YESTERDAY the European Commission ruled that Spain could close its labour market to Romanian immigrants until the end of 2012. The commission has usually been a hearty supporter of freedom-of-movement rules within the European Union (as its spat with France last summer over Nicolas Sarkozy's decision to expel thousands of Roma migrants showed). Its move is a telling reminder—as if one were needed—of the threat posed by Europe's economic difficulties to its political project.
Unlike some of its EU partners, Spain lifted restrictions on workers from Bulgaria and Romania in 2009, two years after the pair joined the EU. But today, following the collapse of its construction sector and a painful crawl out of recession, Spain’s unemployment rate stands at a whopping 21%, over twice the EU average of 9.4%. Almost a third of Spain’s 860,000 Romanian nationals—the largest foreign group in the country— are unemployed.
Something had to give. And so two weeks ago Spain said it would impose restrictions on Romanians looking to enter the country for work. After initially ruling the move illegal, the commission now seems to be persuaded that Romanians were distorting the labour market.
Unfortunately for Spain, Romanians already in the country—who are not affected by the commission ruling—may prefer to stick around to claim unemployment benefits. At home, they face an ill-funded and distorted welfare system that, for example, still hands out large pension payments to ex-Securitate officers.
At 7%, unemployment in Romania is low, but so are wages. According to Eurostat, standards of living in Romania are among the lowest in the EU. Ambitious young Romanians often feel that their best opportunities lie abroad, even if they hope one day to return home.
Under the accession treaties Bulgaria and Romania signed, all EU countries must open their labour markets fully to workers from the pair by 2014. The two countries' labour ministers recently urged the commission to put pressure on those countries that still apply restrictions on their workers to lift them next year. The new Spanish policy—which follows a decision by the Netherlands in April to take a tougher line on Bulgarian and Romanian workers—makes that look unlikely.
So what is the answer? More opportunities at home would help. The Romanian government needs to speed investment in productivity-boosting projects, such as transport infrastructure. There are plenty of inefficient state-owned enterprises ripe for privatisation. A more vibrant small- and medium-sized enterprise (SME) sector could encourage some Romanians abroad to return home.
Yet hopes for a rapid rebalancing of the European economy are whistling in the wind. Economists have been worrying about the perverse incentives created by economic mismatches within the EU for decades. The challenge in the months and years to come will be how, in an age of austerity and stagnation, to stop the huge economic and fiscal differences between EU countries from doing further damage to the project of European integration.
The challenges are large. Economic imbalances within the 17-member euro zone are threatening to tear the single currency apart. Another core EU project—the visa-free Schengen regime—is also under strain.
Freedom-of-movement rules are at the heart of the European project. They are probably not yet under serious threat. Yet as the Spanish move, and the commission's decision to allow it, suggest, when times are tough the draw of abstract principles no longer proves so magnetic.
No comments:
Post a Comment