For workers from a European Union member state, the freedom to look for and take up employment in another member state has existed since the founding of the European Community (EC) in 1957.
Along with the free movement of capital, goods and services, the free movement of people has played a central role in the EU's efforts to create a common market across all member states. However, the European Union included in the Treaty of Accession, in response to pressure from Germany and Austria prior to the signing of the document in 2003, a transitional period of up to seven years, during which member states could choose to exempt themselves from the law relating to free movement of workers. The following table shows the timeline set out for the transitional measures:
During the first phase, eight of the EU15 countries, including Germany, chose to invoke the transitional measures to block the access of Central and Eastern European migrant workers to their labour markets and to keep pre-existing bilateral agreements in place. Austria, Italy, the Netherlands and Portugal did the same but introduced an additional quota system for labour migrants from the EU8 countries. Only the United Kingdom, Ireland and Sweden chose to allow EU8 nationals full access to their labour markets.
An Overview of the Transitional Period (2+3+2)
|Phase one: two years|
(May 2004 - April 2006)
|In the first two years after accession, the free movement of workers does not apply to workers from the EU8 wishing to work in an EU15 state. Instead, pre-existing bilateral agreements continue to apply. Individual member states can, however, choose to introduce national laws that allow greater freedom of movement.|
|Phase two: three years |
(May 2006 - April 2009)
|Before the end of phase one, member states that wish to continue applying restrictions must notify European Commission of their intent. During phase two, any member state can decide at any time to abandon the restrictions and allow full freedom of movement for workers.|
|Phase three: two years |
(May 2009 - April 2011
|In principle, national measures restricting the access of EU8 workers to the labour markets in EU15 states should cease by 2009. EU15 states may, however, continue to apply them if there are serious disturbances or threats of the same to their labour markets. EU15 states that choose to allow free movement of workers during this phase may resort to a 'safeguard clause' in the transitional agreement in order to suspend this free movement, if necessary. From May 2011 onwards, full freedom of movement will apply throughout the European Union.|
Why Were Transitional Arrangements Introduced?
The decision to restrict labour migration from the EU8 to the EU15 was more of a reaction to widespread public fears that a 'flood' of cheap labour would lead to higher unemployment than a decision based on sound economic analysis.
In order to understand the economic rationale behind such fears, it is useful to look briefly at the simplified economic models that are sometimes used to substantiate this decision. Here it is also possible to see how such models fail to take into account important factors affecting migration, which can lead to an overestimation of the number of anticipated migrants.