Commission report on transitional arrangements regarding free movement of workers from Bulgaria and Romania

14 November 2011
by eub2 -- last modified 14 November 2011

A new report published today by the European Commission highlights the overall positive role that mobile workers from Bulgaria and Romania (EU-2) have played in receiving countries' economies.

What is free movement of workers?

Free movement is one of the fundamental freedoms of the EU. It is a right for every worker in the European Union and allows him/her to:

    look for a job in another EU country

    work there without needing a work permit

    reside there for that purpose

    stay there even after employment has finished

    enjoy equal treatment with nationals in access to employment, working conditions and all other social and tax advantages

What are transitional arrangements on the free movement of workers?

They have been agreed in the Accession Treaty of Bulgaria and Romania and allow Member States to temporarily restrict the right of workers from Bulgaria and Romania under EU law on free movement to work in another Member State.

Their aim is to gradually introduce free movement for workers step-by-step over a seven-year period. There are three phases (2+3+2 years) during which different, increasingly strict conditions apply as to the conditions under which Member States can restrict labour market access.

Member States may open their labour markets at any stage but must end restrictions at the latest at the end of the seven year period from January 2014.

The restrictions only apply to workers: they do not apply to the self-employed. Nor do they restrict the rights to travel and live in another Member State.

What does the report contain?

The Commission's report provides information on the legal basis for transitional arrangements, the current state-of-play of their application in Member States, statistical information on labour flows from Bulgaria and Romania, and an analysis of their economic, labour market and social impacts.

Why is it published now?

Bulgaria and Romania used a provision in their Accession Treaty and requested, on 20 June 2011, a further review by Council of the transitional arrangements still governing their citizens' labour market access. This review must be completed within 6 months of the request on the basis of a Commission report.

How many workers from Bulgaria and Romania (EU-2) are there in EU-25 countries?

Member States' population statistics and Labour Force Survey data show that at the end of 2010 around 2.9 million Bulgarian and Romanian citizens of all ages reside in the EU-25 countries. It is more than twice as many as shortly before accession (1.4 million at the end of 2006). This process had, however, already started before 1 January 2007 (net growth around 700,000 between 2003 and 2006).

In relative terms, Bulgarian and Romanian nationals resident in an EU-25 Member State represent a limited share of the total population of the EU-25: 0.6% at the end of 2010, compared to 0.3 % four years before.

The two main destination countries have been Italy and Spain, which together house more than 70 % of all Bulgarian and Romanian nationals resident in another Member State (end of 2010). Romanian nationals represent more than 80 % of all EU-2 nationals resident in another Member State and are found mainly in Italy (41 %) and Spain (38 %), followed by Germany (5 %) while Bulgarian nationals live mainly in Spain (38 %), Germany (15 %), Greece (12 %), Italy (10 %) and UK (7 %).

What have been the recent trends in mobility from EU-2 countries?

Following a period (2004-2008) of very high mobility from EU-2 countries to the rest of the EU, the economic crisis has resulted in a decrease of the flows of workers in 2009, due to a fall of the labour demand. It also triggered some higher return outflows to the countries of origin though there is no evidence of large-scale returns. Mobility outflows from Bulgaria and Romania have increased again in 2010 in line with the improvement in economic conditions. This confirms that cross-border labour mobility tends to be self-regulating and decline in times of economic downturns – people go to where the jobs are.

While the future trend in EU-2 mobility will depend on a host of factors, most of them uncertain (such as growth, job creation and wages in both receiving and sending countries), there are indications that many of the EU-2 nationals who wanted to move have already done so, suggesting a lower potential for migration.

What has been the impact of transitional arrangements on mobility flows from Bulgaria and Romania?

The report and its statistical annex show that there is no evidence of a direct link between the magnitude of labour flows from EU-2 Member States and the transitional arrangements in place. For instance, the impact of opening the labour market early (in Finland, Sweden and most of the countries that joined the EU in 2004) on inflows from Bulgaria and Romania has been very limited while the countries that continued to use transitional measures have received significant inflows since 2007. Moreover, most EU-2 nationals were already in the destination countries before accession.

