38 Free movement of workers from Croatia
| Committee's assessment
| Politically important |
| Committee's decision | Not cleared from scrutiny; further information requested; drawn to the attention of the Northern Ireland Affairs, Scottish Affairs and Welsh Affairs Committees
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| Document details | Commission Report on the Functioning of the Transitional Arrangements on Free Movement of Workers from Croatia (First phase: 1 July 2013 to 30 June 2015)
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| Legal base | —
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| Department
Document numbers
| Home Office
(36922), 9653/15 + ADD 1, COM(15) 233
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Summary and Committee's conclusions
38.1 Croatia became a member of the European Union on 1 July 2013.
The Act setting out the conditions for Croatia's accession to
the EU includes a number of transitional measures which allow
the application of EU rules in certain areas to be phased in over
a period of years.[ 297]
One of the areas concerns the free movement of workers. Transitional
arrangements allow Member States to restrict access to their labour
markets for up to seven years from the date of Croatia's accession
to the EU. The Commission Report reviews the operation of these
transitional arrangements during the first two years of Croatia's
membership of the EU. Member States wishing to maintain restrictions
on labour market access beyond this initial two-year period are
required to notify the Commission of their intention to do so
by 30 June 2015.
38.2 The Commission Report concludes that future
potential flows of Croatian workers to other EU Member States
are likely to be small and, even in the main destination countries,
are unlikely to lead to labour market disturbances. It says that
restrictions on labour market access are one of a number of factors
influencing labour mobility — employment opportunities,
and historical, linguistic and cultural ties are also important.
In any event, labour market restrictions in some Member States
may have a limited effect as they do not apply to those who are
self-employed or are "posted" to another Member State
to provide services. The age, educational profile and high employment
rate of Croatian workers suggest that they are likely to make
a positive economic contribution.
38.3 The Minister for Immigration (James Brokenshire)
explains that the labour market restrictions in place in the UK
consist of a worker authorisation requirement which limits the
employment of Croatian nationals to skilled work. He confirms
that the Government will decide whether or not to extend these
restrictions for a further three year period, to 30 June 2018,
before the deadline of 30 June 2015, but does not indicate what
the Government's decision will be.
38.4 The deadline for notifying the Commission
of any remaining restrictions on access to the UK labour market
has expired. We ask the Minister whether the Government has decided
to extend the existing restrictions for a further three-year period.
38.5 We note that the Government has consulted
the Devolved Administrations on the Commission Report. We would
welcome further information on the views they have expressed on
the Government's decision to lift or maintain current labour market
restrictions for Croatian nationals.
38.6 Pending the Minister's reply, the Commission
Report remains under scrutiny. We draw it to the attention of
the Northern Ireland Affairs, Scottish Affairs and Welsh Affairs
Committees.
Full
details of the documents:
Commission Report to the Council on the Functioning of the Transitional
Arrangements on Free Movement of Workers from Croatia (First phase:
1 July 2013-30 June 2015): (36922), 9653/15 + ADD 1, COM(15)
233.
Background
38.7 Detailed provisions on the transitional arrangements
governing the free movement of workers following Croatia's accession
to the EU on 1 July 2013 are contained in Annex V of the Act of
Accession. The seven-year transitional period during which Member
States may impose restrictions on access to their labour markets
is divided into three phases:
· During
the first phase, from 1 July 2013 to 30 June 2015, access
to the labour market is governed by national measures in each
Member State.
· During
the second phase, from 1 July 2015 to 30 June 2018, Member
States may continue to apply national measures to regulate access
to their labour markets, but are required to notify the Commission
of their intention to do so before the end of the first phase.
Restrictions on labour market access can be lifted at any time
during this phase.
· During
the third phase, from 1 July 2018 to 30 June 2020, Member
States may only apply national measures to regulate access to
their labour markets if they notify the Commission that the lifting
of these measures would cause, or create the risk of, "serious
disturbances" of their labour markets.
