We survey the economic and labour market developments of Austria in the years since
enlargement to identify noticeable shifts in economic development, which can be causally
linked to the enlargements of the EU in 2004 and 2007. Since the public policy debate
before enlargement expressed concerns about the potential effects of enlargement on
migration, the labour market position of the less skilled and foreigners as well as
potentially asymmetric impacts on regions, we pay particular attention to these four
aspects of economic development. We find rather ambiguous evidence.
Economic development in Austria since the first round of the Eastern enlargement in
2004 has been marked by a noticeable improvement in the business cycle, which was
primarily driven by higher exports to countries outside the EU 27. With the impeding
financial crisis, however, Austria is likely to enter a recession in 2009 and growth
expectations for 2010 are also subdued. We also find that despite strong employment
growth, unemployment rates increased in the first two years after enlargement and still
have not declined to levels attained at the end of the last economic upswing in the year
2000. At the same time the number of employees increased substantially since 2004.
Half of this increase can be accounted for by increased migration.
Increased migration in the period 2004 - 2006, however, was not primarily due to an
increase in migration from the new member states, but rather due to increased migration
from the old EU member states, in particular Germany. By contrast, migration from the
new member states increased only modestly. Although there is some anecdotal evidence
of circumvention of the existing restrictions towards immigration, actual labour
movements from the NMS to Austria were small relative to ex ante forecasts of postenlargement
migration potentials. This, however, was also to be expected given
derogation periods on the freedom of movement of labour.
Furthermore, there is no clear cut evidence that either regional economic development or
labour market outcomes of foreigners or low skill groups have been severely affected by
migration following enlargement, but some evidence that since the year 2000 foreign
workers have experienced increasing difficulties on the Austrian labour market.
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