[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 16.5.2007

SEC(2007) 603

COMMISSION STAFF WORKING DOCUMENT

Accompanying document to the Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL providing for sanctions against employers of illegally staying third-country nationals Impact assessment {COM(2007) 249 final}{SEC(2007) 596}{SEC(2007) 604}

TABLE OF CONTENTS

1. Procedural issues and consultation of interested parties 3

2. Problem definition 4

3. Objectives 11

4. Policy options 13

5. Analysis of impacts 18

6. Comparing the options 33

7. Monitoring and evaluation 38

Annex 1 – Methods for assessing numbers of illegally staying third-country nationals 41

Annex 2 – Total number of illegal immigrants by Member State and number in work 43

Annex 3 – Total number of illegal immigrants in work by Member State and sector 69

Annex 4 – Overview of legislation in the Member States 73

Annex 5 – Employer sanctions by Member State (supporting material for options 2 and 4) 76

Annex 6 – Preventive measures by Member State (supportive material for options 3 and 4) 100

Annex 7 – Enforcement in the Member States (supporting material for option 6) 126

Annex 8 – Typology of Member States to assess the economic consequences of the employment of illegally staying third-country nationals 162

Annex 9 – Administrative costs calculation 167

Annex 10 – Enforcement costs calculation 169

Lead DG: Justice, Freedom and Security

PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES

One of the factors encouraging illegal immigration into the EU is the possibility of finding work. This impact assessment report examines policy options for reducing that pull factor by targeting the employment of third-country nationals who are illegally resident in the EU. The Commission suggested such measures in its July 2006 Communication on Policy priorities in the fight against illegal immigration[?]. The European Council endorsed this suggestion in December 2006, inviting the Commission to present proposals. This initiative responds to that request.

In Commission Legislative and Work Programme 2007 states that “an important tenet of the EU strategy in the field of migration will be a proposal on minimum sanctions for employers of illegally staying third-country nationals, in order to reduce both illegal immigration and the exploitation of such workers” and therefore envisaged the preparation of the proposal for a Directive on minimum sanctions for employers of illegally resident third-country nationals[?]. A road map was prepared for this strategic initiative[?].

This report is based on consultations with Member States and other stakeholders. The data were collected from the consultations set out below as well as from case studies and literature reviews. The data-gathering and a large part of the consultations were undertaken through an external study [?] (hereinafter “the external study”) ordered by the Commission in December 2006. The external study constitutes the main support for this report. The problem, objectives and policy options assessed were based on the draft final report from the contractor prepared in close consultation with the Commission and on the basis of a desk analysis of appropriate analytical methods and applicable legal documents.

The external study and this report have been drafted with input from numerous contacts between the Directorate-General for Justice, Freedom and Security and the contractor (starting from a kick-off meeting before the beginning of the study) as well as meetings of an inter-service steering group at which participated representatives of the Commission’s Secretariat-General, Legal Service of the Commission and Directorates-General for Enterprise and Industry, for Employment, Social Affairs and Equal Opportunities, for Research and for Internal market and Services[?].

The Commission’s Impact Assessment Board (IAB) was consulted on the draft final report of the external study, an earlier stage in the process than is normal. The IAB’s (first) opinion was taken into account in this report notably as regards (i) clarifying the links between the general problem/objective of illegal immigration and the specific problems/objectives relating to illegal employment, (ii) widening the assessment of social and economic impacts, and (iii) examining the links between the policy options and the specific problem of inadequate enforcement. The IAB issued an updated opinion on 18 April 2007 (which will be made public) which has also been reflected in this report (notably by providing cross-references to more detailed assessments and descriptions in the external study), except for the IAB’s recommendation to divide the “harmonised sanctions” policy option into two separate policy options which has not been followed[?]. This option has been given due consideration, but because of time constraints, it was not possible to incorporate it in the report. However in the current sanctions option the criminal sanction element was further differentiated.

