Welfare through migrant work:what if the Romanian ‘safety valve’ closes?
Bruno Meeus[*]
Sint-Lucas School of Architecture, Brussels and University of Leuven,Belgium
(received 19 August 2012; final version received 26 October 2012)
The Romanian work migration system came as an answer to the increased individual welfare risks caused by a particular form of Romanian neoliberalism. The system acts as a transnational labour market built up from the grassroots. Through its maturing, this migration system has acted as a ‘safety valve’ in Romania: neoliberal principles could be built into the Romanian welfare system. As such, migrant work abroad became a structural aspect of the Romanian welfare system. The austerity measures that are currently imposed on Mediterranean economies hosting Romanian migrants,and on Romania itself, therefore create a double pressure on welfare in the latter, since they undermine the ‘safety valve’ capacity of the migration system.
Keywords: Romanian migration; austerity; Mediterranean economies; political economy
Introduction
Recently, Smith and others (2012) stated that the current financial and economic instability in different places across Europe is not only symptomatic of the depth of the crisis of capitalism but also evidence of the interconnectedness of states, regions and cities across Europe. In this paper, I wish to endorse their statement. I will argue that the current economic crisis in Mediterranean Europe – Spain, Portugal, Italy, Greece – also hits those places in Romania that have increasingly become dependent upon a system of reproduction that grew bottom-up through the migratory practices of Romanian migrant workers, these migratory practiceshaving originated as a reaction to a previous round of austerity measures.
A critical political-economic perspective on work migration frames my argument. This perspective developed during the 1970s and 1980s when some scholars started to look at human mobility through the lens of historical materialism, arguing that the mobility of workers plays a central role in capitalism on two occasions (see, inter alia, Harvey 1982; Portes 1978; Sassen 1989). First, since capitalist production depends on individual workers who need an income, peoplehave to be disconnected or ‘freed’ fromthe collective structures of reproduction in which they are embedded. The resulting ‘mobilized’ individual workers depend for their welfare on the accessibility of different markets: labour markets for a wage, housing markets for a home and so on. Secondly, people’s mobility then becomes dominated by the spatial and temporal logics of the successes and failures of markets: the spatio-temporal logics of capital accumulation, the logics of cyclical growth and crisis in certain sectors of the economy and the rhythms of the working day(De Gaudemar 1976).This dependence on markets, however, increases individual risks, for instance the risk of having to pay for a housewithout finding a job. But, as Polanyi (1944) pointed out, society reacts against the devastating consequences of individualization in which the spatial and temporal logics of markets dominate welfare provisioning. The process of dis-embedding is followed by diverse societal grassroots reactions, some of whichtryto re-embed the economy in society through social struggle, while at the same time aiming at the re-collectivization of individual risks.
The goalof this article is to link these societal dialectics withHirschman’s classic migration model. In this model, Hirschmandiscerned three reactions to change in a certain place (Hirschman 1970): staying and making the best out of it (loyalty), mobilization against change (voice) and leaving the place (exit). But while these three options were considered by Hirschman as mutually exclusive, I endorse Hoffmann’s argument (2008) that Hirschman’s migration paradigm needs to be recontextualized in order to avoid ‘methodological nationalism’. Indeed, the overlapping and simultaneity of ‘exit’, ‘voice’ and ‘loyalty’ are precisely the most important features of ‘transnational’ migration (Vertovec 2009). Within a critical political economic framework, there are at least three ways in which this overlapping can occur.
First of all, transnational political mobilization can be seen as ‘voice resulting from exit’. Guarnizo and Smith (1998) and Samers (2002), among others, have argued, transnational migrant networks (can) enable new forms of democratic participation and transnational political mobilization.
Secondly, ‘exit’ can itself be seen as a form of mobilization (‘voice’). In reality migration is no individual undertaking. Instead, the migrant networks literature suggests that existing social networks are mobilized in order to succeed in receiving information about employers, wages and housing abroad. As such, migration is a form of collective agency that builds on existing structures that enable mobility and out of which new patterns, pathways, migration industries, and other migration-enabling structures develop (Goss and Lindquist 1995;Meeus 2011; Morawska 2001).
Thirdly, ‘loyalty’ and ‘exit’ are intertwined as well. Contrary to Hirschman, who maintainedthat exit equals the cutting of bonds between places of origin and destination, the transnational turn in migration research has pointed exactly to the fact that migrants retainthese ties. Indeed, they develop hybrid identitiesthat reflect diverse degrees of loyalty (Swyngedouw and Swyngedouw2009). This persistent dual loyalty forms the basis of my argument, since the exploitation of Romanian migrants’ loyalty by West European economies as well as by the Romanian state, is the underlying cause of the current double welfare crisis in Romania.
