On 1 January 2014 British labour markets will be open to Romanian and Bulgarian nationals (the “A2”) as they are to people from the rest of the EU. Many are wondering what the effects will be – although some impacts of Romanian and Bulgarian free movement have already happened, with an estimated 100,000 to 150,000 people born in the A2 currently living in Britain.
Still, the lifting of restrictions creates an expectation of increasing rates of immigration. Over the weekend Eric Pickles claimed to have seen estimates of how many Romanians and Bulgarians might arrive – though he would not reveal what the estimates were – and worried about pressure on the UK’s housing market. Other prominent politicians, including Theresa May and Ed Miliband, have raised concerns that increased migration may reduce wages, especially for the lowest earners.
While no clear evidence supports assertions that immigration reduces average earnings, available research suggests immigration may place modest downward pressure on wages for the lowest paid. Two prominent studies find modest effects, in one case estimating that each 1% increase in the share of migrants in the UK working age population leads to a 0.6% decline in the wages of the 5% lowest paid workers, which would mean about 3p less per hour for someone earning just over the minimum wage of £6.19.
These large-scale studies may disguise bigger effects on particular sectors. Construction, for example, is the biggest single sector for Romanian workers in the UK. An increase in A2 migration may mean some of the biggest wage impacts are felt by recent migrants from Poland who are also concentrated in construction jobs.
The end of labour market restrictions also means Romanian and Bulgarian workers tied to the Seasonal Agricultural Workers Scheme (SAWS) will no longer have to stay in that sector. In theory, this might create a labour shortage that could lead to wages in that sector increasing as farmers try to attract other workers, unless other steps are taken to maintain the supply of low-wage workers.
But the size of any effects – whether on wages, housing or anything else – will depend on the scale of net migration from Romania and Bulgaria. This degree of change, of course, is currently the source of much speculation and hyperbole. In October last year the Daily Express ran the headline: “Now 29m Bulgarians and Romanians can soon move to Britain” Other papers went down down a similar route.
The headline is technically correct but misleading. The entire populations of these two countries will not move to the UK, any more than 80 million Germans or 65 million French people will. The narrative seems to have been framed by the startling impact of the accession of Poland and the rest of the A8 countries in 2004 – which saw a tenfold increase of the Polish population in the UK to more than half a million. But the parallel between 2004 and 2014 misses some important differences in the situations.
First, Romanians and Bulgarians have had open access to the UK, if not its labour markets, for six years already, so many of those who would be interested in travelling to and living in the UK have already come. In 2004, borders and labour markets were opened at the same time.
Second, in 2004 only three EU nations – the UK, the Republic of Ireland and Sweden – opened their labour markets to A8 workers without restrictions. This made Britain, with its large economy and flexible labour market, a leading destination. In 2014 the entire EU will be obliged to open labour markets to Romanian and Bulgarian workers, so countries like Germany and France may prove very attractive too.
Third, the combined populations of Romania and Bulgaria is around 29 million, whereas the combined populations of the A8 countries is around 70 million, meaning there is considerably less potential supply. However, the A2 are poorer countries than the A8 average, which could mitigate this difference.
Finally, Romanian and Bulgarians who have emigrated to the EU up to this point have not been especially likely to choose the UK. The majority of Romanian-born emigrants in Europe are concentrated in just two countries: Spain and Italy. Established personal and economic networks are a “pull factor” that may continue to lead A2 migrants to Spain, Italy, and elsewhere.
It is understandable that the British public wants to know what is going to happen when Romania and Bulgaria become full EU members – whether wages will be affected, or housing queues pushed up, but the truth is complicated and unclear. Models and theories are not crystal balls and don’t show the future, they are simply ways of looking at what might happen in certain circumstances. The estimates were wrong in 2004, there’s little reason to think they will be right this time.
Dr Scott Blinder is a senior researcher at Oxford’s Centre on Migration, Policy and Society (COMPAS) and the Migration Observatory (http://www.migrationobservatory.ox.ac.uk), and an associate member of the Department of Politics and International Relations.
This post originally appeared on the website of The Guardian. It is republished here with their permission.