CZECH REPUBLIC: REPLY TO REQUEST FOR INFORMATION

UNCLAS SECTION 01 OF 03 PRAGUE 000489 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PINR ECON ELAB EUN PGOV PREL SMIG EZ SUBJECT: CZECH REPUBLIC: REPLY TO REQUEST FOR INFORMATION ON MIGRATION IN EUROPE PROMPTED BY THE FINANCIAL CRISIS (C-RE9-00762) REF: STATE 43864 This is a re-transmission of Prague 0484. ¶1. (SBU) SUMMARY: The effects of the global financial crisis are evident in the migration patterns of both skilled and unskilled workers to the Czech Republic (CR). In the two years prior to the economic slowdown, third-country workers poured into the CR to satisfy a growing labor shortage, especially in the manufacturing sector. Anticipating that the economic slowdown in the CR would hit third-country workers the hardest, the Czech government (GOCR) developed programs for the internal transfer and voluntary return of foreign workers, ostensibly designed to assist the most vulnerable and to stave off economically-driven xenophobia. The inflow of foreign workers to the CR has dropped dramatically since the fourth quarter of 2008, when a severe external demand shock led to double digit drops in year on year Czech exports and manufacturing. -------------- Welcome and Farewell -------------- ¶2. (SBU) Prior to the onset of the global financial crisis, the CR experienced a flood of third-country (non-EU) workers, primarily to satisfy the low-skilled labor needs of the growing domestic manufacturing sector. According to the Czech Labor Ministry Statistics Department, 2007 saw the arrival of over 27,000 third-country workers, a forty percent increase from the 2006 level. Third-country economic migration numbers increased another fifty percent in 2008. Among the largest non-European ethnic groups arriving were Vietnamese (from the arrival of nearly 700 new laborers in 2006 to over 16,000 in 2008),as well as Mongolians and Uzbeks. However, between January and May of 2009, the number of third-country, legal workers declined by over sixteen percent. ¶3. (SBU) Interior Ministry Department for Asylum and Migration Policy Analysis Head Pavla Novotna and her section performed an internal analysis which estimated that 12,000 foreign workers would lose their jobs in 2009, and an estimated 68,000 work permits would expire in early 2009. The Interior Ministry (MOI) recognized that this meant that workers, primarily from Mongolia and Vietnam, would become unemployed and be unable to afford return tickets to their home countries. These individuals, Novotna explained, would not be eligible for social services under the Czech system, and could be forced into poverty, crime, or the gray market (unofficial or unauthorized distribution of otherwise legal goods and services). MOI correctly predicted that EU citizens who lost jobs would return home without GOCR assistance. ¶4. (SBU) In February 2009 the MOI launched a voluntary return pilot program, which provided 500 Euro and a return flight to 2000 legal, third-country workers who lost their jobs due to the economic slowdown. According to Novotna's colleague David Vondracek, the Department for Asylum and Migration Policy Unit for Policy and Analyses sold this program to pragmatic then-Deputy and now-current Finance Minister Pavel Janota with the promise that it would ultimately save money in legal and humanitarian costs. As of mid-June, roughly 1000 Mongolians, 300 Uzbeks, and 200 Vietnamese participated in this program. Thanks to a targeted information campaign, the 2000-participant cap was reached in July 2009. The MOI is now launching a second phase of voluntary return for 2000-3000 more applicants with a ticket and a 300 Euro payout. In addition, the MOI will begin offering return transportation to illegal workers who will not be eligible for a payout. Illegal workers who take advantage of this offer will be granted a shorter re-entry ban than deportees from the Schengen Zone and a "clean slate" with respect to undocumented work. -------------- Those Who Stayed -------------- ¶5. (SBU) The MOI, in cooperation with the Czech Labor Ministry, also instituted an internal transfer program in early 2009. Third country workers who lost their jobs are referred to employment offices, which places workers in other factories around the CR. Labor Ministry Official Vera Kolmerova explained that the Foreign Ministry also suspended issuance of new work permits to Vietnamese citizens, which PRAGUE 00000489 002 OF 003 