1. society
2. work
3. unemployment

PaperHeschlA.doc
8.500 words
European Integration and Labour Migration to Austria: How to balance
employers’ and employees’ interests
Franz Heschl, Chamber of Labour Styria, Graz
In the last twenty years the issue of how migration has an impact on labour markets has
entered into research. All the approaches and concepts to this issue differ in various aspects,
the results being strongly influenced by the underlying assumptions. Trying to sum up the
results of the approaches – if only cursorily and thus fragmentarily – one could make note of
five key points:1 The macroeconomic impact of migration or the cumulated effects of
immigration on labour markets are relatively little; a more general view, however, obscures
the distribution effects behind it most of the time. These effects depend on the current
compensation system: if this system is very flexible, reactions regarding compensation are
more likely to arise, if the system is more rigid, it is rather the unemployment rates which will
show reaction. In many cases, migration results in the redistribution of income from
employees to owners of the capital. Among the group of employees, the level of qualification
decides about direction and extent of how an individual is affected. Immigration also brings
with it a redistribution of wealth from employees who compete with immigrants to persons
who use or consume services of immigrants.
From a sociological point of view, the social foundations and the societal development of
these redistribution processes are of great importance. It has to be demonstrated how different
societal groups bring up migration issues against the background of various interests in public
media debate and which instruments they use for doing so. This paper tries to propose an
answer on the example of the public debate about immigration to Austria caused by different
facets of the European integration process. This enterprise is even more complicated as both
public and scientific debates about the consequences of immigration on the labour market
show little nuances – obviously exactly because of the interests behind them and the
1
These five key points have been developed from Brandl et al. (1994), Winter-Ebmer/Zweimüller (1996) and
Pollan (2000).
1
consequences for distribution. The debates show strong polarisation, they are dominated by
accusations and reproaches from “xenophobia” to “disproportionate political correctness”.
This article starts by presenting the development of labour migration to Austria in the last
twenty years. It is especially the jump in employment of foreign people at the beginning of
the 1990s which attracts attention. The consequences of this jump on the labour market are
then elaborated referring to the literature which has abounded in the meantime. After some
remarks on labour market developments in Austria in the decade which followed, the impact
of this experience on the Austrian debate about the eastern enlargement of the EU at the turn
of the millennium is outlined. In the course of this discussion, employers reanimated the myth
of “shortage of skilled workers” which has been known in Austria since the 1980s. In the
years 2006 and 2007 this reanimation led to another climax in public media debates about the
maintaining or loosening of transitional arrangements for labour mobility, which had been
negotiated with a vast majority of the new member states and which had also been claimed by
Austria. Then this article shows that the “fate” of these transitional arrangements is also a
question of distribution between employers’ and employees’ interests. In media debates,
modern societies increasingly use the instrument of mystification. The debate about
transitional arrangements must be stripped of distributional and thus inevitably mythical
aspects. One has to hold that these transitional arrangements are rather an instrument for the
slow growing together of labour markets and definitely not an instrument for a complete
sealing off of one labour market.
Labour migration to Austria
Table 1 summarizes some basic developments in the Austrian labour market of the last two
decades. On the one hand, we can see a steady growth of the number of employees during the
whole period. (This paper is only about salaried employment in Austria and only refers to its
legal forms. The different forms of illegal employment – even if they influence one or the
other development which is analysed – are not debated here.) This growth was mainly the
result of a significant increase in part-time employment. On the other hand, the number of
employees not holding Austrian nationality is also constantly on the rise. This happened
rather moderately between 1985 and 1989, before the fall of the Iron Curtain, and skyrocketed
between 1990 and 1991. The reason for this significant rise stemming mainly from the
developments in former Yugoslavia, and also from the fall of the Iron Curtain. The fields
shaded in grey in table 1 show the most important consequences of this growth: not only
employment but also unemployment rates increased significantly. After tightening the
2
regulations for admittance of foreign work force in the Austrian labour market from 1993
onward, the development of the number of foreign employees again showed a moderate yet
steady growth. In 1985, 140,205 people not holding Austrian nationality worked on the
Austrian labour market, in 2006 it was 389,894 people. In the course of this development the
share of foreigners doubled from 5.1% in 1985 to 11.9% in 2006. From 1996 to 2006,
287,160 people were naturalised,2 many of these naturalisations not being relevant for the
labour market, though. OECD, in its “International Migration Outlook 2007” holds that
15.5% (2005) of all working people in Austria were not born in this country. Regarding this
respect, Austria holds one of the highest proportions of foreigners within the EU.
Regarding the structure of foreign employment in Austria according to the countries of origin,
immigration from former Yugoslavia and Turkey prevailed in the period before the fall of the
Iron Curtain. In 1980, 82.1% of all labour migrants in the Austrian labour market came from
Yugoslavia and Turkey, in 1989 the proportion was still 77.7%.3 In the course of the fall of
the Iron Curtain, Austria’s accession to the EU and the eastern enlargement of the EU this fact
changed considerably, as will be explained later. Furthermore, foreign people in the Austrian
labour market has been predominantly male. The proportion of male employed foreigners was
63% in 1995 and still 60% in 2006.4 Initially, immigration concerned the lower qualification
sectors. For instance, still in 1995, 83% of all employed labour migrants were workers. The
level of qualification has risen in the last 10 years, however; the proportion of clerical workers
has risen from 17 to 29% in the years 1995 to 2006. Regarding economic sectors, most of the
immigrants traditionally worked in production, building, trade and in the hotel industry,
recently also in corporate services.5
Experiences from the early 1990s
These developments, the permanent rise of salaried employment and employment of
foreigners in Austria in the last twenty years and the jump in employment of foreigners in the
years 1990 and 1991 as well as its consequences on the development of unemployment and
wages have quickened public and scientific interest since the mid 1990s. From the mid 1990s
onward, a number of economic studies have been published, researching the different effects
2
cf. Statistik Austria, Statistisches Jahrbuch Österreichs 2007, page 86.
cf. Bundesministerium für Arbeiter und Soziales, Ausländerbeschäftigung 1989, page 34.
