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Mobility of labour from new EU states to the Nordic Region

Development trends and consequences

image of Mobility of labour from new EU states to the Nordic Region

This report sums up the developments in labour migration from the member countries to the Nordic Region since EU enlargement in 2004, the consequences for the labour markets in both the Nordic Region and in the countries of origin, the main features of the political initiatives and adaptation strategies adopted by the Nordic countries, and the most important challenges that the Nordic countries will face in this area in the future. The report points out that Western Europe and the Nordic Region have experienced significant and increasing mobility of labour from the new member countries since 1 May 2004. It concludes that greater mobility, particularly from Poland and the Baltic countries, has been a contributory factor to higher growth and lower inflation in the Nordic countries than would otherwise have been possible in a period of prolonged economic prosperity and increasing labour shortages. It also states that the challenges in the Nordic countries have primarily been associated with the growth in in-service mobility and postings away from home. In addition, the report confirms quite significant emigration of workers from Poland and the Baltic countries since 2004, which has led to shortages of labour in those countries. It concludes that even though employment levels have risen significantly, especially in the Baltic countries, the main challenge for these countries will continue to be how to further increase domestic employment levels. This report constitutes the final product of the expert group on EU expansion set up by EK-A in 2004, the mandate for which expired on 1 December 2007.

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Introduction

The enlargement of the EU/EEA area on 1 May 2004 to comprise 28 countries – including eight Central and Eastern European countries – was a milestone in terms of European labour market policy. For the population in the new member states this enlargement provided freedom to travel, seek employment and perform services in other countries in the EU/EEA area. For Nordic enterprises the enlargement opened new markets and channels for recruitment of labour and service providers. The opening of the labour and service markets to neighbouring countries with lower wage levels and less generous welfare states was a novel experience for the Nordic countries. To be sure, the Nordic countries have had a common labour market since 1954 – and free movement to and from the ‘old’ member states since 1994 – but the low wage levels and the rampant unemployment in the new member states gave rise to uncertainties with regard to developments to follow in the wake of the new EU enlargement. Predictions of a flood of job seekers and persons claiming welfare benefits gave rise to fears of imbalances in the labour market, strains on the wage levels and labour conditions and increasing welfare expenditures. All the ‘old’ EU/EEA countries – with the exception of Sweden, the United Kingdom and Ireland – therefore introduced transitional restrictions on the free movement of labour from the new member states. Several countries also introduced more rigorous internal regulations and controls in order to prevent exploitation of service providers, who were exempt from the transitional regulations.

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