'The benefits and disadvantages of labour migration are unevenly distributed'
One million migrant workers are employed in the Netherlands, often in poor conditions. If we want to reduce labour migration, we need to restructure the economy, says economist Olaf van Vliet. Either way, we need to address abuses, says FNV lawyer Imke van Gardingen.
White paper: The Migration City
Cities are growing, and migration plays an important role in that. What does it mean for policy and governance? This is what the new white paper The Migration City of the past, present and future (in Dutch) published by the Leiden-Delft-Erasmus Centre Governance of Migration and Diversity is about. Seven dialogues between researchers and practitioners lead to surprising conclusions about the best choices regarding work, housing and community.
Why is labour migration important to the economy?
Olaf van Vliet, Professor of Economics at Leiden University: ‘In recent years, the labour market has been exceptionally tight. This is evident from the high level of labour market participation and the low unemployment rate. Labour is in high demand and there are many migrant workers working in the Netherlands – around one million. Substantial parts of the Dutch economy, such as horticulture, abattoirs, construction, logistics and distribution, are largely dependent on migrant workers. At ASML, too, and in IT, there are many migrant workers. Migrant workers are therefore hugely important to the economy.’
FNV lawyer Imke van Gardingen: ‘That tightness in the labour market is not a natural phenomenon, though. It's the result of economic choices. The Netherlands has chosen to be Europe’s logistics hub. And if a local authority allows an abattoir in a zoning plan, it also allows migrant workers. The economic interest is given priority in such cases, but the people who will be working there also need to be housed. Fortunately, that realisation is starting to sink in. Do we actually want all these distribution centres and abattoirs?’
Why are migrant workers so attractive to employers?
Van Gardingen: ‘There is a shortage of people willing to do low-paid production work, and under the associated working conditions. Flexible contracts mean people are quickly replaced and therefore remain on low pay scales. Tax breaks also keep wages low. Employers in the Netherlands are allowed to deduct 25% of the minimum wage for housing, which is sometimes little more than a mattress. Apart from being cheap, this is also convenient for employers. There is a huge labour migration industry with recruitment agencies, employment agencies, housing agencies and transport companies. An employer can arrange everything online on demand and deploy a large group of migrant workers a short time later.’
‘Migrant workers have become a kind of disposable workforce’
What are the most serious abuses?
Van Gardingen: ‘Many migrant workers are in a position of dependency where, if they lose their jobs, they also lose their homes. People in this situation are poorly paid, work long hours and are poorly housed. They often arrive when they're in their twenties, in an abattoir for example, become exhausted after a few years and are then dispensed with. They have become a kind of disposable workforce. Labour migration in the Netherlands is part of a global trend of a race to the bottom. Companies are looking for the cheapest labour as they seek to compete with the rest of the world. And because people in Central Asia or India still earn much less, they are easy to recruit for work in Europe. Once they are employed in Eastern Europe, they can also be seconded to work in the Netherlands. We refer to them as third-country nationals.’
Which developments have you observed regarding the immigration of highly skilled migrants?
Van Vliet: ‘With the extraction of natural gas in Groningen coming to an end, knowledge is the only resource left in the Dutch economy. That knowledge ensures, for example, that the Dutch service sector operates efficiently. It is also important in other areas. Examples that come to mind are companies like ASML and Shell. Here, too, highly skilled migrant workers can be important. A particularly notable development in this regard is the government’s commitment to reducing the intake of international students. This will mean fewer highly skilled workers in the labour market as well.’
‘Knowledge is the only resource left in the Dutch economy’
While poor neighbourhoods are burdened by large numbers of disposable workers, expats elsewhere are driving up house prices.
Van Vliet: ‘Whenever the number of people looking for housing grows more quickly than the number of homes, house prices rise. Immigration is a factor in this. This is true of the poorer neighbourhoods as well as other parts of a city. The 30% rule can also contribute – that is the partial tax exemption for expats to make the Netherlands more attractive to highly skilled migrants. For me, as an economist, the need for this scheme, which is up for debate, has not been conclusively demonstrated. In many cases, companies can also offer higher wages to attract knowledge migrants.’