38.8 All transitional arrangements end on 30 June
2020. For those Member States choosing to apply EU free movement
rules during the seven-year transitional period, there is a safeguard
procedure which allows the rules to be suspended if there is evidence
of labour market disturbances "which could seriously threaten
the standard of living or level of employment in a given region
or occupation".[ 298]
For those maintaining national restrictions, there are provisions
to protect individuals already legally working in a Member State
at the date of Croatia's accession to the EU, or admitted subsequently,
and who have been in employment for an uninterrupted period of
at least 12 months. In such cases, the workers concerned continue
to enjoy a right of access to the labour market of the Member
State in which they are employed, but not to the labour markets
of other Member States.
38.9 Croatia is entitled to apply equivalent reciprocal
measures restricting access to its own labour market until the
end of the seven-year transitional period (or for a shorter period
if restrictions on labour market access in other Member States
are lifted sooner).
The Commission Report
38.10 The Commission Report is intended to inform
the Council's review of the functioning of the transitional provisions
on the free movement of workers which must be completed before
the end of the first phase.[ 299]
It describes the transitional arrangements currently in place,
the actual and potential flow of Croatian workers to other Member
States, and their expected impact on the economy and the labour
market of the destination countries.
MEMBER STATES APPLYING RESTRICTIONS DURING THE FIRST
PHASE
38.11 The Report notes that thirteen Member States
— including the UK — are applying restrictions on
access to their labour markets during the first phase (these generally
take the form of a work permit requirement) and that Croatia has
likewise introduced reciprocal restrictions. The Commission makes
clear, however, that the restrictions do not affect the "fundamental
right" of EU citizens to move and reside freely within the
EU under Article 21 of the Treaty on the Functioning of the European
Union (TFEU), nor do they apply to self-employed workers or those
providing services within the EU.[ 300]
Similarly, there are no transitional arrangements limiting, for
a temporary period, the application of EU rules on the coordination
of social security schemes.
LABOUR MOBILITY BETWEEN CROATIA AND OTHER MEMBER
STATES
38.12 Croatia has a small population (4.2 million
in 2014) representing only 0.8% of the total EU population. Whilst
the outflow of its own nationals to other Member States is significant
for Croatia, representing around 10% of its working-age population
and 2.8% of all mobile EU citizens of working age (15-64), most
of these outward flows pre-date Croatia's accession by ten years
or more and are concentrated in Germany (68% of mobile Croatians),
Austria (17%), Italy (5%), the UK (3%) and Slovenia (2%).
38.13 Since acceding to the EU on 1 July 2013, the
Commission Report indicates that there is some evidence of increasing
mobility from Croatia, particularly to Member States which already
host a large number of Croatians (Austria, Germany, Italy and
Slovenia), despite the fact that countries have maintained national
restrictions.[ 301]
Inflows of Croatian nationals to the UK remain limited. Amongst
Member States that have opened their labour markets, inflows of
Croatian workers "remain limited in both absolute and relative
terms".[ 302]
38.14 Whilst there are, as yet, no comprehensive
data on post-accession migratory flows, the Commission suggests
that there has not, so far, been "any major diversion of
flows" as a result of differences in access to the labour
market across EU Member States. Those leaving Croatia since 1
July 2013 have continued to move to traditional destination countries.
Comparing the flows of migrants to those generated by the previous
enlargements in 2004 and 2007, the Commission concludes:
"The scale of mobility after Croatia's accession
has been small in absolute terms and in relation to the population
of the receiving countries."[ 303]
38.15 The Commission expects the outflow of workers
from Croatia to other Member States to remain "relatively
limited" as a percentage of the EU labour force and of EU
migrant labour in the host Member States. In its analysis of the
push and pull factors which shape labour migration, the Commission
notes that Croatia has the third lowest GDP per capita in the
EU, the third highest unemployment and youth unemployment rates,
and a larger than average proportion of people at risk of poverty
or social exclusion. However, per capita GDP and gross household
disposable income are increasing, as is the employment rate, and
wages were the second highest amongst central and eastern European
Member States in 2013.
