Home / Press review / Archive / Magazine / Economy / Free Movement of Workers / Background

The European Development of the Free Movement of Workers

Free movement of workers is one of the fundamental freedoms guaranteed by European Union law. For new member nations, this right often does not come into effect fully until some years after entry. Here, a retrospective survey of these developments.

The principle of free movement of workers aims to encourage the mobility of workers and thus to promote a dynamic common market. Free labour movement is also intended to equalise living conditions within the European economic region and promote overall employment rates. In order to accomplish these goals, however, it has been necessary to address the hesitations of existing member states. Even today, the fundamental freedom of movement of workers remains to be enacted in full for all member states.

Free and unrestricted? To date, ten EU member states have opened their labour market to Romania and Bulgaria.
Photo: Photocase.com

Freedoms within the Single European Market

Free movement of persons is a key element of the European Single Market and one of the greatest benefits to individual EU citizens. Along with the free moment of goods, services, and capital, the free movement of persons was established by the 1957 Treaty of Rome as one of the four basic freedoms to be achieved under the common market. The principle of free movement of persons includes the right to move freely within Europe for travel, the right to residency in other EU states without restrictions on duration, and the right to equal treatment of workers in all EU member states.

Definition

Freedom of movement under Article 39 of the Treaty Establishing the European Community is defined as the "abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment.” In other words, citizens of the EU may not be subjected to labour discrimination on the basis of nationality. EU citizens may choose to work, be self-employed, study, or retire anywhere in the EU for an unlimited duration. The protection against discrimination also includes the extension of residency rights to family members and to equal treatment on the housing market. These rights may be limited only under unusual circumstances, for example in the case of a threat to public security. However, such restrictions may not be applied solely on the basis of a criminal conviction.

A worker, as defined under these regulations, is a person who "(i) undertakes genuine and effective work (ii) under the direction of someone else (iii) for which he is paid.” In some instances, restrictions may apply to employment in public service. Because public service employment may entail duties related to national sovereignty, these positions may be reserved for citizens of the respective member state.

The Legal Foundation of Free Movement

In the years following the 1958 enactment of the EC Treaty, the Council began to issue regulations governing freedom of movement. Initial regulations tended to grant priority to domestic workers and to establish other protective measures. For example, even though unemployment was virtually non-existent in Germany and France at the time, these two countries feared an influx of workers from Italy, a "low wage” country. The Council Regulation 1612/68 on the free movement of workers, passed on October 15, 1968, finally established a breakthrough, establishing the legal foundation for guaranteeing the equal treatment of workers in the six member states.

Clarification and Amendment

A regulation defining the trade union rights of workers was issued in 1976. According to this new regulation, all EU citizens would henceforth be equally eligible for administrative and leadership positions in trade unions in all member states. Judgments issued by the European Court of Justice also regularly supplemented and refined the definitions and regulations governing the principle of free movement. Finally, in 2004, the body of legislation on freedom of movement was streamlined and consolidated. The regulations also were extended to encompass the entire European Economic Area (EEA), including Iceland, Liechtenstein and Norway.

Transition Periods in the Southern Enlargement of the EC

In the 1970s, unemployment rates in the EC member states began to rise. For this reason, a decision was made to introduce a transition period to protect domestic labour markets prior to the southern expansion, when Greece, Portugal and Spain were admitted to the EC. Greece was granted full free movement of workers six years after joining the EC in 1981, while Portugal and Spain obtained full freedom of movement seven years following their 1986 admission. However, studies have shown that comparatively few workers have in fact taken advantage of this full freedom of movement in the intervening years. Indeed, emigration rates to the old EC states have declined.