These examples suggest that transitional measures have only had a limited influence on the distribution of intra-EU mobility and that mobility flows are driven by other factors, such as general labour demand, network effects through existing foreign population, and language.

As already stated in the 2008 report on the functioning of transitional arrangements for EU-8 workers (COM(2008) 765 of 18.11.2008), if anything, restrictions on the labour market access can have side effects such as the increased incidence of undeclared work. The relatively high share of self-employed among recent intra-EU movers from Bulgaria and Romania countries in countries keeping restrictions is another side effect of the restrictions.

When measuring the flows and stock of EU-2 workers, shouldn't we take into account also the temporary mobile workers?

The picture of mobility of workers from the EU-2 countries is not complete if we consider only the workers residing permanently in the receiving countries. A certain number of workers come for a limited duration, including as posted or seasonal workers. According to administrative data, estimates show that in 2009, around 30.000 certificates for posting were issued from EU-2 Member States, mostly from Romania, to EU-25 countries and in particular to Germany, Italy and France.

Another important form of short-term mobility at least in some Member States concerns seasonal work. In 2010, around 100.000 seasonal workers from EU-2 countries (mostly from Romania) were employed in Germany under bilateral agreements, compared to around 50.000 in 2006.

What is the labour market situation of the EU-2 citizens who recently moved to EU-25 countries?

According to the EU Labour Force Survey, the employment rate of Bulgarian and Romanian working age (15-64) citizens who moved recently was, in 2010, slightly below (63%) the average in the EU-25 countries (65%). A breakdown by main destination country shows, however, that the employment rates of EU-2 citizens are much higher than the average working age population in Italy and the UK, close to the average in Spain and significantly lower only in Germany. It should also be noted that the employment rate of recent movers from EU-2 countries is higher than the average rate in the sending countries (59%).

However, EU-2 recent movers have been the group hardest hit by the economic recession and the share of those unemployed (16%) was much higher than for nationals (6%). This is mainly due to the adverse labour market situation in Spain, one of the two main destination countries, to their on-average low educational attainment and their predominance in sectors strongly impacted by the crisis, in particular the construction sector.

However, it is clear that recent EU-2 movers played a very minor role in the labour market crisis of individual countries. For instance, in 2010 they represented only 1 % of all unemployed persons (aged 15-64) in EU-15 countries, compared to 4.1 % for recently arrived third-country nationals.

What has been the impact of the enlargement and increased inflows of workers for the destination countries?

The vast majority of recent movers from Bulgaria and Romania participate in the labour market to the same extent as the average population, or even at a higher rate. They have played overall a positive role for the economies of receiving countries, contributing to the skill mix, and working in sectors and occupations where job shortages needed to be filled.

A recent model-based study estimates that mobility from the EU-2 during 2004-2009 may have boosted the aggregate GDP of the EU by about 0.2 % in the short term and 0.3 % in the long term (based on the increased labour force and allowing for adjustment of production capacity).

For the receiving EU-15 countries, the long-term impact is even stronger (0.4 %). However, there seems to be no significant long-term impact on GDP per capita for receiving countries. Other existing studies tend to confirm the overall positive impact on overall GDP and moderate effects on GDP per capita.

As far as labour market impacts are concerned, most studies of the impact of EU-2 labour mobility on wages and employment of local workers conclude that the effects are very small. For example, the same recent study finds that that wages in the EU-15 are on average 0.24 % lower in the short term than they would have been without additional mobility from the EU-2, with a similar impact in the long term (-0.28 %).

The short-term impact of the inflow of EU-2 workers on unemployment is also found to be marginal, with an estimated increase of the average EU-15 unemployment rate only 0.02 percentage points in the short term and no effect in the longer term, even in countries that received significant inflows from EU-2.