4
In the group of Austrians with salaried employment, this number was 52.94% for men in 2006.
5
For these structures of employment of foreign people cf. Hauptverband der österreichischen Sozialversicherungsträger, Statistische Daten aus der Sozialversicherung. Beschäftigte Ausländer in Österreich,
Jahrgänge 1995-2006 (employed foreigners in Austria, years 1995-2006).
3
3
of growing employment of foreigners on the aforementioned macroeconomic aggregations.
Some of the main results will be discussed in the following.
4
Table 1: Developments in the Austrian labour market of the last two decades *
year
salaried employees
annual percentage development of part-time
change %
employment**
recorded
unemployed
1985
2.759.432
1986
2.779.865
0,74%
151.973
1987
2.785.442
0,20%
1988
2.808.334
1989
annual percentage
change %
139.447
unemployment rate
development in the
proportion of
annual percentage
number of foreign
foreigners in total
change %
employees
of employees
4,8
140.205
5,08%
8,24%
5,2
145.963
3,94%
5,25%
164.468
7,60%
5,6
147.382
0,96%
5,29%
0,82%
158.631
-3,68%
5,3
150.915
2,34%
5,37%
2.859.932
1,80%
149.177
-6,34%
5,0
167.381
9,84%
5,85%
1990
2.925.396
2,24%
165.795
10,02%
5,4
217.611
23,08%
7,44%
1991
2.995.361
2,34%
185.029
10,40%
5,8
266.461
18,33%
8,90%
1992
3.054.065
1,92%
193.098
4,18%
5,9
273.884
2,71%
8,97%
1993
3.055.271
0,04%
222.265
13,12%
6,8
277.511
1,31%
9,08%
1994
3.069.424
0,46%
214.941
-3,41%
6,5
291.018
4,64%
9,48%
1995
3.069.536
0,00%
382.039
215.716
0,36%
6,6
300.328
3,10%
9,78%
1996
3.046.904
-0,74%
381.670
230.507
6,42%
7,0
300.271
-0,02%
9,85%
1997
3.055.305
0,27%
415.694
233.348
1,22%
7,1
298.797
-0,49%
9,78%
1998
3.075.850
0,67%
454.867
237.794
1,87%
7,2
298.566
-0,08%
9,71%
1999
3.106.120
0,97%
481.598
221.743
-7,24%
6,7
305.783
2,36%
9,84%
2000
3.133.173
0,86%
494.060
194.314
-14,12%
5,8
319.394
4,26%
10,19%
2001
3.148.177
0,48%
535.805
203.883
4,69%
6,1
329.261
3,00%
10,46%
2002
3.154.512
0,20%
573.314
232.418
12,28%
6,9
334.132
1,46%
10,59%
2003
3.184.117
0,93%
595.718
240.079
3,19%
7,0
349.559
4,41%
10,98%
2004
3.197.250
0,41%
731.000
243.880
1,56%
7,1
361.767
3,37%
11,31%
2005
3.228.777
0,98%
750.900
252.654
3,47%
7,3
373.692
3,19%
11,57%
2006
3.280.878
1,59%
791.100
239.174
-5,64%
6,8
389.894
4,16%
11,88%
* source: Bundesarbeitskammer, Wirtschafts- und Sozialstatistisches Taschenbuch, various years, own calculation.
** source: Statistik Austria, Mikrozensus Jahresergebnisse und Mikrozensus-Arbeitskräfteerhebung, various years respectively. Data from 2004 are not directly comparable to the years before.
5
Rudolf Winter-Ebmer and Josef Zweimüller have dealt in detail with the effects of the
increasing employment of foreigners on the Austrian labour market in the years 1988 – 1991.
In their work, they refer to the fact that “the enormous increase of labour potential within a
rather short period” (transl. from the original)6 should facilitate to visualize the reaction of the
labour market on immigration. They also state that the jump in labour migration to Austria
occurred in the time of a relatively good economic cycle. Data of employment development
and income trends from the Austrian social security funds form the basis of their empirical
research.
Regarding the risk of unemployment they conclude that there has been no significant effect of
competition with foreign employment for women; men, on the other hand, do suffer from
increasing employment of foreigners in their unemployment rates. In the timeframe
investigated, there has been a general effect on the income level of nationals at the time of a
growing presence of foreigners on the Austrian labour market. This result is especially
interesting as concerns income subgroups. Winter-Ebmer and Zweimüller divided all the
investigated people according to their median income into recipients of low income and high
income. As regards women, there is no significant negative effect of the concentration of
foreigners on the income in any subgroup, with men the picture is different: “If the income is
below median, most of the results are negative. The most negative effect is on men above 50.
An increase of 1% in the proportion of foreigners reduces the monthly income by 0.3% …
With the high income group, a high proportion of foreigners results in significantly higher
incomes … An exception being the group over 50 and foreigners themselves” (transl. from
the original).7 The authors then divide their test groups into those people who have changed
sectors in the timeframe investigated (“mover”) and those people who have not (“stayer”).
„With men, an increase in employment of foreigners results in a significant negative effect on
the income level of the movers …. If the proportion of foreigners increases by one percentage
point, increase in income is reduced by two thirds. On the stayers, the effect is also negative,
though insignificantly. This outcome rather argues for moving which is not conducted out of
free will in connection with a change in foreign employment. With women there are no
significant negative effects” (transl. from the original).8
6
Winter-Ebmer/Zweimüller (1996), page 55.
ibid, pages 93-94.
8
ibid, page 96.