Although time constraints meant that the Commission’s minimum standards for consultation were not fully met, meetings were held with the ETUC and UNICE/Business Europe. Member States were consulted in the framework of the Commission's Committee on Immigration and Asylum. The work also benefited from seminars and workshops bringing together representatives of the social partners and other NGOs[?]. Through the external study, further consultation of Member States (including their enforcement bodies), trade unions and employer organisations, and NGOs was undertaken using questionnaires and interviews[?]. Account has also been taken of comments made in reaction to the Commission’s July 2006 Communication on Policy priorities in the fight against illegal immigration[?].

PROBLEM DEFINITION

The scope of the problem

Tackling illegal immigration is one part of the EU's effort to develop a comprehensive migration policy. In September 2007 the Commission will present a first proposal on legal migration in accordance with its December 2005 Policy Plan. This report however is concerned with the fight against illegal immigration.

The general problem: illegal immigration

Illegal immigration is driven by a range of push and pull factors, which are by no means only economic in nature. Decisions to migrate are based on push factors such as unemployment or permanently low wage levels and natural disasters or ecological devastation, and of pull factors such as informal employment with higher wage levels, political stability, maintenance of the rule of law and effective protection of human rights. Illegal migrants make their decisions despite various deterrents, such as high costs for the services of smugglers and the risk of interception and prosecution by border authorities[?].

The present initiative needs to be viewed as part of the EU’s comprehensive approach to reducing illegal immigration, as an instrument focussed on reducing the employment pull factor will not on its own eliminate the problem of illegal immigration to the EU.

The specific problem: employment as a key pull factor for illegal immigration

The legislative proposal aims to reduce a key pull factor for illegal immigration: the employment of third-country nationals who are staying illegally in the EU. These include those who entered the EU illegally and ‘overstayers’ who entered the EU legally, but whose rights to stay have expired.

The legislative proposal does not cover the employment of third-country nationals who are staying legally in a Member State but who have no or limited rights to work, and the limited rights are being exceeded. These include students, researchers, tourists and legally present family members of third-country nationals who do not have the right to work or only have the right to work a specified number of hours per week. Although practical terms tackling such situations is also important for significantly reducing the employment pull factor, the legal basis for the legislative proposal (Article 63(3)(3)(b) of the EC Treaty) could not also permit measures in relation to this second category of third-country nationals.

The remainder of this report refers only to illegally staying third-country nationals, whilst a separate Commission Staff Working Paper identifies other measures to prevent and reduce the employment of both categories of third-country national: those who are illegally staying and those who are working in breach of their residence status.

The policy options considered here would not affect EU citizens from the EU-10 and the two new Member States Bulgaria and Romania who under transitional arrangements have restricted rights to work in some Member States of the EU.

The size of the problem

Determining the size of the problem is necessarily difficult. Apart from the difficulties of measuring undocumented persons and undocumented work, where data or estimates do exist, it is in many cases difficult to identify whether they include EU citizens subject to work restrictions under transitional arrangements and if so, to separate out the figures for third country nationals. Even though precise estimates are unavailable, on the basis of data identified it is evident that there are high numbers of illegally staying third-country nationals across the EU and that numbers have grown in recent years.

Total numbers of illegal immigrants in the Member States

Different methods have been used to estimate the numbers of illegal migrants in the EU; these are described in Annex 1. The results, given in Table A2.1 in Annex 2, vary considerably. Most estimates that are available relate to the period prior to 2004 and the accession of the EU-10 and include nationals from these countries and Bulgaria and Romania as third country nationals. This makes it difficult to present a clear overview of the situation in the EU and in individual Member States.

The estimates of the total number of illegal migrants in the EU include: two to three million (Global Migration Perspectives 2005); four and a half million (IOM 2000); and, seven to eight million (United Nations' Trends in Total Migrant Stock: The 2003 Revision)[?].

