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Responding to Brexit: returning to a social market model on migration

In the second part of the series on key inter-related aspects of the upheaval facing European countries and their citizens: how should the EU tackle the issue of internal migration?

lead Theresa May leaves the room at Lancaster House in London after outlining her plans for Brexit, saying, "I know that you cannot control immigration overall...". Is that right?The free movement of people to take up employment in another EU country is one of the fundamental rights guaranteed by Community law. Yet until the 2004 enlargement to eight countries from Central and Eastern Europe, there was no large scale take-up of this right by Europeans. In 2005, less than 2% of EU citizens lived and worked in a member state other than their country of origin. That figure had not changed for more than three decades.

A survey of 24,000 EU citizens in 2005 found that concerns over a lack of language skills (50%) and adapting to another culture (20%) were key factors in discouraging people from working abroad.[1] In addition, people did not want to lose direct contact with their family and friends as well as crucial support for every-day life in terms of childcare or care for the elderly. 

The survey also confirmed that there was a weaker labour mobility culture in Europe as compared to the United States with the average duration of employment in the same job being 10.6 years compared to 6.7 years in the US. This complemented other studies which showed much lower labour mobility across Europe when compared to the United States. The general position remained that most Europeans were extremely reluctant to look for work in another EU country. During this period the European economy grew steadily as did overall living standards. In other words, the effective functioning and prosperity of the European economy and its Single Market did not depend on large flows of migrant labour. Significant numbers of Poles, Latvians and Lithuanians started to move west, especially to the UK and Ireland.

The entry of eight new member states from Central and Eastern Europe changed all that, above all in the UK and Ireland where no transitional controls on the movement of labour were imposed. Just as following German unification in 1991 when large numbers of citizens from the low wage eastern part of Germany flocked to the west, so after 2004 significant numbers of east Europeans saw new opportunities beckoning in western Europe with wage levels three to four times higher than what they could expect in their own countries. Significant numbers of Poles, Latvians and Lithuanians started to move west, especially to the UK and Ireland, followed subsequently by others.

This trend has been exacerbated by the impact of the prolonged financial recession after 2008 and the deflationary, austerity policies that the EU has pursued. With high unemployment levels across the whole of southern Europe, especially amongst the young, the last few years has seen a new flow from southern Europe of migrants into the big cities of northern Europe. These trends have been reinforced by the spread of ICT technologies of all kinds which lessen the disruption of population movement by making it much easier and cheaper to retain connections with family and friends back home as well as the emergence of low cost air travel and European-wide coach services.

Across the Single Market this unprecedented, easy movement of labour has brought substantial economic advantages for employers. They gain a ready supply of skilled, low-cost labour. For the individual migrant, the large wage differentials between east and western Europe mean that s/he gets new work opportunities and higher wages than are available in their own countries. For southern Europeans, it means they get employment.

But the social and cultural costs of large-scale people movements are not picked up by any public authority. They are just experienced by citizens living in the areas with large migrant populations – additional kids in local schools, where they often do not speak the local language; extra pressure on housing; more people in doctors’ surgeries. When combined with the added competition in the labour market, with east Europeans often prepared to work for longer hours and for much lower wages, this adds up to a volatile cocktail and is fertile ground for racist groups. Tackling this requires European-wide action and a reshaping of the operation of the Single Market. Its economic benefits need complementary social measures such as a European minimum wage and a migration integration fund to ensure that economic efficiency is combined with social justice. At the heart of this issue is a question of politics. Politicians created and shaped the Single Market. They can reshape it too.

At the heart of this issue is a question of politics. Politicians created and shaped the Single Market. They can reshape it too. However, to do so the EU has to return to its founding social market principles and to ditch its recent conversion to neo-liberalism. It is an irony of history that the increasing orientation of the EU towards a free trade, supply-side competition policy without social protection has been rejected by voters in Britain, precisely the country that originated and was the main driver of these neo-liberal policies. In order to address the consequences of Brexit the EU itself has to discard these neo-liberal policies, above all in relation to migration.  Freedom of movement is specifically tied to agreed, contracted employment and recognises the need to balance labour supply and demand.

Contrary to the repeated statements of Commission President Juncker and others, the Treaty of Rome is not a neoliberal free for all. This will surprise many readers since the regular refrain from both EU and UK politicians is that access to the Single Market depends on the wholesale application of the four freedoms of goods, services, capital and people. However, the precise wording of the official EU treaty documents shows that this is not the case. Freedom of movement is specifically tied to agreed, contracted employment and recognises the need to balance labour supply and demand. Article 48 of the original Treaty of Rome states that “freedom of movement for workers shall entail the right (a) to accept offers of employment actually made; (b) to move freely within the territory of member states for this purpose.” Article 49 calls for “the achievement of a balance between supply and demand in the employment market in such a way as to avoid serious threats to the standard of living and level of employment in the various regions and industries.” In other words, these have to be managed processes. These clauses were transposed into the Treaty of Lisbon, word for word.  In order to address the consequences of Brexit the EU itself has to discard these neo-liberal policies, above all in relation to migration. 

Too many politicians have conflated the freedom to travel without restriction across the EU with the right to work. Theresa May repeated the mantra in her Lancaster House speech. “I know that you cannot control immigration overall when there is free movement to Britain from Europe.”[2]  This is simply mistaken.

The Treaties offer the basis for a serious negotiation between the UK and the rest of the EU. Its Articles show that it is perfectly possible on the basis of the EU’s existing treaties for the UK government to negotiate a managed migration policy. This is true for all European states but for the UK, which is not a member of the Schengen area, there are fewer complications. Within the terms of the Treaties, there is nothing to stop the UK government from organising seasonal agricultural labour schemes to enable fruit and vegetable farmers to get their food picked and processed and indicating the number of nursing and care staff the UK needs for its hospitals and care homes. This would be balancing supply and demand in ways that avoid serious threats to levels of employment and living standards in various regions. Mrs. May’s government is presenting migration as the obstacle that prevents the UK from being part of the Single Market as Norway and Switzerland are. The EU Treaties do not prevent this: neo-liberal politics are the obstacle. It is perfectly possible on the basis of the EU’s existing treaties for the UK government to negotiate a managed migration policy.

Returning to the original principles of the Treaties of Rome and Lisbon would be in the interests of all parties. It is not just in the UK that there is a need to balance labour supply and demand. The EU should indicate its preparedness to apply the principles actually laid out in its Treaties. This would break the political log-jam and put the hard Brexiteers on the defensive. It would also indicate that the EU was returning to its original social market principles rather than the neo-liberal economic direction it has taken in the last decade with such dire results. Such a move is long overdue. Can Brexit be the trigger for this much-needed policy shift?

Last part of Responding to Brexit tomorrow – Breaking with neo-liberalism


[1] Eurobarometer 64. Survey on geographical and labour market mobility.(2005)

[2] http://www.telegraph.co.uk/news/2017/01/17/theresa-mays-brexit-speech-full/


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