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The Illegal Employment of Foreign Workers: an Overview

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The Illegal Employment of Foreign Workers: an Overview A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Boswell, Christina; Straubhaar, Thomas Article — Published Version The illegal employment of foreign workers: An overview Intereconomics Suggested Citation: Boswell, Christina; Straubhaar, Thomas (2004) : The illegal employment of foreign workers: An overview, Intereconomics, ISSN 0020-5346, Springer, Heidelberg, Vol. 39, Iss. 1, pp. 4-7 This Version is available at: http://hdl.handle.net/10419/41823 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu FORUM The Illegal Employment of Foreigners in Europe The illegal employment of immigrants, a phenomenom that appears to be on the increase in Europe, has raised a number of issues, such as the possibility of domestic workers being crowded out, the losses to national revenue resulting from the non-payment of taxes and social security contributions, and problems relatings to the living conditions, legal protection and integration of the immigrants working illegally. Why have European governments so far failed to tackle the problem more effectively? What policy responses would be appropriate? Christina Boswell* and Thomas Straubhaar** The Illegal Employment of Foreign Workers: an Overview s a recent European Commission communication legally.3 Given the many negative aspects of illegal Apoints out, the problem of illegal employment of employment, why do European governments appear immigrants in Europe appears to be on the rise.1 While to have failed to tackle it more effectively, and what any estimates of the phenomenon need to be treated can be done to curb the phenomenon? with caution, commentators have suggested that Defi ning the Problem around 500,000 migrants enter EU countries illegally every year. Estimates of stocks of illegal migrants in Illegal employment is essentially a product of two individual countries meanwhile put the number at factors: legislation which restricts possibilities for le- around 500,000 in Germany, 300,000 in France, gal labour migration; and the incentives of employers 200,000 in the UK, and up to 800,000 in Italy. It can to circumvent the costs of employing legal labour. In be estimated that around 70% of these are engaged some industries – such as agriculture, construction, in illegal labour.2 A large proportion of this stock of hotel and catering, tourism, or cleaning – the restric- illegal migrants entered EU countries legally, but sub- tion of legal labour migration opportunities since the sequently overstayed their visas or permits. In other 1970s and a lack of supply of indigenous workers will- cases, foreign illegal workers are legally resident, but ing to do low-status, low-paid or seasonal work gives are working without being in possession of relevant them little option but to hire illegal immigrants. But the work permits. problem also refl ects the advantages for employers of minimising costs through non-payment of social con- The phenomenon of illegal employment has raised tributions, lower salaries, and hiring workers willing to a number of concerns in west European states. Do- work more fl exible hours or with sub-standard working mestic workers – especially in low-skilled work – may conditions. Some economists see this as a product fear being undercut by lower-cost labour. Others have of increased global competition, which forces many argued that illegal work generates huge losses to na- small and medium-sized fi rms to draw on a supply tional revenue, because of the non-payment of tax or social security contributions. Illegal employment is 1 Commission of the European Communities: Communication from also politically sensitive, putting into question states’ the Commission to the European Parliament and the Council in View of the European Council of Thessaloniki, on the Developments of a ability to enforce their migration rules. And it raises a Common Policy on Illegal Immigration, Smuggling and Traffi cking of number of other economic, social and humanitarian Human Beings, External Borders and the Return of Illegal Residents, Brussels, 3.6.2003, COM (2003) 323 fi nal. problems revolving around the living conditions, legal 2 For estimates see, for example, S. D jaji : Illegal Immigration protection, and integration of immigrants working il- Trends, Policies and Economic Effects, in: S. D jaji (ed.): Interna- tional Migration: Trends, Policies and Economic Impact, London and * Head of the Migration Research Group, Hamburg Institute of Interna- New York 2001, Routledge, pp. 137-161. tional Economics (HWWA), Germany. 3 See L. K atseli, T. Straubhaar, K. F. Zimmermann (eds.):Il- ** President, Hamburg Institute of International Economics (HWWA), legal Migration, in: Journal of Population Economics, Vol. 12, No. 1, Germany. 1999, pp. 1-182 (several contributions). 4 Intereconomics, January/February 2004 FORUM of cheap, fl exible labour in order to stay competitive.4 become increasingly politicised over the past decade. Others locate the problem in the rigidity of European This is manifested in the increasing number of organ- labour markets: in some countries the costs of em- ised interests – especially trade unions, human rights ploying workers are more than double what they actu- and church groups – who have been voicing concerns ally receive in wages. On this argument, more effi cient about the impact of illegal labour on employment, labour markets would eliminate the need to employ wages, welfare systems, or immigrant rights. More people outside of the regular legal framework.5 generally, public opinion in many states has become increasingly anxious about problems of illegal entry Whatever the cause, illegal employment is a highly and traffi cking, with illegal immigration perceived to problematic issue for governments. On the one hand, be a serious threat to law and order and even internal it is clearly economically benefi cial for employers of il- security. Since the prospect of fi nding a job is often legal labour and for the economy as a whole. Indeed, the major pull factor encouraging people to enter Eu- it has been argued that business-friendly governments ropean states illegally, effective measures to prevent have a strong interest in tolerating a substantial level illegal employment may be seen as a good means of of illegal labour, even if they cannot publicly acknowl- discouraging illegal entry and the nefarious traffi cking edge this goal.6 Moreover, efforts to combat illegal and smuggling practices which often accompany it. employment through border controls, internal checks and employer sanctions are expensive and diffi cult The second reason why states may begin to rethink to enforce, and can confl ict with civil liberties or even approaches to illegal migration concerns the emerging generate discrimination against legal foreign workers. legal labour migration agenda. Many European gov- Given the weighting of costs and benefi ts, from an ernments – notably Germany and the United Kingdom economic perspective the optimal number of illegal – have shown a readiness to make a positive case for employees is certainly above zero.7 On the other hand, expanded legal programmes. This explicit recognition governments are also under intense pressure to con- of the need for migrant labour could encourage gov- trol the problem, and respond to concerns about com- ernments to do more to combat illegal foreign labour, petition with domestic workers, loss of fi scal revenue, and to attempt to meet demand through regular rather or the exploitation of workers. While many of these than illegal channels. In effect, it could provide an negative impacts have been contested – indeed, there incentive to bring the employment of foreign workers is little evidence of any signifi cant impact on native “above board”.8 wages, or indeed of a net welfare burden – govern- Is there any evidence that governments are more ments risk losing legitimacy if they are not seen to be willing to combat illegal foreign labour than before? effectively enforcing legislation. In the UK the government has launched a number of These confl icting interests have led many govern- high profi le initiatives to crack down not just on illegal ments in Europe to adopt a somewhat ambivalent entry and stay, but also to improve the enforcement stance towards combating illegal employment. While of employer sanctions. To date, however, the number condemning it in public, they have shown a less than of prosecutions has been extremely low. Germany, the
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