Migration and Migration and Irregular Irregular WorkWork

Judit JuhászJudit Juhász

Panta Rhei Social Research Bt.

Budapest

Tel./fax: +(36-1) 200-1942

E-mail: juhasz@hungarnet.hu

DebatesDebates

EEconomic, social and political conomic, social and political significancesignificance

RegulationRegulation Possibilities of measurementPossibilities of measurement

Diversity of definitions Diversity of definitions different different estimatesestimates

Lack of elaborated methodologyLack of elaborated methodology

conceptual conceptual uncertainuncertainityity

Problems of definition, Problems of definition, terminologyterminology

IllegIllegal/irregularal/irregular migr migrantant workerworker

Legal categoryLegal category Economic determinationEconomic determination socio-demogrsocio-demographicaphic interpretationinterpretation

Same activity might be qualified/classified Same activity might be qualified/classified differently differently

informal economy

informal economy - all economic activity which is not officially reported,

registered is neglected when calculating the GDP of the economy.

irregular employment„black labour” :

•Employers fail to register their employees (evading taxes and contributions)

•Employees accept the omission of registration, (and fail to pay their taxes and contributions)

•the employee does not report that they are not entitled to unemployment benefits (as they are working);

•employing foreigners without a permit

“Grey labour” :•registered labour, where the actual employment differs from

prescribed conditions. (eg. registering at minimum wage,, but in practice paying more, and the difference is transferred tax-free from pocket to pocket. )

MethodologyMethodology Secondary analysis of existing informationSecondary analysis of existing information ( (research, research,

literature, statistical data, pressliterature, statistical data, press)) EmpiriEmpirical researchcal research

Expert surveys (Delphi method combined Expert surveys (Delphi method combined with a standard questionnaire) – 303 with a standard questionnaire) – 303 respondentsrespondents

In-depth interviews (experts, migrants, employers)In-depth interviews (experts, migrants, employers)

35 experts:

16 governmental bodies

6 local governments

4 members of parliament

4 trade unions and 3 unions

2 organisations for Hungarians living beyond the borders

42 foreign emloyees

6 Hungarian employers

Mailed and filled in by the experts themselves

ScaleScale

EU: EU: 7-16% of GDP 7-16% of GDPHungary.:Hungary.: 20-30% of GDP 20-30% of GDP

Public opinion:Public opinion:part of everyday normspart of everyday norms Black work: 37% does not strictly

condemn 28% would take part

The The proportionproportion of illegal of illegal work work

in the whole economy: 25-30% in the whole economy: 25-30% ~1,000,000 ps~1,000,000 ps.. Within this 15-20% is from foreigners. Within this 15-20% is from foreigners. (2000: (2000:

30%)30%) The range of the estimates is large: The range of the estimates is large: 30% of experts:30% of experts: less than 20 thousand, less than 20 thousand, 30% 30% :: more than 100 thousand. more than 100 thousand.

Average:Average: panel: panel: 115,000 fő115,000 főentire sample: 80,000 főentire sample: 80,000 fő

CausesCauses

high level of taxation and labour costs high level of taxation and labour costs high social acceptability of irregular workhigh social acceptability of irregular work weak internal mobility weak internal mobility difficulties of getting permits difficulties of getting permits

the basic problem relates not to foreigners the basic problem relates not to foreigners but to irregular employment in generalbut to irregular employment in general

EffectsEffectsPositive• a possibility to fill less attractive and poorly paid

jobs. (70%)

• With With flexibility and low wages contribute to the flexibility and low wages contribute to the economic development.economic development. ( (45%45%))

Negative

• loss of taxes and revenuesloss of taxes and revenues• distortion of competition distortion of competition • it affects the social insurance system negativelyit affects the social insurance system negatively• conserves poor working conditionsconserves poor working conditions

Past trendsPast trends

2

2,5

3

3,5

4

4,5

5

1990 - 1995 1995 - 2000 2000 - 2005 EU csatlakozás(2004) óta

Magyarország

Ausztria

Csehország

declining trend of increase

Future trends (expectations)Future trends (expectations)

The rate of growth is decreasing on

According to the estimations after 5-10 years the growth stops

Period 1 strongly decrea

ses

2 3 4 5 strongly increas

es

N Mean

Distribution of answers (panel) panel all resp.

next 5 years --- 7.8 66.7 23,5 2.0 51 3.2 3.0

next 5-10 years 2.9 34.3 31.4 27.1 4.3 70 3.0 2.8

Composition by citizenship and Composition by citizenship and nationalitynationality

90% from the neighbouring countries, 60% 90% from the neighbouring countries, 60% HungarianHungarian

Citizenship Of which Hungarian

Transylvanian Hungarians 38

RO 55 69Transylvanian Romanians 12

Romanian Gypsies 5

Transcarpathian Hungarians 12UA 18 64

Ukrainians 6

Hungarians from SK 6SK 8 72

Slovaks 2

Hungarians from Ex-Yugoslavia 4YU 6 73

Non-Hungarians from Ex-Yugoslavia 2

Chinese 8 8

Other 5 5

Together 100 100 59

Illegal work and Illegal work and qualificationqualification

Qualification requirement of irregular labour (% of unqualified work)

Hungary Austria (from all countries)

Austria (from EU-8)

Construction 62.5 87.0 48.0

Agriculture 91.7 95.7 87.0

Catering, entertainment 45.1 69.2 37.5

Industry 31.0 63.6 41.7

Households (care) 59.4 54.2 42.3

Households (cleaning, repair) 88.6 100.0 100.0

SectorsSectors

Construction Construction – need for qualified and – need for qualified and unqualified workersunqualified workers

Agriculture Agriculture – seasonal works, multitudinous – seasonal works, multitudinous need for labour forceneed for labour force

Catering and entertainmentCatering and entertainment Trade, vendingTrade, vending TextilesTextiles Households Households Highly qualified emloyees Highly qualified emloyees

Employment by sectorsEmployment by sectors

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Employed

according to

Population census

2001

Foreigners

employed according

to Population

census 2001

Employed in 2005 of which foreigners

with work permit

Other, unknown

Electricity, gas

Public administration

Mining

Financial intermediation

Education

Transport

Real estate, renting and business

Health

Agriculture

Other community, social and personal services

Trade

Manufacturing

Construction

Source: HCSO, National Employment Office

Foreign or Domestic Irregular Foreign or Domestic Irregular Labour?Labour?

