Introduction
It is difficult to test or model the outcomes of free worker movement because of the potential consequences of such a policy and the number of variables involved. By examining the effects of A8 accession on the UK through the lens of new Polish immigrant workers, conclusions can be drawn about the impact of free movement policies and the effectiveness of immigration policies in the absence of free movement. This paper attempts to provide a useful lens for immigration policy makers by examining the case study of new Polish immigrant workers in the UK economy and the implications of this case for immigration policy in the UK. Using the example of this case, it is apparent that free movement policies enacted with the accession of the A8 to the European Union are working to provide the appropriate number of workers and associated skill sets to the UK economy. This example makes a clear case for why policy makers should revise current immigration laws based upon their nation’s labor market needs. In order to understand why this shift in policymaking is necessary, this paper examines UK immigration policies and their outcomes; provides a brief background on the A8 countries’ accession to the European Union in 2004 and associated labor market policies; analyzes a case study on Polish immigrant workers in the UK economy post-accession; and discusses the implications of this case for immigration policy in the UK and elsewhere. These discussions lead to the conclusion that the UK’s immigration policies, which are meant to prevent the perceived problems of free labor markets, are unnecessary and derogatory toward the exact workers needed to create a well functioning, productive economy.
Immigration Policies in the United Kingdom
Immigration policies in the UK have consistently focused on attracting young, highly skilled workers who bring specialized skills to the UK. The philosophy behind these policies is that these types of workers are less likely to tax the national social safety net and are therefore more desirable candidates for immigration than older, unskilled workers. Immigration criteria in the UK reflect this thinking.
Utilizing a points-based system, the UK Home Office makes it relatively easy for "desirable" workers to obtain work permits. Candidates for work permits are assessed on the basis of age, qualifications (educational attainment), previous earnings, United Kingdom experience (whether they have worked in the UK in the past), English language skills, and maintenance funds (personal savings). A score of 95 is required to apply for a work permit, and the breakdown of available points is as follows:
Figure 1
For each of these categories, points are awarded accordingly:
Figure 2
Figure 3
Figure 4
U.K. experience points are awarded on initial applications when candidates "have successfully scored points under previous earnings and those earnings were made in the United Kingdom" or when candidates "have been in full-time study in the United Kingdom for at least one full academic year, and have been awarded a qualification at bachelor’s degree level or above. The qualification should have been awarded within the last five years." English language skills and adequate maintenance funds are required and earn a candidate ten points each. Without 10 points from each of these two categories, an application can be rejected outright despite the number of points earned in the remaining categories. Effectively, these policies require potential workers to be nationals of other English speaking countries, to have obtained a degree from an English-speaking university, or to have passed an approved English proficiency test. The maintenance funds provision requires each applicant to have £2,800 in savings before a work permit application can be submitted. Non-EU skilled and temporary workers that do not meet the criteria above are required to obtain sponsorship from an employer or they cannot work in the UK.
While no single qualification area has a tremendous net effect on worker access to the UK, together these policies are meant to attract a very specific type of worker. Because skilled and temporary workers must already have established job sponsors before they can apply for a UK work permit, these workers must have established job opportunities waiting for them in the UK before they move there. Obtaining a job in a foreign country is difficult for any worker, and thus these workers tend to enter the UK through established programs with large corporations. For highly skilled workers, it is easiest for young workers with high educational attainment levels, extensive work experience, English language skills, and significant personal savings to obtain a work permit in the UK. In other words, workers that are unlikely to drain the social welfare system. Clearly, these individuals are beneficial to any country because they produce innovative ideas and highly value-added goods and services. In essence, these immigration policies suggest that the UK needs more of these highly skilled workers, even if they are not immediately connected to job opportunities. Workers with lower skill levels, however, cannot be considered for work permits without secured job opportunities for fear that such opportunities will not materialize and that these workers will burden the social welfare system through applications for unemployment and other benefits when they have not contributed to the welfare system and are not UK citizens. While these immigration policies continue to remain applicable to all non-EU nationals, the A8 accession distinctly changed the labor market dynamics of the UK.
The A8 Accession
2004 was an important milestone in the evolution of the European Union. In May, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, the Slovak Republic, and Slovenia (the so-called "A8" countries) joined the European Union in an unprecedented integration of Eastern and Western Europe. The A8 accession was significant not only to the EU as a whole but also to the A8 countries individually. Accession marked an economic and political turning point for these former communist nations.