provides incentive for factories in need of foreign labor to seek internal tranferees. Czech visa issuance in Hanoi had also been suspended from November 2008 to March 2009. (COMMENT: Although Foreign Ministry officials publically offer economic explanations for the suspension of consular activities at the Czech Embassy in Hanoi, it was likely connected to accusations of corruption (see paragraph 6). In fact, a Foreign Ministry Official told us that the full overhaul of Czech consular operations around the world was attributable to incidents in Hanoi. END COMMENT) ¶6. (SBU) The estimated 60,000-strong Vietnamese community constitutes the Czech Republic's second largest minority ethnic group (after Roma). Of these 60,000, roughly one third arrived in the last two years with the goal of finding work and sending remittances home. Many Vietnamese workers obtained their jobs and legal status in the CR through "job agencies." These agencies are largely unregulated and, for the going rate of USD 10,000, promise a job paying USD 1000 per month. According to Thu Hien, a member of the local Vietnames advocacy group Klub Hanoi. In reality, however, most Vietnames workers receive on average only USD 500 a month (roughly 30 percent below the national average income). Furthermore, job agencies often garnish a significant portion of workers' wages for "other expenses," such as housing or food. According Irena Konecna, Director of La Strada, a European NGO focused on combatting human trafficking and labor exploitation, when Vietnamese workers have lost their factory jobs due to the economic downturn, they often owed large sums of money This debt, coupled with the shame of returning home unsuccessful, has led many Vietnamese workers into poverty and the gray market. Konecna said that fear of deportation or prosecution also deters them from seeking social services. Both Vietnamese community leaders and Czech government ministries struggle to estimate the number of such workers. (Note: Unlike most foreign laborers, who came to the CR with "work visas" tied to a specfic job, Vietnamese job agencies generally arrange "entrepeneurial visas" for their clients. "Entrepreneurial visas" are much more flexible and not linked to any specific place of employment. Thus unlike most other foreign workers, most Vietnamese do not lose their legal status within the CR when they lose their jobs. End Note.) -------------- Attracting Talent -------------- ¶7. (SBU) In January 2009, the GOCR launched a green card program to attract third-country, skilled workers and expedite their arrival. Vondracek estimates that to present, 300 vacancies have been posted in CR's green card database of jobs that companies were unable to fill with Czechs or EU citizens. While skilled, third-country workers, particularly in management-level positions generally kept their jobs in the CR despite the economic slowdown, new, skilled positions appeared in lower numbers than were anticipated when the program was conceived. Vondracek attributes sparse offerings and low participation to the state of the economy. Still, MOI is optimistic. Novotna says that her office is working on post-crisis management plans to include new admission projects and public relations compaigns to attract both skilled and unskilled foreign workers after the economy recovers. -------------- Not Out of the Woods Yet -------------- ¶8. (SBU) COMMENT: Foreign workers, who came here in the tens of thousands in 2007 and 2008, have been the first to lose their jobs as the Czech economy began to slow (the Czech economy is expected to contract by 4.3 percent for all of 2009, following a sharp first quarter drop in manufacturing and exports). As the Czech Republic's main export markets have fallen into recession, demand for Czech products has plummeted. While the worst of the economic slowdown may now be over, Czech unemployment, while still relatively modest, is expected to continue to grow. Czech National Bank Chief Economist Tomas Holub stressed to us that unemployment tends to lag behind GDP by several quarters. Furthermore, the slow growth expected in 2010 (less than one percent) is unlikely to create many new jobs. Thus, he expects unemployment to peak at nearly 10 percent in 2011. As unemployment continues to rise, the situation for foreign workers will become more difficult, potentially leading to more hardship, more crime, and more xenophobia. PRAGUE 00000489 003 OF 003 Thompson-Jones