobia In a recent study some 70% of Latvian respondents admit being negative towards the arrival of labour migrants from other countries. The most negative attitude is expressed towards persons from China, Africa, Vietnam, other Asian countries and Turkey. Newcomers like migrants, asylum seekers and refugees are vulnerable to xenophobia and exclusion.

Paradoxes of NMS labour crisis 1. Employers need labour retention - but barriers to recruitment of labour from other parts of the FSU for reasons of ethno-politics. 2. Continuing workforce exit from CEE may reinforce previous tendencies to labour quiescence by draining off discontented workers. 3. Returnees may be less willing to permit exploitative labour conditions, but many will have experienced comparable exploitative conditions abroad. 4. Renewed/ racialised internal labour force segmentation (eg differential treatment of younger, more skilled and potentially mobile workers), as against ethnically non-citizen (especially Russianspeaking, older, less skilled and immobile employees). 5. Second wave chain migration China, Thailand

The Baltic hard landing scenario

A race to the bottom?

1. Quantitative scale of migration from the NMS is limited but qualitative impact on EU labour standards significant 2. Informalisation of labour conditions esp. in poorly regulated sectors (construction, agriculture, services, hotels and catering etc) 3. Concession bargaining in unionised sectors 4. Disruption of orderly industrial relations in older member states. eg Sweden, Ireland 5. Increasing xenophobia and racism in Western and Eastern Europe 6. Further retreat from a European social dimension especially in the NMS 7. Reinforcing of neoliberal trajectories in NMS + post Lisbon Commission - undermining regulation of labour standards at EU level

(Weak) countervailing tendencies National governments/employers in NMS may concede better wages and conditions as a form of employee retention. Attempts by trade unions in older member states to organise immigrants and co-operate cross-border (EWCs) may succeed Tight labour markets and inflation in NMS may increase union assertiveness in NMS new voice? EU debates over decent work agenda/ quality labour may lead to support for regulated labour standards and stronger enforcement practices in EU.

Labour standards - post-communist style