7
6
Fritz Breuss and Fritz Schebeck have used an econometric model to approach the labour
market relevant consequences of the high immigration rates of these years. Their central result
is: “We can see from the reaction of the labour market that income flexibility has risen
considerably. The heavy temporary inflow of foreign work force in the years 1989 to 1992
quickly curbed pay increase. Compared to the basic scenario (without immigration), gross pay
decreased by 2.25% between 1989 and 1992. As a consequence, oversupply in the labour
market could be absorbed and unemployment rise could be alleviated. Pressure on pay
increase abated price increase, which led to a slight actual growth in national demand. So, due
to immigration, real GDP additionally grew by 0.2% until 1994. The sharp rise in
unemployment (especially until 1992) burdened the public budget in the form of
unemployment benefits” (transl. from the original).9
On the basis of a random sample of 1,521 enterprises which had at least one employee per
year between December 1988 and December 1991, Brandel et al. found out that the heavy
inflow of immigrants at the end of the 1980s and beginning of the 1990s considerably
squeezed both Austrian workers and those foreigners already working in Austria out of the
market. So, 60% of all businesses in the random sample, whose employment rates dumped
during this period, increased employment of immigrant work force.10 In their final remarks,
they summarize the results in a way – both linguistically and content-wise – which could be
taken as evidence for this paper’s initial considerations concerning “political correctness” as
regards the issue of migration. “The study produces some evidence for partial replacement
processes in the employment system triggered by the shock of work force supply in the years
1989 to 1991. According to the results presented here, it was especially foreign labourers who
had been longer in the country that suffered from having to compete with the newly arrived
offerers of work force; some national labourers, however, also saw themselves confronted
with unfavourable income prospects. The study also makes very clear how such restructuring
measures in the employment system are embedded in a general high dynamics of fluctuation
of work places and work force” (transl. from the original).11
In another study based on data from social security funds, Gudrun Biffl elaborated that heavy
labour migration at the beginning of the 1990s led to a cut-throat competition among foreign
work force. “The quick extension in offer of foreign work force in the early 1990s led to a
9
Breuss/Schebeck (1996), page 145.
cf. Brandel et al. (1994) as well as Pollan (2000), pages 104-105.
11
Brandel et al. (1994), chapter „6. Final remarks“ (pages not available).
10
7
temporary oversupply in some work sectors. In these sectors, competition among the
employed toughened in such a way that not only wage pressure (as documented by the
widening of wage differences of national and foreign work force) but also the unemployment
rate of foreigners increased. Foreigners’ unemployment rate is always higher than that of
nationals, and this gap widened remarkably in the early 1990s …” (transl. from the original).12
The author concludes that an increase of the proportion of foreign work force in employment
by one percentage point would raise the unemployment rate in foreigners by 0.6 percentage
points. She points out that the effects of an increase in supply of foreign work force in the
Austrian labour market always depend on the role various groups of foreigners play in a
certain business or sector. “If national and foreign employees perform the same activities,
they are potentially interchangeable; in the case of demand fluctuations, members of core staff
or people with workplace protection will stay employed and temporary staff will be
dismissed. In the case of re-employment, wage adjustment downwards is possible. In certain
sectors, foreign work force complements national work force, for example in very specialised
activities in high income groups (banks and insurances) and in low income groups (night
shifts in the textile sector). Under the terms of complementarity, foreign work force adds to
job stability, even to an increase in employment of nationals” (transl. from the original).13
Even if it is very difficult to summarize the sophisticated outcomes of those studies concisely,
it cannot be disputed that the jump in labour migration to Austria at the beginning of the
1990s had positive effects on employment development and economic growth, but
problematic effects regarding the risk of unemployment and income development for some
subgroups in the labour market
Developments in the decade after
Due to the experiences made in the years 1990 and 1991, regulations for foreign work force in
the Austrian labour market – the central instrument to regulate employment of foreign people
in Austria being “Bundesgesetz, mit dem die Beschäftigung von Ausländern geregelt wird“
(Foreign People Employment Act) – was formulated more restrictively from 1993 onward. By
doing so, further jumps in employment of foreign work force in the following one and a half
decades were prevented, the further increase was permanent and steady. Regarding labour
market relevant effects of this rise of employment of foreign people in Austria, there were
12
13
Biffl (2002), page 548.
ibid.
8
also different investigations carried out. They have in common that they all point at the
positive effects on growth and employment which were quoted before. Many of these
investigations, however, point out that thereby – in combination with other factors, as with
growing employment of women or reforms in retirement and old age pension insurance which
delay the starting of retirement – the supply of work force in Austria has increased to such an
extent that the labour market could not fully absorb it. In the 1990s and at the beginning of
the 21st century, unemployment in Austria was therefore on the rise. This rise and the
constantly high level of unemployment – again in connection with other factors, such as the
increasing internationalisation of Austrian economy due to the european integration process –
had significant effects on the development of functional income distribution. Graph 1
correlates the development of the unemployment rate to the development of the wage rate. It
shows a significant decrease of the wage rate and at the same time an increasing or high
unemployment rate in Austria in the last 30 years.
Alois Guger and Markus Marterbauer described this development as follows: “Like in most of
the other industrial nations, inequality in functional and personal distribution of income has
increased in Austria. After a rise of wage rate in the 1970s, the wage share in national income
has decreased notably, mainly due to rising unemployment and sharp increase in capital
income … For a long term development of functional distribution, labour market situation is
of vital importance. On the one hand recipients of unemployment benefits drop out as income
recipients, and on the other hand an increase in unemployment changes the economic balance
of power and forces trade union’s wage policy onto the defensive. In the 1980s and 1990s,
wage policy was not able to make use of the scope in real wages given by the development of
productivity, and so the adjusted wage rate was continuously on the decline”(transl. from the
original).14
14
Guger/Marterbauer (2004), pages 38-39.
9
Graph 1: Development of unemployment rate and wage rate in Austria*
adjusted wage rate
umemployment rate
8
75
74
73
7
72
71
adjusted wage rate
69
5
68
67
4
66
65
3
64
63
unemployment rate
6
70
2
62
61
1
60
59
0
58
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
years
* source: Guger/Marterbauer (2004), pages 7 and 43.