In 1993 at the Copenhagen European Council, criteria for EU accession were established. These criteria were: "stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities; the existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the Union; [and] the ability to take on the obligations of membership including adherence to the aims of political, economic, and monetary union." In 1995 at the Madrid European Council, criteria were also added to require that candidate countries adjust their administrative, legislative, and judicial systems to appropriately integrate European Community legislation into national legislation that is enforceable through the country’s administrative and judicial systems. Achievement of these criteria was a significant landmark for the A8 countries as they lacked functioning democracies and market economies barely fifteen years earlier.
Perhaps the most controversial aspect of A8 accession to the EU is the free movement of workers. "Free movement of workers entitles EU citizens to look for a job in another country, to work there without needing a work permit, to live there for that purpose, to stay there even after the employment has finished, and to enjoy equal treatment with nationals in access to employment, working conditions, and all other social and tax advantages that may help integrate in the host country." While A8 accession was a sweeping change of the face and composition of the EU, with regard to labor policies, A8 accession has been carried out cautiously. EU-15 countries (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom) have been slow to embrace free movement of workers from A8 countries. The Accession Treaties of April 16, 2003 enabled EU Member States to restrict labor market access for migrant or immigrant workers for the first two years following accession according to the national laws and policies of those Member States. For most Member States, this meant practically that work permits were still required. The application of each Member State’s national policies could be extended for a period of three additional years, after which Member States must cite severe labor market disturbances to the European Commission to continue to impose restrictions. Restrictions can be imposed for a maximum of seven years following accession, which in the case of the A8 can be through 2011, after which all workers must be guaranteed the rights of free movement. Out of the EU-15 countries, only Ireland, Sweden, and the UK initially permitted A8 workers to enter (somewhat) freely for jobs following accession. Across the EU, by 2008, 11 out of 15 countries permitted the free entry of A8 workers, but Germany, Austria, Belgium, and Denmark continued to persist in excluding A8 workers from free entry.
To calm public fears surrounding an anticipated influx of migrant workers, the UK instituted a last-minute Worker Registration Scheme (WRS) prior to accession, a registration process required for all A8 nationals wishing to work in the UK. The WRS permitted the free movement of accession nationals only if they immediately registered under the scheme as soon as they began work in the UK. Registration initially cost £50 (now £90), and workers must register for each new job they take. During an initial 12 month period, migrant workers have restricted access to welfare benefits, and work permits can be withdrawn if the migrant worker becomes unemployed. The WRS is considerably less restrictive than the normal work permit application process in the UK, but the provisions of the scheme are by no means free movement. Despite the fact that the WRS prevents pure free movement, it should be noted that, in practice, it does not appear that the policy is being used to prevent A8 workers from seeking employment in the UK. Data indicates that that there is a high approval rate for WRS applications: between March 2008 and March 2009, 92 percent of all WRS applications were approved. Perhaps the most important outcome of the WRS is that it enabled the UK government to track and analyze the impact of A8 accession on the national economy, an important step in understanding the effects of free movement.
Case Study: Polish Workers in the UK Economy
The example of Polish workers in the UK economy following Poland’s accession to the European Union with the A8 in 2004 is the ideal case study to examine the impact of policies allowing the free movement of workers on highly developed economic systems for several reasons. First, following Poland’s accession to the European Union and the opening of the UK labor market, Poles immigrated or migrated to the UK in record numbers. 2001 census data indicates that about 58,000 Polish-born individuals were living in the UK. By the end of 2007, this number grew to 458,000, making Polish-born workers the single largest foreign national group of residents in the UK and the largest national group of A8 immigrants, representing 66 percent of all approved applicants under the Worker Registration Scheme between May 2004 and March 2009. Second, Poland’s labor market was relatively poor performing at the time of its accession while the UK’s labor market was performing well, creating incentives for Polish nationals of all walks of life to move abroad for job opportunities. Poland’s unemployment rate in 2003 was almost 20 percent, the highest of all A8 countries, while the UK’s was less than 5 percent, one of the lowest unemployment rates in the EU. Finally, real wages in the UK are considerably higher than those in Poland. For example, in 2005 the average net monthly salary of an engineer in the UK, a highly skilled worker, was $3,407, compared to $1,240 in Poland. For chambermaids, a comparatively low skilled worker, the 2005 average net monthly salary was $1,145 in the UK versus $489 in Poland. Polish migrant/immigrant chambermaids in the UK, then, make nearly as much as engineers Poland. Incentives for immigration/migration of low and highly skilled workers from Poland to the UK are clearly high. Currency conversion rates for the pound sterling to the Polish zloty are also favorable, with £1 purchasing between five and seven zloty since accession. The combined effects of a massive immigration/migration, poor performing home labor market, and favorable wage and exchange rates create the ideal circumstances for examining what happens to a more developed country, such as the UK, when it is opened to inflows of workers from a comparatively less developed country, such as Poland. These findings have a particular bearing on policy as there have been calls for free movement of workers in the United States and other OECD countries that share borders with or have ties to less developed countries.