Indeed, theargument advanced by Burawoy (1976), Piore (1979), Castles and Kosack (1985), Freeman (1986) and Samers (1999),among others,about the systemic function of labour migration can be re-iterated here. These migration scholars arguedthat the re-embedding of citizen workers in receiving nation-states in postwar Western capitalism created ‘closed’ welfare systems for their citizens (Freeman 1986). However, since capitalist production in the West still needed workersprepared to fill in the vacant jobs in mining and construction work, such workers were imported,therebycreating a de facto dual labour market (see also Kloosterman,van der Leun and Rath1999). The reproduction of these workers was outsourced to the sending nation-states. For Burawoy (1976), this typical ‘migration system’ was not characterized by a form of permanent migration, i.e. cutting the bonds. Instead, temporary or circulatory migration was organized in order to produce the spatial segregation of two types of welfare: maintenance welfare, or the day-to-day reproduction of migrant workers, in the receiving states; and renewal welfare, or labour’slong-term reproduction, in the sending states. For the receiving states this ‘guest-worker system’ had the advantage of not having to bear the responsibility for the ‘renewal’ of workers, since families and children were supposed to stay behind. As such, production in the receiving state capitalized on the persistent loyalty of ‘guest-workers’ who were encouragedor forced to leave again at the moment when insurgency developed (Samers 1999). Seen from the perspective of the sending state, a similar outsourcing of social reproduction occurs. If workers make use of transnational networks of social support, the sending state also does not have to bear full responsibility for the reproduction of its citizens (Piore 1979). Sending states also capitalize on migrants’ loyalty: migrants work abroad in order to secure social reproduction ‘at home’. Moreover, their migrant work acts as a ‘safety valve’ for the sending state: migrants’ welfare is ensured, they do not mobilize against the welfare policies of the sending state, and the sending state does not have to invest in collectivizing the social risks of all its citizens.
Based on this framework, I focus on three main points in this article.
First, I argue that the Romanian work migration system evolved as a response to the increased individual welfare risks caused by a particular form of Romanian neoliberalism. The system acted as a transnational labour market and was built up from the grassroots. Secondly, through its maturing, this migration system acted as a ‘safety valve’ in Romania. Geographical proximity of informal work opportunities for over two million Romanians meant that neoliberal principles could be built into the Romanian welfare system, making migrant work a key structural aspect. Therefore, and my third point, the austerity measures that are currently imposed both in the Mediterranean economies and Romania, cause a double pressure on welfare in Romania, since they undermine the ‘safety valve’ capacity of the Romanian migration system.
Dis-embedding in Romania: reform and the decline of ‘voice’
Particularly important for understanding Romania’s starting position on the road to post-socialist neoliberal reform was the specific heritage of the years of austerity preceding the 1989 revolution. Ceausescu’s repayment of Romania’s debts could only succeed through major cuts in domestic consumption and in public welfare at large. As a consequence, at the start of the reform period, popular support for state socialism was at its lowest level. At the same time, Western European industries and banks, backed by important lobby groups such as the European Roundtable of Industrialists (Balanya et al. 2003), were eager to ‘redevelop’ Eastern Europe in search of cheaper and non-unionized labour and an expanding market for consumption products, insurances, credit-takers and the like. The redevelopment involved two instances, as Ivanova (2007, 360) argues: first, the fundamental destruction of the socialist state through a retreat from its redistributive and investor function; and second, the creation of a strong neoliberal state that could effectively discharge its duties as legislator and guardian of the free market, creating and safeguarding favourable conditions for business operations. However, as Ivanova (2007) points out, the destruction of the state in Bulgaria and Romania has been so profound that what emerged was not fully capable of defending the interests of the foreign capitalist class.
There is no space in this article to give a complete historical overview of all the domains of social reproduction that were privatized. Instead, I focus on three issues: the shift of some key aspects of welfare from state responsibility to individual bodies; how this process accelerated when the influence of the IMF and the EU increased in 1997; and how Hirschman’s ‘voice’, under the form of unions’ protest, gradually declined. The remainder of this sectiondraws considerably on Ban’s (2011) recent work – the first systematic study of Romanian neoliberalism.
The power of the unions and the deterioration of welfare at the beginning of the 1990s
Reform in Romania started in the 1990–91 period when the first post-socialistcabinet under President and former ‘apparatchik’ Iliescu made a first attempt at implementing neoliberal principles by declaring price and wage liberalization, privatization and the withdrawal of industrial subsidies as their most important objectives (Ban 2011, 364). As part of these measures, it was decided that state-owned companies should be split up in two kinds: ‘regii autonome’ which stayed in the hands of the state in order to keep control over strategic sectors of the economy and to secure employment, and ‘commercial corporations’ that were to be privatized.
However, the implementation of neoliberal principles proved to be much more difficult than in other Central and Eastern European countries. This was due to two key factors. First, the country lacked neoliberal technocrats placed in strategic positions. Second, working-class mobilization against price and wage liberalization was strong. Not only were the energies of the 1989 mass mobilizations still alive, but the austerity measures of the 1980s did not leave much manoeuvring space for further cuts in welfare such that industrial production continued to be dominated by large and very large state-owned enterprises where unions remained powerful. Labour mobilization ultimately led to the end of the first post-socialist government when the Jiu-valley miners went on strike and forced the government out of power at the end of 1991.
