20 years of EU enlargement: How skilled workers from Eastern Europe changed the German labor market

Exactly 20 years ago, one of the biggest leaps in European integration took place: on May 1, 2004, the EU expanded eastward, with ten more countries from Eastern and Central Europe joining the EU. How does this look from an economic perspective two decades later? And what opportunities are currently opening up on the labor market for Eastern European workers?

At the time, many German citizens initially feared that the German labor market would be “flooded” with Eastern European workers, especially given the high unemployment rate in Germany. For this reason, Germany restricted the free movement of EU workers and introduced corresponding rules that remained in force until 2011, including a requirement to obtain a permit to hire Eastern European workers. Today, the labor market functions without such restrictions, for example for cross-border commuters from Poland and Czechia or for permanent immigrants from Eastern Europe. These Eastern European skilled workers are essential for combating the shortage of skilled workers in certain industries, such as logistics and road transport. At the same time, many are taking advantage of the opportunity to escape the lower wages in their home countries.

Figures from the ifo Institute show that around 820,000 people from the “new” EU states are currently working in Germany. In addition, German companies, for example in the automotive industry, are benefiting from production relocations to Czechia and Slovakia. Such relocations also benefit the countries themselves, whose standard of living has risen. Economic researchers therefore now speak of a win-win situation for both Germany and the countries of Eastern Europe. However, observations also show that Germany has lost some of its appeal in recent years, precisely because of the increased standard of living and higher wages in Eastern Europe. It remains to be seen how this stagnation can be dealt with.

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