Table 2 shows this development very clearly. The development of per capita real wages
corresponded with the development of productivity or rather exceeded it during the decades of
low unemployment in Austria, i.e. the years 1960-1970 and 1970-1980. The development of
real wages however stayed noticeably behind the development of productivity in the 1980s
when unemployment was markedly on the rise in Austria.
Table 2: Development of real wages and productivity
1960/1970 1970/1980 1980/1990 1990/2000 2000/2003 1960/2003
average annual growth rate in %
productivity
(real GDP per labour force)
+ 5.0
+ 2.9
+ 2.2
+ 2.0
+ 0.8
+ 2.9
development of real wages
per capita
+ 4.9
+ 3.6
+ 1.3
+ 1.0
+ 0.3
+ 2.5
source: Guger/Marterbauer (2004), page 6.
For the context of this paper it is also important to note that the increasing internationalisation
of the Austrian economy and intensified west-eastern integration in Europe contributed to the
slow development in wages as well. Some studies have elaborated on this connection.
Guger/Marterbauer state, for example: “Globalisation in the course of east-western integration
and increased initial public offerings of businesses form the structural basis for changes in
10
functional distribution. Restructuring measures and dismissals of co-workers to form lean
businesses tighten the labour market situation and weaken the position of the employees, and,
facing integrationally determined adjustment problems, wage policy had to comply with
international competitiveness rather than with the goal of stable distribution”(transl. from the
original).15
Alfred Stiglbauer arrives at a similar conclusion. “As measured by the negotiated wages, real
wages increased on the average by 1.8% in the reference decade and since the accession to the
EU by 0.7%. The median annual increase of wages and salaries … per capita amounted to 2%
from 1985 to 1994 and 0.3% in the EU-decade … Though the growth in work productivity
has decreased, the change of real wages has noticeably stayed behind the development of
work productivity since the EU accession” (transl. from the original).16
In a current paper, Fritz Breuss sees a close connection between the eastern enlargement of
the EU and the decrease of wage rates in Austria. He states that the strong commitment of
Austrian businesses in the European East has led to the sharp rise of their profits. This sharp
rise of profits in relation to the wages, due to new market perspectives in the European East,
has – according to Breuss – also contributed to the sinking of the wage rate in Austria.17
Furthermore, high unemployment rates have a disciplinary effect on the employees. Austria
has faced a high rise in competitive intensity since the fall of the Iron Curtain. EU-integration
and the last EU-enlargements increased the pressure to perform considerably for the
employees. Therefore, many of them see European integration process as a “giant machine to
enforce efficiency”, they experience the European integration as putting enhanced pressure
to perform on them when at the same time real wages stagnate or sink.18
The Austrian debate on the eastern enlargement of the EU
The debate on potential effects of the eastern enlargement of the EU on the Austrian labour
market has to be seen against this background. A number of scientific papers was published at
that time – not only in Austria, but also in the EU altogether. Many of these papers tried to
15
ibid., page 39.
Stiglbauer (2005), page 171.
17
cf. Breuss (2007).
18
For details see Heschl (2004) and Heschl/Kirisits (2000).
16
11
calculate the possible migration potential of the new member states into the “old” EU member
states.19
In one important study, Ewald Walterskirchen und Raimund Dietz concluded in 1998: “In the
course of the eastern enlargement of the EU, there will be – after granting mobility – an
inflow of foreign work force, amounting to the same level as the one at the beginning of the
1990s. Calculations of WIFO (Austrian Institute for Economic Research) show that – because
of the high differences in income and due to held-back supply – there would be an additional
work force supply of about 47,000 people on the Austrian labour market as a result of an
immediate eastern enlargement of the EU without transitional arrangements. From these
47,000, 26,000 would be commuting from their residence and 21,000 would immigrate. It is
highly improbable, though, that we will see an immediate accession of the eastern states
without transitional arrangements. It is more realistic to assume that accession of the central
and eastern European countries will occur around the year 2005. If there are no transitional
arrangements on the labour market, then we still have to anticipate about 42,000 immigrants
and commuters annually because of the considerable difference in living standards” (transl.
from the original).20
Although these conclusions have been criticised in the scientific community and in the public
– other studies in this context arrived at (slightly) different migration potentials21 – the hardly
disputed core of the debate consisted in the conclusion that an enlargement of the European
Union without the introduction of transitional arrangements for labour mobility would put
Austria in the same situation that it had already experienced in the years 1990 and 1991.
Therefore, Austrian employees’ representatives demanded these transitional arrangements
from the Austrian federal government already at the end of the 1990s.22 Within the European
Union and due to a similar geographical position, only the Federal Republic of Germany
faced the same situation. Therefore, debates about the introduction of transitional
arrangements originated in both countries, in each case the debates being dominated by
different interests of employers’ and employees’ lobbies.
19
Fassmann/Münz (2003) offer an excellent overview of the results and the research methods of these
investigations.
20
Walterskirchen/Dietz (1998), pages 1-2.
21
cf. the results in Huber/Brücker (2003), for example.
22
Details are presented in one of the following chapters of this paper.
12
The situation in Austria regarding lobbies was particular in that Austria has two different
organisations that represent employers’ interests. The Wirtschaftskammer Österreich
(Austrian Federal Economic Chamber, based on legal and obligatory membership) and the
Industriellenvereinigung (Federation of Austrian Industry, based on association statutes and
voluntary membership) differ regarding their members and thus also regarding the interests
they represent. Austrian Federal Economic Chamber is formed by many small and mediumsized businesses, the big members are a minority. On the contrary, members of the Federation
of Austrian Industry are mostly big, export-oriented Austrian industrial enterprises. Due to
this difference the Federation of Austrian Industry pleaded predominantly against transitional
arrangements. From the employers’ point of view, this makes sense; the migration stream
which had to be expected without transitional arrangements would have held work force
supply constant and high, thus further strengthening the employers’ bargaining power in
framing work relationships.
