Brain drain Europe's Eastern Exodus

A new report highlights the dangers of mass labor migration for new E.U. member countries as they lose their best and brightest to wealthier western neighbours.
They might be better off at home.

Five million. That is the number of people from new E.U. member countries such as Romania and Latvia who are now living in older E.U. countries to the west.

And the new arrivals are making their presence felt.

Since the European Union's expansion into eastern Europe from 2004 to 2007, debates have raged about how western Europe can cope with the influx and to what extent countries such as Germany can meet labor shortages and prop up aging populations.

But what changes are taking place in the countries losing workers? What happens when 9 percent of a nation's labor force migrates to western Europe, as is the case with Lithuania? Or when one in 10 citizens live elsewhere in the European Union, as is the case with Romania?

Initial findings have been provided by the Institute for the Study of Labor, IZA, a non-profit in Bonn supported by the Deutsche Post Foundation. The report, "Labor Migration, E.U. Enlargement and the Great Recession," due to be published at the beginning of 2015, shows migration can relieve the burden on labor markets in eastern and central Europe.

But at the same time, the economic development of these countries is threatened as they lose significant numbers of young, highly qualified workers.

What happens when 9 percent of a nation's labor force migrates to western Europe, as is the case with Lithuania? Or when one in 10 citizens live elsewhere in the European Union, as is the case with Romania?

Migration functions as a relief valve when high unemployment strikes. That is the positive side.

The IZA authors compared the reality with a theoretical scenario without migration, based on E.U. data from 2004 to 2009. The results showed that in the countries that joined the bloc in 2004, migration resulted in a long-term decrease in unemployment, although only by 0.05 percent. Migration also led to a wage increase of 2.4 percent in Poland, 0.6 percent in Hungary and 0.3 percent in the Czech Republic.

It is doubtful that the advantages can compensate for the loss of qualified manpower. Of the eastern Europeans who left their homelands, 83 percent had a college education or a degree. The development in Romania is particularly problematic.

More than 2 million Romanians are living in other E.U. countries, among them many researchers, high-tech specialists, physicians and nurses. “If the brain drain in the health systems isn’t stopped, it will have to be assumed that it will have a negative impact on the health and quality of life of the population,” wrote IZA researchers.

The research group also sees signs of brain drain in Slovakia, Poland and other countries.

The authors estimate the exodus will cause a long-term drop of 7.4 percent in the gross domestic product of Bulgaria and Romania. The average for the other eight new E.U. member countries is 1.3 percent. “There is the risk that the labor markets of some countries will be hollowed out,” the report's researchers concluded.

Researchers at The Other Canon, a research center at Tallinn University in Estonia, a new E.U. member, warn that the exodus of qualified people is contributing to the deindustrialization of the country. In a working paper, they point out that between 1990 and 2005, the share of industrial activity as a share of Estonian GDP sank massively - from 49 to 29 percent. In Poland, the share declined to 30 percent from 50 percent.

There is the risk that the labor markets of some countries will be hollowed out. Institute for the Study of Labor

The researchers warn that “economic problems are resolved through labor migration instead of by changing the conditions of structural development.” Because of this, they say, Europe is threatened with a downward spiral of wages and productivity.

Migration optimists counter that migrants return home at some point.

“They bring new skills with them, leading to an increase in productivity and jobs,” the IZA report said.

However, the studies also show that most immigrants from the East are not using their qualifications abroad. “The contribution to a substantial further development of skills is limited,” the authors said.

In addition, there is no mass movement encouraging people “to go back home,” and whoever does go back is also not necessarily economically successful.

The IZA study shows that Poles returning to Poland had an up to five times greater risk of being unemployed than those who had stayed home. They may be more highly qualified, but they can’t use their knowledge at home.

The sobering conclusion is that: “Migration experience is no advantage in Poland’s labor market, but rather more of a burden.”

The IZA researchers called for improvements to the domestic economy to "make the return more attractive to qualified workers.” Admittedly, that will be difficult without help. But The Other Canon foundation warns that E.U. cohesion policy funds are not being used to improve industry in the new member countries.

Viewing mobility in the E.U. domestic market as a cure-all, the IZA researchers said say, is an “economically suicidal policy.”

 

The author is a freelance journalist. To contact the author: [email protected]