Are migrant workers taking jobs from the Dutch?
Van Gardingen: ‘This was a concern in the past, but it's no longer the point. That’s because for these wages, and working in these conditions, the Dutch can’t in any case do the work that low-paid migrants do now.’
Van Vliet: ‘Research has shown that there is no displacement due to labour migration. Dutch people who in the past did the jobs that have now been almost entirely taken over by migrant workers have not become unemployed. They started doing something else, often in the service sector. There is also little or no displacement among knowledge migrants. The labour market is so tight that there is sufficient work. Due to ageing population, that shortage will continue to increase.’
If we wanted to reduce the number of migrant workers, how could that be done?
Van Vliet: ‘Not through migration policies, because the Netherlands is a member of the EU. That means there is free movement of people within Europe. If you want to limit labour migration, you will inevitably have to change the structure of the economy. The decision was indeed made to have abattoirs here. But the economy can only be shaped to a certain extent: we do not live in a planned economy, so we would have to use indirect measures such as zoning plans and permits for businesses.’
Would stricter standards for working conditions also make labour migration less popular with employers?
Van Gardingen: ‘For the FNV, it is not a matter of more or fewer migrants. But the standard certainly has to increase. Much has been written on the abuses surrounding migrant workers, but in practice nothing is improving. There is nothing wrong with the analysis conducted by the Netherlands Labour Authority, but effectively they do not result in any changes. On the contrary, abuses are actually becoming more serious and the enforcement issues more complex.’
Van Vliet: ‘If it were possible to make the rules stricter or enforce them more effectively, and if as a result migrant workers were better treated, the price of their labour would increase slightly. That would cause demand for that labour to decrease, as a matter of course. That is the economic analysis.’
Would the Netherlands benefit from less labour migration?
Van Vliet: ‘On the one hand, poor working conditions are commonplace for migrant workers and their arrival causes increases the pressure on the housing market. On the other hand, they also contribute towards the economy. Cheap labour makes products like meat and peppers, and painting and cleaning services, inexpensive. It would also be a problem for society as a whole if there were fewer migrant workers. After all, they reduce the pressure on the labour market slightly. Without labour migration, A&E departments and schools may have to close one day a week.’
‘People who come to work in abattoirs also need housing’
Is the kind of economy we want to be also an issue?
Van Vliet: ‘Certainly. The state commission on demographic developments 2050 advocates the encouragement of a highly productive economy. And I think that is a wise course to pursue. But it would also mean that substantial sectors in the Netherlands where many migrant workers work, such as horticulture, would have to shrink. There is currently no sign of any such trend happening.'
Van Gardingen: ‘I agree. At the same time, there should be a focus on work for people with practical training. The problem now is that it is exactly this type of work that is not highly regarded and is unhealthy.’
What is your advice for policymakers?
Van Vliet: ‘How to deal with labour migration is a political matter – there are pros and cons. It's up to politicians to make the decisions. But it is true that the benefits and costs of labour migration are currently unevenly distributed in society. An employer in the Westland region can make greater profits thanks to cheap labour, while consumers benefit from inexpensive products. But many people who see their residential area changing mostly experience disadvantages.’
Van Gardingen: ‘Ensure that the parties profiting from cheap migrant labour are held accountable. Ensure that Dutch legislation on pay and working conditions is strictly enforced. Inform and engage employees in the workplace – make sure there is a platform where their voices can be heard. Involve local residents too, in places where landlords have properties housing large numbers of migrant workers. Councillors responsible for economic affairs are happy whenever a new distribution centre is established, but they should also consult with their social affairs and housing counterparts tasked with finding housing for people. Policymakers must factor all aspects into decisions.’
Author: Joris Tielens
Image: Pexels: Joao Jesus Design
Olaf van Vliet is a Professor of Economics at Leiden University, specialising in social security and labour market policy from an international perspective.
Imke van Gardingen is a lawyer and policy advisor at the FNV trade union. She studied law at Leiden University and subsequently specialised in employment law. She is conducting PhD research into the secondment of third-country nationals: migrant workers from outside the EU.