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fourth
  EU Migration Helps U.K.
Fill Hospitality Jobs

 
 
 

LONDON -- Migrant workers from Eastern Europe have been a cost-curbing "godsend" for the United Kingdom's tourism and hospitality employers, filling a recent domestic void and helping prevent wage inflation, experts say.

U.K. hoteliers and restaurant owners would be facing a major staffing shortfall, and paying substantially more in salaries, were it not for workers who have arrived since the European Union expanded to include eight new countries last May, according to Berkeley Scot, one of the biggest recruitment agencies specializing in the hospitality sector.

"They're a godsend, because the English education system isn't turning out as many people as the industry requires. Had they not been here, wages would have had to go up as employers struggled to fill their vacancies," said Tony Aylward, regional manager at Berkeley Scott.

Reflecting a nationwide trend over the past 18 months, Berkeley Scott has brought over hundreds of workers, mainly Poles and Czechs, since May 2004 to work in restaurant kitchens, and in hotels as receptionists and cleaners.

Firm numbers indicating the scale of the influx of migrant workers from the European Union's newest member states aren't available, making any assessment of the impact they have on the U.K. economy even more elusive.

But Bank of England Governor Mervyn King and some of his colleagues have been repeatedly alluding to the presence of migrants. Paul Tucker of the Monetary Policy Committee last month told the parliamentary Treasury committee he had "little doubt" that migrant labor from the new EU member states has helped to dampen wage pressures.

With the U.K.'s jobless rate at 4.7%, wage pressures should be rising, but that doesn't seem to be the case. Wage inflation is running at around 4%, with incomes in the hospitality sector broadly in line with the national trend.

Benchmark consumer price inflation is 2.5%, with the hospitality sector posting around 3.7%, according to the U.K.s Office for National Statistics.

Whether wages are being held down by arrivals from the 10 countries that joined in May 2004 is a crucial question for corporate strategy, public policy and interest-rate setters.

Chris Dunn, responsible for U.K. recruitment for Marriott International Inc., said if it weren't for the willingness of Eastern Europeans to come to Britain, the U.S.-based hotel chain would be struggling to fill vacancies and left paying vastly more for kitchen and housekeeping staff.

"If we couldn't recruit from Eastern Europe we would have to pay agencies horrendous fees for staff which are neither loyal nor well-trained," said Mr. Dunn, noting that Marriott has hired hundreds of workers from Eastern Europe since May 2004.

But real information is woefully incomplete. Workers from eastern EU countries taking advantage of the U.K.'s decision not to postpone their right to find jobs in the U.K. have contributed a net £500 million ($876 million) to the economy since May 2004, according to the Home Office -- which was unable to explain how it calculated this figure.

It isn't clear how many people have come, either. Governor King said in a recent speech that the supply of new labor since last May had doubled to 120,000 due largely to eastern European migrants. But the latest October estimates from the ONS put the number at 75,000.

Assessing their real impact is important not just for national policy makers but also their counterparts elsewhere in the EU.

While the U.K., Ireland and Sweden opened doors to new EU members, the other EU states opted to impose temporary restrictions on the free movement of labor. That policy is up for review on an EU level next spring.

Internal EU migration would, unhindered, probably boost host country's GDPs by around 0.2% to 0.3% while knocking wages there by up to 0.6%, according to models developed by Tito Boeri and Herbert Brucker in research conducted for Bonn-based IZA, the Institute for the Study of Labor. In relative terms, the main beneficiaries are the migrants' countries of origins which receive remittances, they found.

That creates a policy dilemma, as not only would wealthier countries transfer economic gains to poorer ones at the cost of curbing wage prospects at home, but the effect could be exacerbated if not all EU members play by the same rules.

While the Bank of England is loath to publicly call on the government or the ONS, bank officials are privately prodding Chancellor Gordon Brown to order better information to be compiled.

To assess the impact of the EU migrants, the central bank needs more information about how many Eastern Europeans are arriving, how long they are staying and how much money they are spending in the U.K. as opposed to sending back to their native countries.

Experts such as Mr. Aylward of Berkeley Scott say informal evidence suggests that Eastern European workers are spending on average half their pay packets in the U.K., mainly on living expenses, and sending the rest home.

Higher salaries in the U.K. mean the flow of workers will remain steady, Mr. Aylward said.

A waiter in Poland, where the unemployment rate is 18.9%, can expect to make about £180 a month before tax. In the Czech Republic, where the unemployment rate stands at 8.8%, the same job would fetch a salary of £210 month. This compares with an average of £800 in the U.K.

If the salary gap narrows, future EU members -- such as Bulgaria and Romania in 2007 and possibly Turkey, the Balkan states and even Ukraine at later dates -- will provide new workers eager to serve as wage arbitrageurs across the EU economy.

They will be needed, according to Marriott's Mr. Dunn, who reckons there will be up to 600,000 new jobs created in the hospitality sector in the next few years.


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