The Austrian Federal Economic Chamber on the other hand had to balance the nuances of this
decision. In general, the small and medium-sized businesses that dominate the Austrian
Federal Economic Chamber are also interested in a high and increasing work force supply.
This supply also strengthens their position and widens their scope in bargaining collective
contracts, which traditionally happens between organisation units of the Austrian Federal
Economic Chamber and trade unions in Austria. On the other hand, representatives of the
Austrian Federal Economic Chamber were aware of the fact that the adoption of the four
fundamental freedoms by the new member states and their full integration into the Single
European Market would bring their members new competitors on the Austrian merchandise
and services markets. The big, export-oriented businesses represented by the Federation of
Austrian Industry were better off in coping with this new pressure of competition from the
beginning, due to their experience on highly competitive markets. The smaller businesses that
rather act regionally, experienced this scenario more as a threat. Positioning Austrian Federal
Economic Chamber and weighing different interests concerning transitional arrangements was
therefore difficult from the outset.
When it became clear in the course of the EU accession negotiations with the central and
eastern European states that transitional arrangements in labour mobility would also mean
transitional arrangements in services (mainly because of Germany’s pressure), Austrian
Federal Economic Chamber committed itself to accepting this package of transitional
13
arrangements for labour mobility and services mobility. A balance of interests of the majority
of employers’ and employees’ lobbies in Austria was thus achieved at that time and a stable
political majority concerning this issue was given. As a consequence of this majority, the
Austrian federal government decided to make use of this package of transitional arrangements
with the beginning of the enlargement on Mai 1, 2004. This meant for labour mobility that
Austria could – temporarily for two years – retain the regulations of the Foreign People
Employment Act in a modified form, after a notice to the EU for three more years. This
period will end on April 30, 2009. If Austria can provide evidence for current or future
disruptions on the labour market, those transitional arrangements can be called upon for two
more years.
It was also after the enlargement that this use of transitional arrangements remained a central
point of discussion among employers’ and employees’ lobbies, in the media, and in scientific
and socio-political debates. One could often hear the wrong argument that transitional
arrangements would bring with them a complete sealing-off of the Austrian labour market for
citizens of the new member states. Statements like “by contrast, immigrants of the new EU
member states now do have general right of residence but no access to the legal labour
market” (transl. from the original)23 or „the ban of work force from the new EU states from
the Austrian labour market is being loosened. In principle, labour market is completely closed
until 2011… “(transl. from the original)24 shall exemplify these arguments. Every now and
then they were supplemented with reproaches to employees’ lobbies that they defended the
transitional arrangements out of sheer “populism”,25 because of “backward thinking”,26
because of “global resentments” (the “line of argument of the chamber of labour that is not
ashamed of using existing resentments against Europe and especially against eastern
Europe”),27 or because of their xenophobia “latent xenophobia (which includes the ban of our
neighbours from the labour market)”.28 It should have become clear in the course of the above
mentioned analyses of labour market and income development in Austria that employees’
lobbies bear totally different motives behind the wish to retain transitional arrangements,
namely that the use of these transitional arrangements has not led to a “complete sealing-off”
23
Münz (2007), page 113.
Presentation in the most important Austrian news programm on TV „Zeit im Bild“, February 2007.
25
cf. e.g. Wolfgang Böhm, Die Presse, 25.4.2007 or Der Standard, 27.7.2005.
26
cf. APA-Journal „Emerging Europe“, 5.7.2005.
27
Karlheinz Kopf, Der Standard, 26.2.2007.
28
Wolfgang Müller-Funk, Der Standard, 24./25.5.2006.
24
14
of the labour market but to a controlled access, which shall be demonstrated in the next
chapter.
Labour migration to Austria since 2004
Table 3 shows some aspects of effects of the use of transitional arrangements by Austria so
far. Employment of people from the new EU member states, especially Poland, Hungary, the
Czech Republic and Slovakia has increased by about 6,000 people in the annual average in
the years 2004 to 2006. The number of labour migrants from the “traditional immigration
countries” Turkey and (former) Yugoslavia stagnates, due to high immigration numbers from
Germany the proportion of people from Turkey and former Yugoslavia in all employed
foreigners currently is only 53.9%. So the use of transitional arrangements has definitely not
led to a complete sealing-off of the Austrian labour market for people from the new EU
member states. If – as laid down in the accession treaties – the goal of the transitional
arrangements was a slow and balanced integration into the labour market, then this goal has
been at least partly achieved. The first trend changes which were aimed at are discernible,
labour migration from the traditional immigration countries stagnates and labour migration
from the new EU member states is on the rise.
Other evidence for the fact that one can under no circumstances speak about „sealing off“ are
the development in the number of labour migrants from the new member states and the
development in the legal status of these people on the Austrian labour market. Foreign People
Employment Act knows different forms of authorisation, such as short term temporary
authorisations (“Saisonniers”, “Erntehelfer”),
those linked to a certain
company
(“Beschäftigungsbewilligung”) or to a certain federal country (“Arbeitserlaubnis”) or such
authorisations that guarantee full mobility on the Austrian labour market (“Befreiungsschein”,
since the eastern enlargement of the European Union “Freizügigkeitsbestätigung”, for citizens
from the new EU member states in the framework of transitional arrangements). “The number
of Freizügigkeitsbestätigungen for new EU citizens and their relatives has reached almost
28,000 in all since 2004. The beneficiaries can take up salaried employment in all of Austria,
in all sectors and at any time” (transl. from the original).29
29
AMS business report 2006, page 43.
