Europe of 25 Nations May04
Last week, ten independent nations joined the European Union (EU)
as full members to make the EU the world’s largest internal market of
470 million consumers. About 75 million new EU citizens will enjoy the
single market governed by EU laws. They will be represented by the
European Parliament and protected by the European Court of Justice. Never
before have so many diverse nations joined the EU at the same time.
Most of these European nations were occupied and ruled for almost
50 years by communist governments controlled by Moscow. They were forced
to accept a bureaucracy that was unaccountable and corrupt. Free
enterprise and private ownership of assets were forbidden or discouraged.
The state controlled the lives of its citizens from the cradle to the
grave. Such protracted and comprehensive suppression distorted and
destroyed the culture, competence and traditions of great nations such as
Poland, Hungary and Czechoslovakia. EU membership of these nations has
liberated them from the shackles of their past.
How will these new countries cope in applying the EU rules and
adapt to the EU’s single market?
Agriculture in the New Member States (NMS), based on traditional
small family farms, will need to be transformed so that larger, mechanised
units will employ fewer people and produce more efficiently. Substantial
technical and human resource investment will be required to increase the
intensity and profitability, especially in animal production. The NMS will
add 38 million hectares of unutilised agricultural area to the 130 million
hectares of the current EU, thus increasing the farmed area of the EU by
30%. However, this expansion of area will only lead to an increased output
of about 15% and an increased value of about 6%. With EU accession funding
for restructuring agricultural production and marketing, rural incomes
will rise by about 35% in the NMS. Like
Spain, Portugal and Ireland such an increase in rural incomes will bring
substantial benefits for NMS citizens.
How will an enlarged EU impact on employment for citizens of the
NMS? Already, there has been an increase in jobs in the public sector in
each of the NMS. There has been some relocation of private sector
manufacturing jobs to new locations in Eastern Europe. Relatively cheap
supply of skilled labour and geographic location for marketing favour
Slovakia, Hungary, Poland and Czech Republic as attractive countries for
investment for automotive manufacturing, agro-processing and high-tech
products. Owing to transport and housing problems, labour mobility between
the NMS is low. Workers in any one of these countries are reluctant to
move from one region to another. There is a need for governments of the
NMS to invest in human capital to offer education and training especially
in rural Poland, Hungary and Slovakia where there is structural and long
term unemployment. NMS governments must also reform employment practices
that stack heavily against employers and the establishment of new private
businesses – a legacy from their communist past. Many of the citizens of
the NMS are natural entrepreneurs and they should be encouraged to
establish SMEs that can recruit and train the unemployed, especially in
Whilst some skilled workers in these countries would seek work
elsewhere in the EU, the vast majority will choose to stay in their own
homes with their families preferring to enjoy a high income in a low-cost
domestic economy. Less skilled workers may seek temporary seasonal work
(agriculture, catering services etc) in the EU15. It is unlikely that
there will be a massive inflow of benefit seekers from NMS to the UK in
view of recent legislation that requires evidence of work.
The accession of NMS offers EU15 SMEs and investors many opportunities to establish business and industry to exploit relatively cheap skilled labour, land, utilities and a significant domestic market e.g. 40 million in Poland. UK local authorities with skills in waste management, education, health and other public services can establish financially beneficial partnerships with similar authorities in the NMS. Enlargement of the EU is a win-win situation for British entrepreneurs with initiative, drive and determination to succeed.