What has been the impact of increased workers' mobility for the origin countries? Is there not a risk of brain drain?

For the countries of origin, the impact of free movement of workers and increased mobility to the EU-15 countries is mixed. On the one hand, geographical mobility has allowed a number of workers to find a job abroad, leading to a reduction of unemployment. On the other hand, there has been an increased risk of brain drain and skill shortages in the sending countries, notably in some specific sectors (for instance health care).

An analysis of the skill level of recent EU-2 mobile workers showed that they were over-represented in the low and medium-skill level and the share of those having tertiary education (university graduates) is higher among the EU-2 active population (19%) than among recent movers from EU-2 countries (14%).

Moreover, tertiary education enrolment rates for 18-24 year olds have substantially increased in EU-2 countries in recent years (from 16.1% in 2000 to 28.8% in 2008), which may compensate for the outflow of skilled labour. Finally, many younger migrants may not move permanently, but rather for a temporary period and after returning home, they bring extra skills including language, enabling them to take up more internationally oriented jobs.

Finally, remittances sent by workers living abroad to Bulgaria and Romania represent around 3 % of GDP in both countries (average 2004-2010). They are a substantial source of income in the sending country and can help to drive economic growth by supporting aggregate demand and financing investment in education or the start-up of capital-intensive businesses. Remittances can be a partial compensation for losses in sending countries that result from the loss of potential labour input and can also have a positive impact on the balance of payments of sending countries.

What are the conditions for Member States to maintain restrictions for workers from Bulgaria and Romania after 1 January 2012?

Member States may continue to restrict access to their labour markets after 1 January 2012 for the final two years only if they notify the Commission of a 'serious disturbance of the labour market, or the threat thereof'. This condition reflects the general idea of the transitional arrangements which is to gradually introduce the free movement of workers. It is realised by increasingly stricter conditions under which Member States can maintain restrictions on labour market access.

When does the decision on whether to continue restrictions for workers from Bulgaria and Romania have to be made?

Member States have until 31 December 2011 to communicate to the Commission whether they experience a serious disturbance of the labour market, or threat thereof. If a Member State does not notify such a disturbance before 31 December 2011, EU law on free movement of workers applies for workers from Bulgaria and Romania in that Member State (in other words, no restrictions apply).

How long can restrictions for workers from Bulgaria and Romania remain in place?

If a Member State communicates such a serious disturbance of the labour market, or threat thereof, this will apply for the period from 1 January 2012 to 31 December 2013 at the latest. Thereafter, the transitional period ends and all Member States must apply full free movement for workers from Bulgaria and Romania.

Which EU countries impose restrictions for workers from Bulgaria and Romania?

Workers from Bulgaria and Romania currently enjoy full rights to free movement under EU law in 13 (of 25) Member States (Denmark, Estonia, Greece, Cyprus, Latvia, Lithuania, Hungary, Poland, Portugal, Slovenia, Slovakia, Finland, and Sweden) and also do not need a work permit to work in the Czech Republic.

In addition, Bulgarian workers also enjoy full rights to free movement in Spain, unlike Romanian workers, after Spain invoked the safeguard clause in relation to Romanian workers and re-introduced restrictions on their labour market access.

No restrictions on labour market access apply between Romania and Bulgaria.

When did Member States decide not to apply restrictions on labour market access of workers from Bulgaria and Romania?

As from accession on 1 January 2007, 10 of the 25 Member States immediately opened their labour markets for Bulgaria and Romanian workers: the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Poland, Slovenia, Slovakia, Finland and Sweden. No restrictions on labour market access apply between Romania and Bulgaria.

After the Commission had presented its report on the functioning of the first two years of the transitional arrangements on 18 November 2008 and Council had reviewed the functioning of the transitional arrangements, Greece, Spain, Hungary and Portugal decided to open their labour markets and apply EU law on free movement of workers from 1 January 2009. Denmark followed suit from 1 May 2009.