15
Table 3: Employed foreigners according to nationality from 1995-2006
nationality
all foreigners
EEA-countries
of which
EU-(15) states
EFTA-states
former Yugoslavia
(Slovenia)
Turkey
Germany
Poland
Hungary
Romania
former Czechoslovakia
Bulgaria
Italy
Switzerland
other nationalities
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
300.328 300.271 298.797 298.566 305.783 319.394 329.261 334.132 349.559 361.767 373.692 389.894
comparison
of 2006 with
1995
+ 29,82 %
21.476
23.492
25.063
26.981
29.650
32.456
35.708
39.415
45.024
53.103
61.997
71.226
+ 231,65 %
21.101
375
23.299
193
24.855
208
26.761
220
29.438
212
32.237
219
35.481
227
39.184
231
44.782
242
52.848
255
61.743
254
70.950
276
+ 236,24 %
- 26,40 %
147.703 147.888 147.228 148.724 152.306 158.276 161.852 161.340 161.101 159.756 156.886 156.000
(5.802)
(4.951)
54.733
13.438
11.186
9.423
9.575
10.455
1.478
2.627
872
31.959
53.570
14.548
10.986
9.264
9.309
10.056
52.803
15.634
10.893
9.171
9.142
9.661
54.178
16.870
10.704
9.185
9.074
9.550
55.555
18.703
10.878
9.700
9.319
9.656
57.098
20.822
11.154
10.378
9.642
9.968
56.902
23.435
11.252
11.236
9.907
10.409
56.280
26.342
11.278
11.935
10.099
10.834
55.726
31.276
11.538
12.617
10.673
11.361
54.655
38.593
11.968
13.567
11.016
12.346
53.483
46.726
12.591
14.657
11.305
13.682
2.915
931
32.512
3.107
954
32.724
3.274
1.013
33.485
3.592
1.078
34.996
3.856
1.154
37.046
4.086
1.192
38.990
4.354
1.219
40.451
4.630
1.277
49.360
4.796
1.387
53.683
5.101
1.498
57.763
54.071
55.006
13.384
15.732
11.675
14.698
2.118
5.429
1.631
62.268
+
5,62 %
- 1,21 %
+ 309,33 %
+ 19,65 %
+ 66,95 %
+ 21,93 %
+ 40,58 %
+ 43,30 %
+ 106,66 %
+ 87,04 %
+ 94,84 %
source: Hauptverband der österreichischen Sozialversicherungsträger, Statistische Daten aus der Sozialversicherung. Beschäftigte Ausländer in Österreich, Jahresdurchschnitte 1995-2006 [statistical data from social
insurance funds. Employed foreigners in Austria. Annual average 1995-2006]
16
The regulative function of the transitional arrangements for the Austrian labour market
concerning the still existing bigger migration potential from the new member states shows
itself by the obvious violation of these regulations in the field of “Scheinselbstständigkeit”
[pseudo-self-employment]. The transitional arrangements in labour mobility only concern
salaried employment, self-employment is not restricted in the framework of freedom of
establishment. By registering a trade, employees from the new member states formally appear
as entrepreneurs. In reality, however, they definitely perform dependent personal services. In
some subtrades in building, the number of trade registrations by citizens of the new member
states has skyrocketed since May 1, 2004.
Restricting access to the labour market by using the transitional arrangements for a time of
maximum seven years was also undertaken to guarantee that the immense differences in
wages between the new and old EU member states could be lessened and that the high level of
unemployment in the new member states at the time of accession could be reduced. The basis
of these considerations were the favourable growth prospects for the new EU member states.
Even if such wage differences are rather rigid and will not level off in the foreseeable future,
the development of the last years shows a noticeably higher wage rise in the new EU member
states than in Austria, for example.30
Despite a partial achievement of this goal, the retention of the transitional arrangements in
Austria is currently an explosive and much discussed politico-economic matter. The
Federation of Austrian Industry vehemently demands their easing or abolition. This procedure
would probably raise the supply in work force and thereby the bargaining power of the
employers. To this end, the myth of “shortage of skilled workers” was revived – again, as
shall be argued here.
Myths as instruments in distribution matters
Corroborating statements, arguments, positions and demands with concrete numbers or at
least rough quantitative calculations plays an important role in public discourse of labour
market. Behind these numbers and the calculations respectively there are mostly tangible
interests, the production and dissemination of myths which rely on numbers is a crucial
feature in public debate – also about labour market matters. It is only through simplification
by the mass media that complex, labour market relevant political contexts become
30
cf. OECD Economic Outlook 2/2006.
17
understandable; it is only through reduction of complexity by the mass media that political
policy formation is basically made possible. This achievement of mass media is considerably
facilitated by the system of politics. The political system delivers suitable input, considering
conditions and requirements of the other system.
It is not the coarse isolated simplifications which are more likely to be “believed” by the
public but simple correlations, easily comprehensible for many, easily disseminated by many
and capable of gaining the character of truth mainly through constant repetition – in the media
but also in one’s own social peer group. No technique of simplification meets these demands
better than the building of myths. According to Roland Barthes a myth is a statement, a
specific system of information, a message, a way of meaning.31 The myth is a specific
projection giving a specific meaning to a specific statement. The meaning of the myth
postulates knowledge. “However, the knowledge incorporated in the myth is clouded, made
from indeterminate, infinite associations” (transl. from the source text).32
It is exactly this diffuse meaning, this openness for associations that turns a myth into an apt
instrument for the attempt to push certain interests also in labour market matters. Barthes also
pointed at this instrumentalisation of myths which is led by interests. Myths never exist out of
themselves, they always serve a specific purpose or are useful for specific interests. The
intentions, which lie behind a myth, are not hidden as a matter of principle, yet they seem
natural. A myth is also of challenging, interpellative character. Exactly these features of
expression of expectations and insinuation of how to act are characteristic of the revival of the
myth “shortage of skilled workers” in the public debate in Austria about the enlargement of
the European Union and about retention vs. abolishment of transitional arrangements in
labour mobility.