After this short period, a new cabinet under President Iliescu came into power and compiled an alternative to the neoliberal model between 1992 and 1997. It was based on an industrial policy that mainly tried to secure employment, renew the existing industrial stock and placate labour union resistance to privatization (Ban 2011, 380).However, the continuous expenditure on full employment channelled state funds away from much-needed investments in welfare provisioning. This had an important influence on the legitimacy of the reform policy among Romanians. Having not seen any serious investment in welfare since the beginning of the 1980s, they were now faced with a dilapidated welfare state which was a far cry from their expectationof enjoyinga considerable improvement in their living standards after the revolution.
Indeed, both political periods had a significant impact on welfare since important parts of the already deteriorated socialist redistribution function were either privatized or left in deteriorating condition due to limited budget resources. Three key areas reflect this well. The first is related to the countryside and the privatization of agricultural land thatproved to be a lengthy and conflictual process. The land of collective farms, which represented 74% of Romania’s arable land, was restituted to those who owned it before collectivization (1948–62), while the state retained control of the land in the state farms. However, few land recipients could assemble the other production factors necessary for commercial farming. Consequently, a large share of the land was handed over to newly formed producers’ cooperatives called ‘associations’ or was leased to emerging ‘super-tenants’ (Verdery 2003).1
The second focus concerns urban areas and the privatization of housing there. Most of the 1960s’ and 1970s’ dwellings built in urban areas were blocks of flats, usually 30 flats per block (Dan and Dan 2003). Although flats were equipped with installations and facilities, they were of a low quality, which often led to major problems concerning central heating, gas and running water. From the 1980s onwards, the housing crisis became increasingly acute. During the last decade of socialism, building activities slowed down causing increasing overcrowding. The 1990 elected government decided to sell the state housing stockto the tenants for symbolic prices. By transferring a difficult-to-manage, low-quality housing stock into private hands, the state essentially escaped from a significant responsibility.
The third point spans rural and urban areas and relates to healthcare provision and its deteriorationover the years. Free access to medical services for everybody, equity in distribution of medical provision and easy access to physicians at all rural and urban places improved the health status of the population during the first decades of socialism. All of this changed during the austerity years of the 1980s. ‘Unproductive’ sectors such as healthcare were underfinanced and life expectancy decreased at the beginning of the nineties. There were no major changes in the Romanian health system during the period of 1990–96 as a consequence of a lack of budgets, although the population’s expectations were high.
The super-shock, the rise of the technocrats and the decline of the unions
The 1997 elections resulted in a change of power and a new period of privatization dawned. The ‘ex-communists’ lost the elections and the ‘Democratic Convention’ now in power gave neoliberalism a real chance. The economic reform authorized by the Convention was the most radical ‘shock therapy’ package tried anywhere in the East European region (Pop-Eleches 2009). Government spending on public services was halved, a massive withdrawal from the ownership of industrial assets was initiated and support for agriculture was suddenly stopped. The 1997 stand-by agreement with the IMF put the focus squarely on accelerating privatization, with one of the IMF criteria being the closure of loss-making enterprises. ‘Voice’, under the form of union protest, however, stopped the closure of several large enterprises while deficit figures kept rising. As Ban (2011) states, Romania experienced the worst of all worlds since the fragile Convention government lost IMF and World Bank financial support while pushing on with austere and pro-cyclical fiscal and monetary policies.
In the meantime, two important political power shifts occurred: first,a consolidation of a Romanian network of befriended technocrats and politicians; and second, decreasing public support for the influence of the unions’ actions. As Ban (2011) again demonstrates, at the end of the 1990s, the vague structures of a particular form of Romanian ‘Third Way’ neoliberalism started to take shape. On the one hand, aided by German social-democrats, the former communists started to incorporate the latest Third Way ideas in the 2000 election manifesto of their ‘Social Democratic Party’ (PDS). On the other hand, due to increased international mobility of students of economics and the rise of externally funded Romanian ‘think tanks’, a small army of neoliberal technocrats began to develop.
A gradual shift in the public discourse about the transformation occurred as well. The ‘company manager’ became increasingly the central figure of the transforming economy. He was seen as the actor of change who was hindered in his freedom of enterprise by the power of unions and by the different workforce protection measures that were built into the privatization procedures by the former government. Notwithstanding their remaining power in some large enterprises, trade unions increasingly became the scapegoat. Over the course of the first post-socialist decade, unions and workers were largely depicted as symbolic reminders of a dark past, as trouble-makers that literally blocked the possibility of creating a new Romania (see also Kideckel 2008). This association was further strengthened by the fact that unions were mainly active in the former state-owned enterprises but were almost non-existent in new companies.