38.16 The factors most likely to influence future
mobility are the availability of jobs, higher wages and better
working conditions, but geographical proximity, cultural and historical
links and existing "networks" of compatriots in other
Member States are also likely to play a part in the choice of
destination country. Drawing on an analysis of these factors,
as well as survey evidence, the Commission suggests that "post-accession
mobility from Croatia is likely to be small, whatever the legal
regime on access to work". It cites forecasts indicating
that net migration from Croatia to the other 27 Member States
("EU-27") during the period 2013-19 will be within a
range of +166,000 (if existing labour market restrictions are
maintained) and +217,000 (if all Member States open their labour
markets on 1 July 2015), constituting between 0.03% and 0.04%
of the total EU-27 population. The Commission anticipates that
Germany, Austria and Italy are likely to receive more than 80%
of these net flows, regardless of whether they decide to lift
or maintain restrictions on labour market access.
THE ECONOMIC AND LABOUR MARKET IMPACT OF MIGRATION
38.17 The Commission observes that the impact of
migration in the main destination countries depends, to a large
extent, on the characteristics of those who have recently migrated.
In the case of Croatia, they tend to be "predominantly young"
— 62% of recent movers were aged between 15 and 34 —
relatively well-educated and economically productive, with a "higher
employment and lower inactivity rate than average".[ 304]
These factors point to "a potential positive impact"
for the destination countries, although the Commission acknowledges
that it is too soon to estimate the actual economic, labour market
and fiscal impacts of mobility from Croatia since 1 July 2013.
It suggests that most studies of earlier waves of migration have
found, however, that labour migration within the EU has a positive
economic and fiscal impact, and that the impact on wages and unemployment
(at least in the long-run) in the host Member States is marginal.
38.18 Turning to the impact on Croatia, the Commission
observes that the outward flow of predominantly young and well-educated
people could worsen both its demographic profile and growth prospects.
It suggests, however, that "bottlenecks" and skills
shortages within particular sectors can be attributed to inadequate
planning and "a lack of technical and workplace competencies"
rather than emigration. The Commission underlines the importance
of labour mobility as "an economic adjustment mechanism",
highlights "the potential benefits of people being employed
in another Member State compared to remaining unemployed at home",
and notes that migration is often "circular", enabling
migrants to return home with valuable experience and skills.[ 305]
In addition, remittances are estimated to have contributed 1.6%
of Croatia's GDP in 2013, to have "helped decrease the level,
depth and severity of poverty in Croatia", and to have boosted
savings and investment and contributed to stabilising the economy.[ 306]
The Minister's Explanatory Memorandum of 24 June
2015
38.19 The Minister notes that the Commission Report
"is purely informative and does not have any binding legal
effects".[ 307]
38.20 He explains that the national measures applicable
in the UK during the first phase of the seven-year transitional
period are contained in the Accession of Croatia (Immigration
and Worker Authorisation) Regulations 2013 and subsequent amending
Regulations, and consist of a worker authorisation requirement.
He continues:
"Their effect is to restrict Croatian nationals'
employment to skilled work, which may be subject to a labour market
test, for the first 12 months of their employment in the UK."[ 308]
38.21 The Minister says that the Government will
decide whether or not to extend these restrictions on labour market
access for a further three year period, to 30 June 2018, before
the deadline of 30 June 2015. He does not indicate what the Government's
decision will be.
Previous Committee Reports
None.
297 See Article 18 and Annex V of the Act of Accession.
Back
298 The decision to suspend the application of EU free movement rules
is taken by the Commission, but may be amended or annulled at
the request of a Member State by the Council, acting by a qualified
majority. Back
299 See para 2(3) of Annex V to Croatia's Act of Accession. Back
300 The right to reside is already subject to various limitations
and conditions set out in EU secondary legislation. Croatia's
Act of Accession also includes some limited transitional arrangements
restricting the posting of workers from companies based in Croatia
to certain service sectors in Austria and Germany. Back
301 The increase is more marked amongst those who are self-employed
and to whom the labour market restrictions do not apply. Back
302 See p.6 of the Commission Report. Back
303 See p.6 of the Commission Report. Back
304 See p. 8 of the Commission report. Back
305 See p.11 of the Commission report. Back
306 Ibid. Back
307 See para 1 of the Minister's Explanatory Memorandum. Back
308 See para 15 of the Minister's Explanatory Memorandum. Back
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