The myth of the „shortage of skilled workers“ has been part of the standard repertoire of
public and media debates in Austria for at least twenty years. As early as 1988 (!), Hans
Georg Zilian noted that “the media lament about the shortage of skilled workers has become
chronic, the topic having mutated to a classic” (transl. from the original).33 In this paper Zilian
makes a detailed analysis of the question how it was possible that probably existing problems
31
For the following cf. Barthes (1964), 85-133.
ibid., page 99.
33
Zilian (1989), page 18.
32
18
of single entrepreneurs or businesses in filling vacancies according to their wishes and ideas
could publicly turn into the social and economic problem “shortage of skilled workers”.
We do not want to deny really existing problems of single entrepreneurs or businesses in
filling certain vacancies. These problems are based on a wide range of reasons. These include
specific insecurities of economic life, which make long-term planning almost impossible for
entrepreneurs,34 also specific human ressources policy adjustment strategies of entrepreneurs
as a reaction to fluctuations in capacity utilization. They want to keep staff numbers short
because of competition, which of course quickly leads to a sudden demand in work force with
peak capacity. Existing bad or below average working and payment conditions in an
enterprise may also contribute to this problem. It is, however, only the concurrence of
entrepreneurs’ wishes and the media which turns individual employment problems into
“general shortage of skilled workers”. It is obvious that employers are generally interested in
such a public myth. If the public image of “shortage of skilled workers” prevails, politics will
tend to take action to extend work force supply (for example in the qualification sector, with
“Zumutbarkeitsbestimmungen” for the unemployed – regulations of which job an
unemployment person must accept if offered – in matters of employment of foreign people
etc.). These measures to extend work force supply are in principle beneficial for the
employers. On the one hand they expand the choice for the employers, on the other hand they
have a disciplinary effect on the employees because their risk to be exchanged out of the now
bigger work force supply is on the rise. Employers do indeed always look for someone who
performs the same work with the same quality but cheaper, faster, more flexibly etc. In this
sense – and only in this sense – employers do indeed have “shortage of skilled workers”.
So much for the „theory of shortage of skilled workers“. In the following, we will
demonstrate how this myth was reactivated and reinforced again and again in the course of the
EU enlargement debate and then in the debate about retaining transitional arrangements which
was started by parts of the group of employers in order to undermine the employees’
integrationist position in connection with the EU enlargement, which tends towards a
shortening or not too sharp a rise in work force supply.
34
In this respect, problems in filling vacancies and partial shortages in needed qualifications are „normal
phenomena of economic developmental and restructuring processes” (transl. from the original), cf. the editorial
in: Wirtschaft und Gesellschaft 4/2005.
19
Around the turn of the millenium, the two central Austrian employees’ lobbies –
Arbeiterkammer (Chamber of Labour) and Österreichischer Gewerkschaftsbund (Federation
of Austrian Trade Unions) – had taken such position in the issue of enlargement in that they –
different in nuances, though – warned against a too quick opening of the labour market after
the enlargement and advocated using the transitional arrangements concerning mobility of
work force in the course of the EU enlargement. Their arguments were the high and quickly
rising unemployment rate in Austria, rather low growth prospects in the medium run, and the
considerable differences in living standards and income situation between Austria and the
new member states because of the specific geographic position of Austria, especially in
neighbouring regions. A position paper by the Chamber of Labour says: “Therefore, from
today’s point of view, the transitional arrangements of seven years for labour mobility as laid
down in the accession treaty must be exploited to the full. Necessary national laws have to be
guaranteed in order to be able to assert the agreed transitional arrangement as concerns work
force mobility” (transl. from the original).35
That, it seemed, made alarm bells ring for at least a part of the employers. The expansion of
work force supply, which was to be expected in the course of the eastern enlargement of the
EU, seemed to be in danger, at least for the time frame of transitional arrangements, and the
general “shortage of skilled workers” had to be revived via the media. This time the “shortage
of skilled workers” was not to be used as a disciplinary measure and for discrediting the
unemployed like in the 1980s but should rather weaken the argumentation lines of the
employees’ lobbies in the debate about the enlargement of the European Union. “Shortage of
skilled workers can threaten your livelihood” (transl. from the original)36 was the title of an
article in a daily newspaper of the year 1999, in which the managing director of an employers’
organisation announced his point of view. From then on, media presence of the issue was on
the rise.
A study compiled by the Austrian Institute for Economic Research (WIFO) 37 definitely added
to this effect. It was commissioned by the Austrian Federal Economic Chamber and was
extensively received and reviewed in the media. For example, the highest circulation
newspaper had “Shortage of 165,000 workers!” as the headline to an article which ran:
“Already until 2005 there will be a shortage of 165,000 workers as too few young people
35
Bundesarbeitskammer (2003), page 4.
Kleine Zeitung, 31.3.1999.
37
cf. Walterskirchen (2001).
36
20
arrive at an employable age” (transl. from the original).38 In the following years 2002 and
2003 the revived myth of “shortage of skilled workers” did not reach the dynamics of the year
2001 – unemployment had risen to the highest absolute number since the time after World
War II – but was still cultivated also in these years. An example of the year 2002: „The
president of the Federation of Austrian Industry … advocates selective immigration of
qualified work force from the EU accession countries to Austria. It is only then that the
imminent shortage of skilled workers can be met, he says. The negotiated transitional
arrangements for the labour market should be shortened in the course of the EU enlargement.
