To stimulate discussion, some considerations are put forward at this point for evaluating the directive proposal, without addressing analyses and discussions that have already taken place.
Extended and harmonised employers' obligations
The fact that private and commercial employers are to examine residence documents, and that companies are also to report the employment of foreigners will, for the main part, curb the "unintentional" employment of irregular migrants. According to current studies, however, this is not a widespread phenomenon in Europe. It is generally assumed that the employment of foreigners without status goes hand in hand with undeclared employment, meaning that employers are generally aware of the fact that they are employing the migrants in question illegally. Even if this were not the case, experience in the USA shows that it is not possible to curb the employment of irregular migrants by increasing demands on employers to make checks. For the most part, the number of employed migrants with good-quality forged documents increased. However, the intended introduction of an obligation for companies to report employment should be judged differently. This obligation could reduce the unintentional employment of immigrants without residence permits in regular jobs. This presupposes that, after data has been compared, employers are promptly notified that the immigrant in question might not be in possession of a work permit. When an employer confronts an employee after receiving such an inquiry, the employee will likely quit because he cannot produce any real papers and will not want to face subsequent investigations. However, increasing the obligations placed on employers will have no impact on the intentional undeclared employment of irregular immigrants. Therefore, it cannot be assumed that there will be less demand for irregular migrants to take up such employment.
Whether the imposition of greater penalties for offering illegal employment acts as a deterrent depends greatly on which sanctions can, in fact, ultimately be enforced. Frequently fines and penalties are reduced in court because it is only possible to secure convictions on minor offences in court. Demands for additional social security contributions and taxes also tend to be underenforced. According to the German Federal Audit Office only 10 % at most of the estimated sums for damages have been recovered.
Whether increasing the intensity of inspections actually leads to a reduction in employment opportunities for irregular migrants depends on what exactly is to be inspected and, indeed, how. This is not described in more detail in the draft directive. Where estimated costs are concerned, it is assumed that inspectors need on average three days per company, including preparation and follow-up. According to the results of studies on the inspection process in Germany, that appears to be an entirely realistic value when it comes to inspecting such places of work as restaurants or building sites. Larger companies, however, may distribute their operations over a number of sites and have high numbers of employees; in these cases the estimated costs appear too low. Moreover, it is assumed that the inspections serve only to ascertain the employment of irregular migrants, whereas in practice inspections in Europe are frequently multi-purpose. Taking Germany as an example, inspectors are simultaneously looking for foreigners without a work permit, unemployed persons with an undeclared "job on the side" and tax fraud ; 70% of suspicious cases uncovered in Germany during labour market checks concern benefit fraud on the part of native employees. On a weak empirical basis, it is estimated that currently about 2% of all companies are inspected each year and that any extension of these inspections will incur additional costs amounting to about EUR 1.1 billion. Our calculations for Germany are likewise only approximate, but suggest that the estimated costs are too low. We calculate that the monitoring authority for illegal employment (Financial Control of Undeclared Employment, FKS) carries out inspections on between 2.5 and 3% of companies. According to the Federal Audit Office's latest calculations, the FKS cost about EUR 386 million in 2006. Judging by this, if the number of inspections remains the same, Germany would roughly have to quadruple expenditure in order to meet the EU requirements. This means that Germany alone would require as much additional expenditure as the EU estimates the costs will be for all the member states put together.
One argument for increasing the level of inspection to a standard percentage in all member states is that this is the only way to avoid distorting competition. If we assume, however, that member states are affected to different degrees by illegal residence, on account of their geographic location, salary level and the relative economic significance of sensitive sectors, then the question arises as to whether a standardised level of inspection does not place a disproportionate burden on states in which the illegal residence of migrants is a less significant phenomenon.
Extended employee rights
Whereas the approaches discussed so far essentially increase the obligations on the employer and extend those of the responsible authorities, the extension of employee rights is based on a different premise. Employees without residence status would indeed continue to face deportation if discovered in the course of employer inspections. However, governmental and private institutions would be required to enable them to claim outstanding remuneration and to be available to act as witnesses in serious cases. This would help strengthen the employees' legal security and ability to deal with conflict. If these measures were effectively enforced, it would put the employer – and not just the employee – at risk of being penalised. There have been repeated reports of employers passing information to the control authorities in the event of conflict, in order to withhold salaries from employees without residence status; if the draft directive were implemented, employees would have an incentive to report fraudulent employers to the control authorities in order to assert their claims to remuneration. This presupposes, however, that they accept their own deportation. For the employer, this would not only increase the risk involved in employing irregular migrants, but would also reduce the incentive to exploit such migrants and cheat them out of their wages. However, due to the limited practical experience in Europe with implementing such measures, it remains uncertain as to how authorities could ensure that outstanding employee claims are asserted. Whereas quantitative benchmarks have been suggested for monitoring an increase in labour market inspections, no such benchmarks have been proposed for monitoring the extension of employee rights. One solution would be to require that towns of a specific size establish an information centre; it could also be specified that the advisory activities be extended in direct proportion to labour market inspections (i.e. one new employee advisor for each new inspector).