Labor Shortage in the EU

Labor Shortage Jon Purizhansky

Jon Purizhansky from Buffalo, NY points to a new report by the Vienna Institute for International Economic Studies that shows that, while most of central and eastern European countries have been growing at their highest rates since the global financial crisis about a decade ago, this boom may be overdue to severe shortage of labor in the EU.

Global relocation of economic migrants stands at an all-time high in modern history. With Central and Eastern Europe being a large part of the EU, both skilled and unskilled labor has migrated to Western European EU member states. Simply put – if you are a carpenter in Western Poland, then why would you work in Poland when you can make double in Germany, which is just an hour drive away. As Western Europe has been feeding on labor, originating from Eastern and Central Europe, a vacuum of labor has emerged and is growing in Central and Eastern European countries.

Central and Eastern European countries, which have been struggling to fill up vacancies as more and more workers migrate to Western Europe in search of better pay. The labor shortage has pushed down unemployment rates in the region to record lows and driven job vacancies to their highest levels. The shortfall can also be attributed to a decline in the overall population. Most countries in the region have experienced shrinking populations over the past 15 years even as the total population in the EU has gone up.

The working-age population in these countries has been shrinking due to migration and other demographic factors such as low fertility rates. This shortage might result in lower GDP growth rates which could have severe implications for the welfare systems. As the aforementioned report stated, migration and low fertility rates are expected to cause the working-age population (aged 20-64) in central and eastern European countries to shrink by about 30 percent by 2050.

So, how does the EU solve its shortage of labor? Primarily by bringing in workers from outside the EEU. The organic economic trend of EU employers searching for workers globally is driving the numbers of EU bound foreign workers into dozens of millions annually.

Jon Purizhansky from Buffalo, New York notices that in December 2011, the so-called Single Permit Directive was adopted. It creates a set of rights for non-EU workers legally residing in an EU State, notably the right to equal treatment with nationals in the country they reside and work. The Directive applies to most non-EU nationals with authorization to reside and work in the EU, independently of their initial reason for admission, unless they are explicitly excluded from the scope of the Directive. Its scope includes both non-EU nationals seeking to be admitted to an EU State in order to stay and work there and those who are already resident and have access to the labour market or are already working there. It provides for:

A single permit giving the right both to residence and work

A single application procedure for this permit

A set of rights for non-EU workers, notably the right to equal treatment with nationals of the country where they reside and work, in a number of key areas: working conditions, freedom of association and joining organisations representing workers, education and vocational training, recognition of diplomas, social security, tax benefits, access to goods and services including procedures for housing and employment advice services. Some exemptions may be applied by the Member States. The right to social security can, for instance, be limited to those in employment, or who have worked for at least 6 months and who are registered as unemployed.

Jon Purizhansky says that a foreign worker can work in the Schengen Area if she/he holds a National (D) Visa for employment purposes issued by one of the 26 European countries parts of the Schengen Zone. The fact that dozens of millions of D Visa recipients enter the EU annually coupled with the fact that the manpower recruitment industry is full of fraud, inefficiency and non-transparency creates risk not only to the economic health of the EU but also to the domestic security in Europe. European employers largely meet their employees for the first time when employees arrive.

Often times so-called “manpower brokers” or “recruiters” charge prospective employees exorbitant amounts of money by promising them unreal employment terms and when the non-European employees show up in the EU, their expectations are not aligned with the expectations of their European employers. Consequently, employees leave their employees, file complaints with government agencies and NGOs and become illegal aliens in the EU by illegally migrating in violation of their “D Visa” conditions. Jon Purizhansky from Buffalo, NY points out that without a systemic technological solution the situation will continue to get worse.

Author: Jon Purizhansky

Jon Purizhansky is a lawyer, entrepreneur and commentator in New York. He is an avid follower of US and International economics and politics. With decades of international experience, Jon Purizhansky reports on a wide variety of economic and political issues.