… As Austria has to anticipate a large-scale shortage of skilled workers already from 2004,
qualified work force from the EU accession countries should be allowed to work in Austria
before the transitional arrangements are expired. Enhanced training and re-training in the next
years will not be enough to cover the immense shortage of tens of thousands of skilled
workers, he says” (transl. from the original).39
Another example which is very telling was published in a newspaper article in September
2003. It is also about a general shortage of skilled workers, in the following it quotes a study
by WIFO, according to which “it is already in the year 2008 that we will see a shortage of
165,000 wage earners on the Austrian labour market, due to the demographic development”
(transl. from the original).40 The “shortage” of 165,000 taken from the media coverage of the
year 2001 emerges here again. In 2001 there was a “shortage” by 2005, in 2003 there was a
“shortage” by 2008. The shortage of skilled workers was permanently lamented, but did
finally not seem to arrive. We cannot think of more illustrating examples for the theory of the
“shortage of skilled workers” than the ones given above.
In the years 2006 and 2007, the revival of the myth of the shortage of skilled workers reached
its peak of the last 20 years. By the end of April 2006, Austria had to decide about the
retention of the transitional arrangements, part of the employers’ lobbies (Federation of
Austrian Industry) led the public debate about it almost exclusively by reviving the myth of
the shortage of skilled workers. After the Austrian Federal Government’s decision to prolong
the application of the transitional arrangements, this decision has been fought until today.
Headlines like “Shortage of skilled workers. Even retirees are being called back”,41 “Survey:
38
Kronen Zeitung, 24.4.2001.
Der Standard, 8/9.6.2002.
40
Die Presse, 20.9.2003.
41
Kronenzeitung, 19.7.2007.
39
21
Shortage of qualified work force is biggest impediment to growth”, “Shortage of qualified
work force is spreading”,42 “Qualified work force already scarce”,43 “Shortage without
borders”,44 “Shortage of thousands of skilled workers”,45 replaced other economic issues in
the media, the list of examples could be extended infinitely. The “calculations” of the
quantitative dimension of the alleged problem reveal the mythical character of the statements
in these articles. At the end of February 2007, the secretary general of the Federation of
Austrian Industry was cited: “there is an annual shortage of 5,000 to 7,000 skilled workers”,46
three weeks earlier Austrian Federal Economic Chamber claimed that there will be a shortage
of 15,000 to 16,000 skilled workers in the years 2007 and 2008 respectively.47 In May 2007,
the president of Austrian Federal Economic Chamber said that there will be a demand of
50,000 new skilled workers in the next seven years,48 some weeks earlier a commentary in a
newspaper had it that according to the ministry of economics there would be a shortage of
50,000 skilled workers by 2009.49 Already some months before that, there was a quotation of
the president of Austrian Federal Economic Chamber “in Austria there is a shortage of
150,000 skilled workers” (all transl. from the original).50 These numerical games, which
remind us strongly of those of the years 2001 to 2003, could be continued almost infinitely,
which would maybe increase the entertainment value of this paper, but would definitely not
contribute to any insight into the matter discussed here.
Conclusion
This paper tried to show that the issue of developing and steering labour migration to Austria
in the context of the European integration process is tightly associated with distribution
matters. Distribution battles are fought with the instrument of myth building and myth
utilization, which was shown on the example of the myth of the shortage of skilled workers in
this article. Zilian described the permanent existence of this myth with the tight interrelation
of the media with some sectors of entrepreneurship. This interrelation can spur a dynamics
which suddenly turns vague announcements of expansion, or rather diffuse, inconcrete, farfuture estimations of entrepreneurs into the “shortage of skilled workers”, of which large parts
42
both: Die Presse, 11.7.2007.
Kronenzeitung, 13.6.2007.
44
Kleine Zeitung, 23.4. 2007.
45
Der Standard, 24./25.2.2007.
46
Der Standard, 24./25.2.2007.
47
cf. NZZ, 27./28.1.2007.
48
cf. Kleine Zeitung, 19.5.2007.
49
cf. Die Presse, 25.4.2007.
50
Der Standard, 22.1.2007.
43
22
of the public – including the entrepreneurs themselves – are then virtually convinced that it
represents an objective economic problem.
This paper supplemented this argumentation with the indication that entrepreneurs do in fact
always have a shortage of skilled workers, but only in the sense that they are generally on the
lookout for employees who would perform the job at the same quality but cheaper, faster and
more flexibly than the ones who are already employed. Furthermore, the permanent retention
of the media construct “shortage of skilled workers” meets employees’ lobbies halfway in
many respects and facilitates the political implementation of employees’ interests. This was
made clear on the example of the revival of the myth of the “shortage of skilled workers” in
the course of the EU enlargement debate and the debate about the extension of transitional
arrangements concerning labour mobility.
Apart from these distributional and mythical aspects we could also demonstrate that the usage
of these transitional arrangements has not at all led to a complete sealing-off of the Austrian
labour market for citizens of the new EU member states; quantitatively, their number has
risen, qualitatively, their legal status has improved by the so-called Freizügigkeitsbestätigung.
The transitional arrangements could thus be regarded an instrument of balance between
employers’ and employees’ interests concerning the issue of labour migration. Their usage
has not hindered a rise in work force supply, though this rise was organized moderately in the
interest of the employees, the consequence not being the complete sealing-off but immigration
which was partly regulated. Against this background, reasonings such as the following are
even more surprising: “All apprehensions that the Austrian labour market could be swamped
with cheap work force after the eastern enlargement of the EU did not prove right, the
commissioner for EU enlargement, Olli Rehn, declared … ‘There was no crush.’ He therefore
called upon Vienna … to shorten the seven-year-transitional arrangements for employees
from the new EU countries” (transl. from the original).51 Similar lines of argument can be
found in a communication of the EU commission on the labour market relevant effects of EU
enlargement before 2004.52 With their arguments, both the commissioner and the commission
remind us somehow of a doctor who would like to discontinue medication because of its
effectiveness.
51
Der Standard, 30.4./1.5.2005.
cf. Communication from the Commission to the Council, the European Parliament, the European Economic
and Social Committee and the Committee of the Regions: Report on the Functioning of the Transitional
Arrangements set out in the 2003 Accession Treaty (period 1 May 2004–30 April 2006).
52
23
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