European Finance Ministers discussed on Saturday, 6 April, at their informal meeting in Bucharest, the impact of workforce mobility in the EU on Member States' public finances.
It was the Romanian Presidency of the Council of the EU that decided to put this item on the agenda. Romania feels particularly affected by the “brain drain” from east to west, which it claims contributes to slowing down the country’s growth and income convergence.
“For sure, there are different points of view between the countries. The ones who are receiving the labour forces and the other ones which are losing this important factor”, explained Romanian Minister Eugen Orlando Teodorovici upon his arrival at the meeting.
And Romania belongs to this second category. “In our economy, I think at least one million workers are missing. And we have to do something”, he continued.
The discussions took place on the basis of a study by the CEPS think tank which describes both the positive and negative effects that workforce mobility can have on the economy (see EUROPE 12229/26).
According to the study, just under four percent of EU citizens of working age (20-64 years) now reside in a Member State other than that of their nationality.
However, this percentage hides large differences between Member States, according to CEPS. In 2017, the proportion of working-age nationals living abroad ranged from one percent in Germany and France to almost 20% in Romania.
So much for workers mobility. But on the specific issue of “brain drain” in the EU, the study minimises the east/west phenomenon described by Romania.
“In the context of the EU, we find that (today) there is little difference east to west between low and high skilled outwards mobility rates and thus, a priori, little evidence of an ‘ongoing brain drain’. Emigration rates from south to north in the euro area, by contrast, are more highly skewed towards the highly skilled”, the study concludes.
During the meeting, some countries reacted and indicated that, even if the average in the EU made this phenomenon marginal, it was still necessary to look at situations on a case-by-case basis, according to a European source. Beyond the effect between Member States, we must also look at the effect by region, Greece also stressed.
In particular, Lithuania reportedly claimed that it had lost 20% of its population since 1989 due to emigration, which had negative consequences on public investment.
Overall, Member States have therefore recognised that this is a problem and the most affected countries see the solution in increasing the number of convergence instruments, but have not really shown a willingness to put this subject on the European political agenda. Only Romania really wants to go down this path, our source asserts. The country is said to have been the only one to question the conclusions of the study.
Another twist: the discussion would have been linked to the one on fiscal capacity for the euro area, already discussed the day before (see EUROPE 12230/4). Several southern countries, including France, Italy and Portugal, considered that this subject should be addressed in the context of discussions on fiscal capacity for the euro area. According to our information, Spain has reiterated its idea of having a European Unemployment Stabilisation Fund (see EUROPE 12160/1).
For Finland, this is a subject that does not concern the euro area. Denmark, for its part, considered that this was an issue that should be resolved within the framework of the Capital Markets Union.
At a press conference, the Romanian minister made it clear that he was dissatisfied with the outcome of the discussions. “If I’m using the EU language, I have to say that yes, we are happy with the discussions. But [...] I have to say that no, we’re not satisfied”, he stated.
He then launched a series of rather confusing announcements, including “a very incisive [package of] measures” that could be put in place by the Romanian government to “bring the workforce back into the country”.
The Romanian minister also announced that he would like to engage in a dialogue with countries that are losing workforce in order to develop a common response. He also suggested that discussions should continue at the next ECOFIN Council meeting in May and that the subject should also be discussed by the European employment ministers in the Employment, Social Policy, Health and Consumer Affairs Council. This last point had not been mentioned at the ECOFIN meeting, our source asserted.
In any case, Romania does not intend to stop there. It plans to request more information on the causes and concrete effects of this phenomenon. In any case, the country wants “something much more clear than it is today on this specific issue”, before the end of its presidency.
And to those who would be tempted to see it only as an isolated Romanian problem, Mr Teodorovici replied that the subject should be discussed by the EU as a whole. “We are a family, and if one member of the family is not happy we cannot speak about a happy family”, he concluded. (Original version in French by Marion Fontana)