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Richer Poles bad news for Denmark facing labour shortages

Richer Poles bad news for Denmark facing labour shortages

by Bloomberg 2 min. 30.01.2018 From our online archive
Polish workers build Copenhagen's new Cityringen metro line, while Danish farmers struggle to produce enough of country's famous bacon without help of Romanians
Copenhagen's busy metro network  (AFP)

With living standards now rising in eastern Europe, many of its natives are thinking about going home. That spells trouble for Denmark, which is already desperately short of labour.

Despite a progressive tightening of immigration rules by the centre-right government of prime minister Lars Lokke Rasmussen, foreign workers have continued to trickle in and now account for nearly a tenth of the Scandinavian country's labour force, with eastern Europeans making up a sizable chunk of that, according to estimates by Nordea Bank, the region's largest lender. 

That hasn't stopped unemployment from dropping to its lowest level since the global financial crisis as the economy enjoys what Nordea calls "a solid upswing."

The arrival of about 80,000 foreign workers since 2013 helps explain why Danish inflation remains subdued despite half a decade of negative rates. According to Helge Pedersen, Nordea's chief economist in Denmark, annual wage growth could have been as much as 4.5% without them, compared with the actual rates of around 2% seen over the past five years. 

Poles, Romanians, Bulgarians or Czechs have been able to look for jobs around the continent since joining the European Union, which guarantees the free  movement of its workers. But years of EU membership – and the subsidies that come with it -- are now bringing the intended rewards to much of eastern Europe. Nordea notes that unemployment in Hungary or the Czech Republic is now at "post-communist lows," while salaries in Poland have doubled since the start of the millennium, says Eurostat, the EU's statistics agency.

Latest available data suggests many of them have taken note of improving conditions at home. According to Statistics Denmark, net migration from Poland and Romania has started to slow from its 2014/15 peak.

The potential tipping point comes amid repeated complaints about labour shortages in Denmark. In November, the Confederation of Danish Industry said that nearly four out of 10 of its member companies were struggling to find qualified employees. But the truth is that all kind of workers are needed across many sectors of Danish business.

Karen Haekkerup of the Danish Agriculture and Food Council says her associates complain about being "completely out of labour".

"If the eastern Europeans go home we'll need someone else to come in and take those jobs. Otherwise we'll lose orders and fail to boost exports,'' she said. 

It’s time the politicians took note, she said.