The predicted impact of EU enlargement prior to A8 accession in 2004 was mixed. While scholarly research from as early as 2000 indicates that "Eastern Enlargement will not affect wages and employment at the aggregate level," and "concerns that EU labor markets will be swamped by migrants from the CEECs…seem to be ill-founded," popular media in the UK seemed to exhibit panic over labor market integration in the months preceding accession in early 2004. A March 2004 article from London’s Mail on Sunday conveys the author’s opinion that "the main economic effect [of A8 accession] will be to ensure a fresh supply of unskilled labour in the agricultural and food sectors. In other words, immigration tends to shore up a 'sweatshop' economy, rather than making British manufacturing more sophisticated." Despite predictions, data and subsequent analysis have only recently begun to illuminate the real impact of the massive worker influx in the UK following A8 accession.
To fully understand the impact of Polish migration to the UK following accession, it is important to understand the demographics of the Poles moving to the UK. To start, the majority of Poles who move to the UK searching for job opportunities are young. 43 percent of all registered workers between May 2004 and March 2009 were between the ages of 18 and 24, and an additional 38 percent were between the ages of 25 and 34, meaning that 81 percent of all migrant workers were younger than 34. The average Polish worker migrating to the UK also has relatively more education than other A8 immigrants. At the time of A8 accession, the average Polish worker had 13.3 years of education past the age of seven, compared to all other A8 migrants post enlargement, which had approximately 11.6 years of education past the age of seven. These findings suggest that recent Polish migrants are not typically those with the lowest levels of education.
The average earnings of a Polish worker in the UK are similar to that of other recent Central and Eastern European migrants, around £6 per hour, despite the higher educational attainment of Polish workers. These wages hover just slightly above the UK minimum wage as of October 2008, which is £5.73 for adults aged 22 and older and £4.77 for adults aged 18-21. These low wages may raise concern that Polish workers are depressing overall wages in the UK and causing unemployment to rise among UK nationals. However, government research suggests that Polish workers have had no adverse effect on employment or overall wages for local workers.
Finally, in addition to their high educational attainment and relatively low wages, Polish workers tend to be highly productive employees. Polish workers, on average, work four hours longer per week and have an employment rate 9 percent higher than UK workers, debunking the myth that new immigrant workers are less attractive employees than local workers. Finally, The UK Home Office Border and Immigration Agency’s Accession Monitoring Report of A8 Countries from May 2004 through March 2009 concludes that the numbers of A8 nationals applying for tax-funded, income-related benefits and housing support remain low in relationship to the total number of claims in the UK. This suggests that Polish workers do not require higher than average social welfare benefits. Taken together, these characteristics of the Polish worker paint a very clear picture of who these new immigrants are and what they are doing in the UK economy: they are young, educated, hard-working, inexpensive workers that productively contribute to the economy without diminishing opportunities for local workers or burdening the social welfare system.
The state of the UK economy at the time of accession, including the number and types of jobs available to this massive influx of Polish workers, are also important considerations in assessing the overall impact of Polish workers on the UK economy. The UK workforce is both shrinking and aging: in 2003, about 700,000 job vacancies existed in the UK. While a globalized economy may, in some cases, afford industries the opportunity to outsource positions they cannot fill in the home economy, many of these vacancies in the UK economy were in localized service sectors. The UK Home Office’s Border and Immigration Agency’s March 2009 Accession Monitoring Report notes that "A8 workers are continuing to go where the work is, helping to fill the gaps in our labour market, particularly in administration, business and management, hospitality and catering, agriculture, manufacturing, and food, fish, and meat processing." Approximately 41 percent of Polish workers are working in administrative, business, or management services (approximately 187,780 workers); 17 percent in hospitality and catering (approximately 77,860 workers); 9 percent in agricultural activities (approximately 41,220 workers); 7 percent in manufacturing (approximately 32,060 workers); and 6 percent in food, fish, and meat processing (approximately 27,480 workers).