Worker Migration in Europe – Interim Results in the 1990s

The mobility of workers in the European Union has remained modest: in both 1973 and in 1990, between two and four percent of all workers on the labour market in the various EU member nations were citizens of other member countries. The Council thus saw a further need for action: in 1992, the Council enacted Regulation 2434/92, which required national labour exchanges to ensure the greatest possible transparency in order to promote the necessary exchange of information. The European Job Mobility Portal, EURES, was also established to promote worker mobility and the cooperative exchange of information on vacancies and job applications, as well as to publicize analyses of conditions and trends in the labour market.

Despite the overall low cross-border mobility of EU citizens, living conditions have increasingly converged within the members states, thus fulfilling one of the original aims of free movement of persons. According to OECD reports, in the first half of the 1980s, per capita GDP in Spain was between 60% and 70% of the EC average at the time. According to the latest Eurostat publication, today Spain's per capita GDP is approximately 90% of the EU-15 average, roughly the same as Italy's. When Finland, Austria and Sweden joined in 1995, no transitional period was imposed.

The Approaching Eastern Enlargement

As early as 1998, transitional periods were under discussion in anticipation of the upcoming eastern enlargement of the European Union. In contrast to the southern enlargement, the initial discussion envisaged a time frame of ten or more years. In December 2000, supported by France and Austria, Germany suggested a transition period of a maximum of seven years. A number of other EU member states argued in favour of more rapid integration.

When the accession treaties were finally signed in 2003, it had been agreed that the transition period for full freedom of movement of workers would extend for a maximum of seven years. Some member states have enacted restrictions on the free movement of workers from the states that joined the EU in 2004, with the exception of Malta and Cyprus (EU-8); this transitional period may be extended to 2011 at the latest. According to a prior statement by the Commission, member states will be granted the greatest possible degree of flexibility in the implementation of the transition periods.

The 2+3+2-Regulation

The seven year maximum on restrictions to free movement of workers was divided into three segments (2+3+2-Regulation). States that have not liberalised access to their labour markets must review their restrictions after a period of two years, and again three years later, and lift the restrictions when warranted. Phase 1 lasted from May 1, 2004 to April 30, 2006. During this phase, all the old EU member states apart from Ireland, Sweden, and the United Kingdom imposed what were in many instances quite severe restrictions, or retained their existing work permit arrangements. Thus, for example, some of the member states have introduced quota regulations, while other states have elected to differentiate according to sector. Among the EU-8 states, Poland, Slovenia and Hungary have in turn established restrictions to the free movement of workers from the old EU states, citing the principle of reciprocity.

Phase 2 commenced in May 2006 and will end in April 2009. In addition to the three states already noted above, Spain, Finland, Greece, Portugal and, in July 2006, Italy, have opened access to their labour markets. Other member states have announced plans to streamline and relax restrictions during this second phase once certain preconditions have been fulfilled. A final two-year extension of restriction to 2011 is permitted only in cases of severe disruption to the labour market in that nation (Phase 3).

The Eastern Enlargement, Part II

When it was decided that Bulgaria and Romania would join the EU in January 2007, the member states elected to apply the same transitional arrangements. Phase 1 will thus extend until the end of 2008, while Phase 2 will end in 2011. Full freedom of movement for workers will be attained no later than January 2014. Among the EU-25 (the states that were EU members prior to January 1, 2007), ten nations have already elected to open their labour market to workers from Romania and Bulgaria. These ten nations include Finland and Sweden and the nations that joined the EU in 2004, with the exception of Malta and Hungary. France has opened several branches of the labour market to workers from Bulgaria and Romania, while Italy and Hungary have elected for the time being to restrict access only in specific sectors. In contrast to the pattern of the eastern enlargement in 2004, United Kingdom and Ireland have elected to close their labour market to Bulgarian and Romanian workers for the time being.
(Version: 17 January 2007)

Frens Stöckel

Frens Stöckel is a political scientist currently employed as a journalist and editor. His focus is on topics surrounding issues of European integration, foreign policy ...
» to author index

Further articles on the subject » EU Policy, » EU enlargement, » Europe
More from the press review on the subject » EU Policy, » EU enlargement, » Europe