Labour Migration Impact Unevenly Distributed

What is the importance of labour migration to the economy?

Olaf van Vliet, economics professor at the University of Leiden: 'In recent years, the labour market has been exceptionally tight. This is evident from the high level of labour market participation and the low unemployment rate. Labour is in high demand and there are many migrant workers working in the Netherlands, around one million. Substantial parts of the Dutch economy, such as horticulture, abattoirs, construction, logistics and distribution, are largely dependent on migrant workers. At ASML, too, and in ICT, there are many migrant workers. Migrant workers are therefore hugely important to the economy.'

FNV lawyer Imke van Gardingen: 'That tightness in the labour market is not a natural phenomenon, though. It is the result of economic choices. The Netherlands has chosen to be Europe's logistics hub. And if a local authority allows an abattoir in a zoning plan, it also allows migrant workers. The economic interest is given priority in such cases, but the people who will be working there also need to be housed. Fortunately, that realisation is starting to sink in. Do we actually want all these distribution centres and abattoirs?'

What makes migrant workers so attractive to employers?

Van Gardingen: 'There is a shortage of people willing to do low-paid production work and in the working conditions that go with it. Flexible contracts mean people are quickly replaced and therefore remain on low pay scales. Tax breaks also keep wages low. Employers in the Netherlands are allowed to deduct 25 per cent of the minimum wage for housing, which is sometimes little more than a mattress. Apart from being cheap, this is also convenient for employers. There is a huge labour migration industry with recruitment agencies, employment agencies, housing agencies, and transport companies. An employer can arrange everything online on demand and deploy a large group of migrant workers a short time later.'

'Migrant workers have become a kind of disposable workforce'

What are the worst abuses?

Van Gardingen: 'Many migrant workers are in a position of dependency where, if they lose their jobs, they also lose their homes. People in this situation are poorly paid, work long hours, and are poorly housed. They often arrive in their twenties, in an abattoir for example, become exhausted after a few years, and are then dispensed with. They have become a kind of disposable workforce. Labour migration in the Netherlands is part of a global trend of a race to the bottom. Companies are looking for the cheapest labour as they seek to compete with the rest of the world. And because people in Central Asia or India still earn much less, they are easy to recruit for work in Europe. Once they are employed in eastern Europe, they can also be seconded to work in the Netherlands. We refer to them as third-country nationals.'

Which developments are there regarding the immigration of highly skilled migrants?

Van Vliet: 'With the extraction of natural gas in Groningen coming to an end, knowledge is the only resource left in the Dutch economy. That knowledge ensures, for example, that the Dutch service sector operates efficiently. It is also important in other areas. Examples that come to mind are companies like ASML and Shell. Here, too, highly skilled migrant workers can be important. A particularly notable development in this regard is the government's commitment to reducing the intake of international students. This will mean fewer highly skilled workers in the labour market as well.'

'Knowledge is the only resource left in the Dutch economy'

While poor neighbourhoods suffer from large numbers of disposable workers, expats elsewhere drive up house prices.

Van Vliet: 'Whenever the number of people looking for housing grows more quickly than the number of homes, then house prices rise. Immigration is a factor in this. This is true of the poorer neighbourhoods as well as other parts of a city. The 30% rule can also contribute - that is the partial tax exemption for expats to make the Netherlands more attractive to highly skilled migrants. For me, as an economist, the need for this scheme, which is up for debate, has not been conclusively demonstrated. In many cases, companies can also offer higher wages to attract knowledge migrants.'

Are migrant workers taking jobs from the Dutch?

Van Gardingen: 'This used to be a concern in the past, but that is no longer the point. That's because for these wages, and working in these conditions, the Dutch can't in any case do the work that low-paid migrants do now.'

Van Vliet: 'Research has shown that there is no displacement due to labour migration. The Dutch who in the past did the jobs that have now been almost entirely taken over by migrant workers have not become unemployed. They started doing something else, often in the service sector. There is also little or no displacement in the case of knowledge migrants. The labour market is so tight that there is sufficient work. With the ageing population, the shortage will continue to increase.'

If one wanted fewer migrant workers, how could that be done?

Van Vliet: 'Not through migration policies, because the Netherlands is a member of the EU. There is free movement of people within Europe. If you want to limit labour migration, you will inevitably have to change the structure of the economy. It is indeed a choice that we have abattoirs here. But the economy can only be shaped to a certain extent: we do not live in a planned economy. So you have to use indirect measures, such as zoning plans and permits for businesses.'

Would stricter standards for working conditions also make labour migration less popular with employers?

Van Gardingen: 'For the FNV, it is not a matter of more or fewer migrants. But certainly, the standard has to go up. Much has been written on the abuses surrounding migrant workers, but in practice nothing is improving. There is nothing wrong with the analyses by the Netherlands Labour Authority, but effectively they do not result in any changes. On the contrary, abuses are actually becoming more serious and the enforcement issues more complex.'

Van Vliet: 'If it were possible to make the rules stricter or enforce them more effectively, and if as a result migrant workers were better treated, the price of their labour would increase slightly. That would cause demand for that labour to decrease, as a matter of course. That is the economic analysis.'

Would less labour migration be good for the Netherlands?

Van Vliet: 'On the one hand, there are the poor working conditions in which migrant workers work, and the pressure on the housing market that their arrival causes. On the other, they also contribute towards the economy. Cheap labour makes products like meat and peppers, or the services of the painter or cleaner, inexpensive. It would also be a problem for society as a whole if there were fewer migrant workers. After all, they make the labour market as a whole a little less tight. Without labour migration, A & E departments or schools may have to close one day a week.'

'People who come to work in an abattoir also need housing'

Is it also about what kind of economy we want to be?

Van Vliet: 'Exactly. The state commission on demographic developments 2050 advocates the encouragement of a highly productive economy. And I think that is a wise course to pursue. But it would also mean that substantial sectors in the Netherlands where many migrant workers work, such as horticulture, would have to shrink. There is currently no sign of any such trend.'

Van Gardingen: 'I agree. At the same time, there should also be a focus on work for practically trained people. The problem now is that it is exactly this type of work that is not highly regarded and which is unhealthy.'

What is your advice for policymakers?

Van Vliet: 'How to deal with labour migration is a political consideration, there are pros and cons. It is up to politicians to make the choices. But it is true that the benefits and costs of labour migration are currently unevenly distributed in society. An employer in the Westland region can make greater profits thanks to cheap labour, while consumers benefit from inexpensive products. But many people who see their residential area changing mostly experience disadvantages.'

Van Gardingen: 'Ensure that the parties earning from cheap migrant labour are held accountable. Strictly enforce Dutch legislation on pay and working conditions. Inform and involve employees in the workplace; make sure there is a platform where their voices can be heard. Involve local residents too, in places where landlords have properties where large groups of migrant workers live. Councillors with responsibility for economic affairs are happy whenever a new distribution centre is established, but they should also consult with their social affairs and housing counterparts who have to find housing for people. Policymakers must take all elements into account when making decisions.'

Written by Joris Tielens.

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