The impact of Polish immigrant/migrant labor on the UK economy is staggering. Government estimates place the annual contribution of immigrants to the British economy at £6 billion. Furthermore, the British-Polish Chamber of Commerce estimates that there are currently 40,000 immigrant Polish entrepreneurs who have set up businesses in the UK. This estimate is particularly significant because one of the UK economy’s difficulties during its era of mixed economy and early privatization was the development of entrepreneurial enterprises. These small business organizations play a critical role in creating jobs and contributing to the government tax base, and the ability of the individual to develop entrepreneurial enterprises is an indicator of the health and vitality of an economic system.
Clearly, Polish immigrants fill critical gaps in the UK economy, play an important role in ensuring its future success, and do not burden social welfare systems because they are young, healthy, and more regularly employed than the average UK-born worker. Additionally, the incentives for Polish immigration/migration create mutual benefits for both the UK economy and the Polish worker. Data suggests that Polish workers immigrate/migrate to the UK to take relatively low paying jobs compared to their skill levels. Drinkwater et al. confirm this through their analysis, suggesting that Poles have lower rates of return on their human capital than other migrants, controlling for other personal and job-related characteristics, as a result of this education to income ratio. Polish workers are willing to work for wages that are lower than those appropriate for their skill level because UK wages are, overall, higher than those in Poland and currency exchange rates are favorable. This structure, then, creates a mutually beneficial system. The UK benefits from the attraction of Polish workers because it gains skilled workers that fill critical labor gaps while requiring little social service support. New Polish immigrant workers are able to earn higher wages than they would in Poland, even in a less skilled job, enabling them to live a comfortable lifestyle and send remittances back to their families in Poland. This creates a win-win scenario for the UK economy and the new Polish immigrant worker.
Conclusions and Implications
Overall, the case of the Polish worker demonstrates that the UK’s immigration policies are detrimental to its economy. These policies have prevented immigrants or migrants from filling critical labor gaps by keeping workers with lower skill levels from obtaining work permits on the basis of protecting jobs, wages, and social benefits. The case of the Polish worker in the UK shows that the type of workers that have emigrated/migrated from Poland under EU free movement policies have not taken local jobs, depressed wages, or burdened social welfare systems. In fact, the case of the Polish new immigrant worker in the UK shows that, when there is free movement of workers, the workers that tend to migrate or immigrate are the kinds of workers that the UK’s immigration policies are trying to attract anyway. New Polish immigrants are young, educated, hard working, willing to work for relatively low wages, and do not burden the social welfare systems of the UK. They have filled staggering labor gaps in the UK and significantly contribute to the economy both through their labor and entrepreneurial spirit.
The need for immigration policy reform will become increasingly important as Polish and other A8 migrants to the UK begin to return to Poland and other Eastern European home countries. Arrival rates of new A8 immigrants are slowing, with 18 percent fewer WRS registrations in the second half of 2007 than during the same period in 2006, and some estimates placing the percentage of A8 immigrants that migrated to the UK since 2004 that have returned home at 50 percent. Additionally, the UK population continues to decline and age. Coupled with A8 out-migration, this could create additional labor market gaps. The UK needs to revise its immigration policies in order to ensure that the labor force is the appropriate size and has the needed skill sets.
Developed countries around the world should consider this important example in their evaluation of policies that would create free movement of workers between their country and less developed countries. The case of the Polish worker provides evidence of the significant benefits for developed countries of opening their labor markets to immigrants from less developed countries and shows that the perceived negative impacts of free movement of workers can be avoided. An important consideration in the development of such a policy is the sequencing of implementation. The fact that the UK government instituted a Worker Registration Scheme that required employment for a worker’s first 12 months in the UK immediately following A8 accession is notable and may be an important policy tool that helped to ensure the success of free movement in the UK following A8 accession. More data about free movement will become available in the years following 2011 as all EU countries must allow unrestricted movement of workers beginning then.
Further research might examine additional case studies to determine the optimal conditions in developing and less developed countries for the implementation of free movement policies. For example, free movement of workers between the US and Mexico would be vastly different than the case of free movement between the UK and Poland due to the size of Mexico, average educational attainment there, varying unemployment rates, and the fact that the US and Mexico share a border. Therefore, additional case and empirical research might be used to understand the potential impact of free movement policies in additional situations and geographic locations.