Is there any difference?Is there any difference?not different (1) slightly different (2) essentially different (3) Mean N

Distribution of answers (%)

Type of work 48.7 29.5 21.8 1.7 78

Conditions of work 36.4 42.9 20.8 1.8 77

Quality of work 52.6 32.1 15.4 1.6 78

Type of work (2000*) 47.2 30.9 21.9 1.7 178

Advantages of foreign irregular labour (%)Advantages of foreign irregular labour (%)most important one of the two most

importantConsidered as an

advantage in 1999

advantage(s)

There’s no Hungarian labour 34.4 42.6 8.0

Lower salaries 52.5 70.5 41.1

They’re more undemanding towards working-conditions

9.8 49.2 37.9

The supply is more flexible 2.5 32.8 9.5

N=61

Labour-market competitionLabour-market competition

mean*

Foreigner are formally employed in jobs requiring lower qualification but in reality their qualifications are used

3.7

Unemployed Hungarians in general do not want to work when sent to a workplace, they just ask for the certification needed for getting unemployment benefit

3.3

Irregular employment of foreigners pushes down wages 3.3

The works done by foreign irregular workers Hungarians would not do 3.2

Employers prefer native irregular workers to foreigners 3.0

Cheap foreign irregular labour makes harder the employment of native unemployed 2.8

Foreigners take away jobs from Hungarians 2.1

* 1-Fully disagree, 5-Fully agree

Why?Why?Reasons for the irregular emlpoyment of foreigners in generalReasons for the irregular emlpoyment of foreigners in general

Munkáltatók Munkavállalók

  The role of factors (distribution of answers, %) Considers as

most important (%)

1-no role at all

2 3 4

5-very important role

Mean

 Taxes and charges on labour are higher

than in other countries in the region2.5 7.6 21.5 30.4 38.0 3.9 15

 black work in general is widespread and

widely accepted2.5 6.3 30.0 33.8 27.5 3.8 20

  Internal labour mobility is rather weak 2.5 7.6 29.1 27.8 32.9 3.8 19

  Issuing permits is slow and difficult 3.8 12.5 26.3 27.5 30.0 3.7 8

 The regulation of seasonal and occa-

sional work of foreigners is ineffective

7.5 12.5 26.3 30.0 23.8 3.5 5

 Regulation and sanctioning is not strict

enough15.2 13.9 19.0 26.6 25.3 3.3 14

  Control is weak 12.5 12.5 31.3 23.8 20.0 3.3 3

 Entering Hungary is too easy (as a

tourist)16.5 11.4 20.3 29.1 22.8 3.3 7

  Recovery of fines is not appropriate 12.5 17.5 26.3 31.3 12.5 3.1 8

  Getting the permits often requires bribing 29.9 26.0 32.5 6.5 5.2 2.3 1

Why?Why?

Tax evasion

Getting around the Labour Code

Low er w ages

Diff iculties of legal employment

Foreigners are more undemanding tow ards their w ork-conditions

Hungarians are unw illing to take up

given w orkMore f lexible possibilities

(employment, f iring)

Foreigners are more mobile

Lack of domestic labour w ith appr.

qualif ication

Bad conditions in the country of origin

This is the way, one can earn more

Administration is complicated, long

and inflexible

Existing networks, connections

This is the only way to get work

Geographical proximity

Lack of information on legal

employment possibilities

Rules are not known enough

Language knowledge

The main reason for The main reason for employing foreigners employing foreigners irregularly (panel)irregularly (panel)

Reasons for workersReasons for workers

Reasons of migrationReasons of migration

Why HungaryWhy Hungary?? Distance, knowledge of the language, simplicityDistance, knowledge of the language, simplicity Relatives and aquaintances in HungaryRelatives and aquaintances in Hungary Hungarian nationality, emotional reasonsHungarian nationality, emotional reasons Almost a mother country (related to other Almost a mother country (related to other

countries)countries)

Personal motivesPersonal motives Providing existencial needsProviding existencial needs Looking for adventure, getting rid of the tiesLooking for adventure, getting rid of the ties Long-run plans, existance, substantiating the careerLong-run plans, existance, substantiating the career

ConditionsConditions

Conditions for work – lack of safety; high Conditions for work – lack of safety; high intensity of work; working overtimeintensity of work; working overtime

wages – usually but not always worse wages – usually but not always worse than for the Hungariansthan for the Hungarians

Conditions for housing – cheapConditions for housing – cheap

The employees are losers in this dealThe employees are losers in this deal

Accommodation of Romanian irregular workers at the edge of Budapest

The accommodation inside

„They are rather grateful for it ”

Ways out

reduction of costs and difficulties of legal employment increase the flexibility of regulation

This includes the adoption of differentiated exceptions aiming at the “whitening” of the informal economy and black labour

decentralizing the decision making mechanism based on the principle of subsidiarity and increasing the capacity and effectiveness of the administration

efficient enforcement of the existing legislation on the basis of clearly stated political aims and commitment, supported by appropriate organisational, human and financial resources

vocational training well conceptualized, close European cooperation