EU just approved the Blue Card: Are there advantages for developing countries?

On May 25th, 2009, the European Council adopted the EU Blue Card directive which was initially agreed upon by the European Union’s interior Ministers under the European Pact on Immigration and Asylum in September 2008.

According to the directive, the Blue Card will attract high skilled workers from a third-country into the EU- member states’ labor market and will have a period of validity between one and four years depending on the contract.  The directive rules state that EU Blue Card holders will be treated equally with nationals of the member state issuing the Blue Card in certain areas such as working conditions, education, and a number of provisions in national law regarding social security and pensions. The card will also allow the visa holder to bring in family members with him or her in the EU country where the job is located.

Three issues come to mind:

1. There will not be free labor mobility within the EU for Blue Card holders. The card does not provide authorization to work in all the countries of the EU.  Only after an initial eighteen months’ freeze, the blue card holder will be able to move to another EU state if they find a job there. 
2. High skilled workers from developing countries will find very difficult to compete in the EU labor markets if they need to be offered wages at least 1.5 times more than the average gross annual salary in the country they will work in. Last year I raised the issue on how the “average salary” would be estimated.  In the case of U.S. H1B Visa program, migrants are required to earn only the prevailing wage of the occupation in which they will work. Since 2004, Congress has required the U.S. Department of Labor to provide four skill-based prevailing wage levels for employers to use. 
   Employers using this system classify most workers at the lowest skill level. Given the current crisis, firms will not be able to demand skilled workers from third-countries if they have to pay higher salaries. The Blue Card could result in the same problems as the H1B Visa program (the quota for H1B Visas has not been filled yet for this year due to low demand from American firms). 
3. New member states initially showed opposition to the Blue Card given that their workers still face labor restrictions in five countries (Austria, Belgium, Denmark, France and Germany). However, twenty-four countries approved the new directive since each national authority will decide how many EU work visas to issue under the plan.