What restrictions do Member States currently apply?

The Member States that currently still apply restrictions for Bulgarian and Romanian workers have reduced restrictions in some sectors/professions or simplified procedures compared to the rules they applied prior to Bulgaria's and Romania's accession:

Belgium has introduced an accelerated procedure of issuing work permits within 5 days for jobs in professions for which there is a labour shortage.

In Germany, university graduates and engineers in certain fields (aeronautical, mechanical, electrical, vehicle construction) need a work permit but are exempt from a labour market test.

In Ireland, a work permit will be issued if an employer cannot fill the vacant post with another EU-25 citizen.

France applies a simplified procedure for 150 occupations where a work permit is issued without considering the job situation.

Italy does not require a work permit for employment in certain sectors (agriculture, hotel and tourism, domestic work, care service, constructions, engineering, managerial and highly skilled work, seasonal work).

Luxembourg has introduced simplified procedures for work in agriculture, viticulture, the hotel and catering sector and for people with specific qualifications in the financial sector.

Malta grants work permits for positions that require qualified and/or experienced workers and for those occupations for which there is a shortage of workers.

In the Netherlands, a work permit will be issued whenever there are no workers available in the Netherlands or other EU Member States and the employer concerned can offer proper working conditions and accommodation. Temporary exemptions may be granted for sectors in which there is a labour shortage.

In the United Kingdom, the employer must apply for a work permit (except for certain categories of employment) and the worker must apply for an "Accession worker card". Low-skilled workers are restricted to existing quota schemes in the agricultural and food processing sectors, skilled workers can work if they qualify for a work permit, or under Highly Skilled Migrant Programme.

Austria maintained its work permit systems but allows issuing of work permits after a labour market test for 65 professions for which there is a shortage of labour.

In addition to maintaining a work permit requirement, Austria and Germany also apply restrictions on the posting of workers in certain sectors.

Neither Bulgaria nor Romania apply reciprocal measures on labour market access vis-à-vis workers from the EU-25 Member States which are applying restrictions on Bulgarian and Romanian workers.

What about Spain?

Spain has re-introduced restrictions on labour market access for Romanian workers since 22 July 2011. These restrictions do not apply to Romanian nationals who were already active on the Spanish labour market on that date, or who were then registered as jobseekers by the Public Employment Services in Spain.

This is based on the safeguard clause in the transitional arrangements; it gives a Member State the possibility to re-impose restrictions if it has ended restrictions on labour market access during the transitional period but subsequently undergoes or foresees serious labour market disturbances. Spain had ended its initial restrictions on labour market access for Bulgarian and Romanian workers on 31 December 2008. However, referring to the safeguard clause, the Spanish government decided on 22 July 2011 to unilaterally suspend EU law on free movement for Romanian workers because of a generalised serious labour market disturbance, and subsequently requested, as required by the safeguard clause, the Commission to state that EU law on free movement for Romanian workers be suspended. The Commission approved this request on 11 August 2011, authorising Spain to temporarily restrict access to its labour market for Romanian workers until 31 December 2012 due to serious disturbances of its labour market, characterised by the highest unemployment rate in the EU and slow economic recovery.

Will Spain have to notify the Commission by the end of this year of a serious labour market disturbance, or threat thereof, to continue to apply restrictions on labour market access of Romanian workers after 1 January 2012?

No. The Commission authorisation to re-introduce restrictions under the safeguard clause following Spain's request is valid until 31 December 2012. Spain does therefore not have to notify the Commission again of a serious labour market disturbance, or threat thereof, at the end of this year to continue to apply restrictions.

The three phases of transitional arrangements:

Bulgaria and Romania (accession 1 January 2007)

First phase: 1 January 2007 – 31 December 2008

Second phase: 1 January 2009 – 31 December 2011

Third phase: 1 January 2011 – 31 December 2013

Source: European Commission