About Time Germany Finally Opens Labor Market to Eastern Workers

On May 1, Germany and Austria will open up their labor markets to citizens of the Eastern European countries that joined the EU in 2004 -- seven years after most other EU members let them in. But Berlin's protectionist fears have only hurt the German economy, as the country will struggle to attract enough skilled workers.

Nowhere in Warsaw is the country's upswing as visible as along the road between Frederic Chopin Airport and the town center. Many foreign investors, including German media giant Axel Springer, Unilever and Kraft Foods, have set up shop in the district of Mokotow, erecting steel-and-glass office complexes with names like Tulipan House and Optimus Business Park.

American photocopier giant Xerox works out of Trinity Park. Its business is booming, and the Polish economy is healthy.

Even so, Xerox Poland's head of human resources, Sebastian Gerstmann, is worried about the future -- specifically what will happen after May 1. "I believe there is a real danger we will lose many of our well-trained computer specialists, particularly those who are about to graduate from university, because they will get better offers in Germany," he says. German Economics Minister Rainer Brüderle recently said the German economy needs at least 66,000 IT specialists. To Gerstmann, that sounds like a threat.

From May 1 onward, workers from Poland, the Czech Republic, Slovakia, the Baltic states, Hungary and Slovenia will be allowed to live and work in Germany and Austria. That was forbidden up to now because Gerhard Schröder, the then German chancellor, succeeded in imposing a seven-year transition period on the EU's Eastern European member states when they joined the bloc in 2004. This moratorium on access to labor markets was supposed to protect German carpenters, welders and computer programmers against cheaper competitors from the East.

Fears Reversed

Now this honeymoon period is over, up to 50 million eastern Europeans could theoretically apply for every job that becomes available in Germany. However the underlying conditions have changed dramatically since 2004. Germany is booming, and the former communist states in Eastern Europe have shaken off the burdens of their past, and are now notching up high growth rates.

The fear has switched sides: Germans no longer worry about an influx of workers from the east. On the contrary, they are eager to get them. In fact, it is quite possible that Germany won't be able to woo enough of them to satisfy the hunger of German managers for additional labor. Now it's the turn of Poland, the Czech Republic, Slovakia and Hungary to fret that their cleverest minds and best craftsmen may leave for the west.

Gerstmann says his fellow countrymen are extremely well educated, are fluent in foreign languages and are highly motivated -- exactly the skills he is now concerned about. "Polish employers will have to pay higher wages and offer better opportunities to keep people in the country," he says. After all, a computer programmer in Germany still earns twice as much as his Polish counterpart.

Opinion polls show Gerstmann is not alone in his fears: Some 40 percent of all major Polish employers fear the "negative consequences" of an open border.

Eastern European workers proved that they are extremely mobile when their respective countries joined the EU back in 2004. Two million Poles alone moved to Western Europe in search of work, heading mainly for Britain, Ireland and the Netherlands.

Limited Movement Expected

The exodus will be smaller this time round. The German Institute for Labor Market and Vocational Research (IAB) in Nuremberg expects no more than 140,000 people a year will emigrate to Germany. Warsaw-based demographer Krystyna Iglicka  believes up to 1 million people will move from Poland alone, albeit spread across the next couple of years.

Although figures such as these are large enough to worry Polish and Czech employers, they are too small to satisfy their German colleagues. Germany is running out of skilled labor, and its population is shrinking. From 2020 onward, when the first baby boomers retire, it is expected that more people will leave work than young people will enter the labor market. And because the situation is similar in nearly all European countries, a bitter battle has broken out over the continent's skilled workers. The days are long gone when Germany just had to ask for workers for it to be flooded with applicants. In fact, in 2008 and 2009 more people left Germany than emigrated to the country.

Germany is now too late to cherry-pick Eastern Europe's top engineers and IT experts. The youngest and most dynamic of these are already working in Britain and Sweden, according to the Cologne Institute for Economic Research. These workers settled down in these countries and started careers and families while Germany was choosing to hide behind its seven-year immigration ban.

"This hesitant attitude, based on fears of a possible negative effect on the German labor market, now turns out to have been a huge mistake," says Klaus Zimmermann, the head of the Bonn-based Institute for the Study of Labor. At a trade conference in Warsaw this week, Zimmermann said German companies shouldn't wait for the people of Poland, the Czech Republic and the Baltic states to turn up, but should actively recruit them while there's still time.

Looking Further East

Most of the potential immigrants will probably come from western Poland, which lies particularly close to Germany and where many young people already speak German.

Five years ago, the university in Wroclaw began preparing for the expected exodus -- by wooing the young academics of the future from countries to the east of Poland. With success: They managed to attract 500 students from Ukraine, Belarus, Moldova and Kazakhstan.

Translated from the German by Jan Liebelt
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