MUNICH -- In January, the European Union expanded eastward once again. Following the "Big Bang" enlargement of 2004, which added 75 million new EU citizens, the accession of Romania and Bulgaria has added 30 million more. What does this mean for the labor markets of Western Europe?
Politicians tend to argue that, although some plumbers migrate to the West and companies relocate to the East, the West will enjoy more jobs in net terms due to the likely expansion of its exports. That reasoning is familiar, but is it correct?
One thing is certain: Enlargement has confronted Western Europe with extremely stiff wage competition. While an employee in the old EU's manufacturing sector on average earns 26.09 euro per hour, in Romania the average is 1.60 euro and in Bulgaria a mere 1.39 euro.