The recession changes the trends in the drift of labour?

Article published on Feb. 14, 2009
Article published on Feb. 14, 2009
After the Eastern EU-enlargement the flow of the labour force had a typical trend. Relative cheap workers hit the road to old member states and mostly they were welcomed. As a matter of course there were doubts, arguments pro and contra but by this time it seemed to be equilibrated. Now Moody's Investors Service says the flow will turn back.

In Ireland the half of the non-irish workers are from Eastern European countries but for instance in the construction industry a cut-back has been already started. Often some cease of work is introduced and the workforce demand in the service sector is also decreasing. It's understandable that foreign workers started to move home at this variable juncture: the net inflow of the labuor force in Ireland in 2008 was only 83 000 according to 2007's 110 000. In conformity with forecasts the immigration will decrease and migration will increase in Western European countries.

The process in the UK is similar: the net inflow of the labour force in the UK in 2006 was 228 000 workers from Eastern countries but by now approximately 1 000 000 workers moved back to their homelands.

Among the reasons we can mention that foreign workers usually have low payed jobs, they can not spare enough money to cover the rising costs there. Nevertheless the difference between Western and Eastern EU-countries' wage is increasing that could be also a reason why they move home. But if those workers all move back it will certainly cause a significant pressure on these countries' labour markets.

For instance in Poland - from where most of the employees arrived to Western countries origins - unemployment rate is already over 10%. This migration flow is going to decrease the pressure on the Western European labour markets but will make it warm for underprivileged Eastern European countries' economies' state.

The deepest recession will appear in the UK and Ireland - says Standard & Poor's. In the UK it is possible to have -4% GDP-decrease, and in Ireland this could be over 5-6% minus.