Romania and Bulgaria Are Scheduled to Join to the European Union on 1 January 2007.Using Market Analysis, Discuss Some Possible Implications for the Uk Labor Market

Bulgaria and Romania will become the 26th and the 27th members of the European Union (EU) in 2007. United Kingdom (UK) is one of the few countries in European Union to allow residents from Eastern Europe to be able to work in England after last enlargement in 2004. Zornitsa and Stoyanova-Yerburgh (2006) indicate, that: “An estimated 600,000 migrants have moved to the United Kingdom over the last two years.” Adding, that: “… 250,000 jobs a year are created by the UK economy and the economy continues to grow.” Moreover, Ullmann (2006) argued, that: “Free movement of labor within the UK has given our labor markets a timely boost.” Hence, the upcoming joining of Romania and Bulgaria to European Union would have significant effect on labor market.

Among the numerous economic aspects of future enlargement, wage rates and employment might be of the most concern. Based on the demand and supply analysis it could be possible to investigate major affects of the immigration on labor and salary in the UK. Figure 1 represents the market for labor, where wages, determined by demand and supply, are initially at level We1. An influx of migrants from Bulgaria and Romania could cause labor supply curve to shift from S1 to S2 and, other things remaining equal, wages rates will be decreased to We2. Hence, the increase in supply of labor could influence in the fall in wages and as a result lower the living standards of workers who already reside in the country.

Furthermore, wages and employment rates are also influenced by the elasticity of demand. Considering that the demand for labor is elastic, which is according to Sloman (2004: 54): “When quantity demanded changes by a larger percentage then price”, then labor supply would increase to LE2 and require the additional employees with insignificant decrease in wages to WE2, as shown on the Figure 2.

However, when the demand for labor is inelastic, as defined by Sloman (2004: 54): “When quantity demanded changes by a smaller percentage than price”, then labor supply would insignificantly increase to LE2 in proportion to a great decrease in wages at WE2, as illustrated on the Figure 3.

Moreover, the influx of workers from Romania and Bulgaria could increase migrants spending from the income they earn as well as creation of new jobs in the country following in raise of productivity levels. As a result, Figure 4 illustrates that, the demand curve would shift from D1 to D2 and, other things remaining equal,