Annual inflow and outflow of illegal immigrants in Member States

The number of illegal immigrants in the EU was estimated to increase by 500,000 per annum by Wiener Zeitung (2005), and by 350,000 according to Global Migration Perspectives 2005. However, if the available estimates for the individual 21 Member States are aggregated this calculation suggests that there is an annual inflow of illegal migrants to the EU of between 893,000 and 923,300. Annex 2 shows those estimates for individual Member States and, where possible, indicates trends.

Although reliable figures are not available it is reasonable to assume that significant numbers of illegal migrants either leave the EU voluntarily, are regularised or are returned to their country of origin. Thus the net flow of illegal migrants is much less than the total inflow. Many illegal migrants enter the EU with the intention of staying and working for a limited period sufficient to repay their ‘investment’ and then to return to their country of origin.

Some Member States have undertaken large-scale regularisation programmes in recent years, which will have also (at least initially) reduced the numbers of illegally staying third-country nationals. However, such programmes may themselves constitute a pull factor for more illegal migration to the EU. In order to address the lack of sound evidence and up-to-date information, the Commission will in 2007 launch a study on regularisation measures.

The employment of illegally staying third-country nationals: nature a nd effects

A strong motivation for coming to the EU is the perception that comparatively well paid work is available. In practice this is less the case. Work that is accessible is mainly low paid jobs in the informal unregulated economy, although some jobs are ‘close’ to the formal sectors. This is possible because most countries have large informal sectors (quite how large is not clear as estimates vary significantly), within which nationals also work. However, the low salaries and bad working conditions that illegally staying third-country nationals are forced to accept make them sought after employees.

Available information suggests that the employment of illegally staying third-country nationals does not necessarily crowd out locals from jobs. Instead, there are signs that whole industries are already dependent on illegally staying third-country nationals, as the kind of jobs they take would not be done by nationals at a wage level that would still maintain the international competitiveness of the sector concerned (e.g. horticulture). In terms of effects on product/service markets, making use of undeclared work is widespread particularly in certain sectors, but not limited to third-country nationals.

Effects on the product/service market may be positive in purely economic terms. Illegally staying third country nationals can bring substantial economic benefits to their host countries in their capacity as workers. Their low wages bring down the costs of goods and services, making firms and sometimes entire industries more competitive, and often have important ripple (“up-“ and “down-stream”) economic benefits also for associated firms and industries[?], in the form of lower output prices, or increased purchases.

Data have been obtained for twelve Member States (BE, DK, FI, FR, EL, HU, IT, LV, NL, PT, ES, UK) on the sectors in which illegal migrants work and is presented in Annex 3. Construction, agriculture and horticulture, house work / cleaning, catering and other hospitality services are repeatedly identified as the sectors most prone to undocumented work, in general, and that of illegal migrants, in particular. This reflects in part the nature of the work that is required in these sectors (e.g. seasonal and flexible) and in part the variations in the presence of sectors in Member States.

In Finland, France, Hungary and Portugal the highest concentrations of illegal migrants in work are found in construction. In Greece and Spain, illegal migrants in work are predominantly found in the house work / cleaning sector, whereas in Denmark, the employment of illegal migrants is particularly high in agriculture. In the Netherlands, catering and other hospitality services are a focus of recruitment of illegal migrants.

The economic weight of these ‘sensitive sectors’ in the total employment in each Member State also differs significantly, ranging from 10.8% in Sweden to 38.8% in Romania in 2005[?]. Annex 8 gives an overview of this and other factors that indicate a country’s vulnerability to undeclared work in general, and that undertaken by illegally staying third country nationals in particular. It goes on to examine which countries may experience potentially adverse or beneficial effects from such employment.

As concerns effects on competition and the single internal market, in countries where the informal economy[?] is less strong, employers of illegal migrants pose unfair competition to others within certain sectors. In other countries, the custom of making use of undeclared work in general, and also illegal third country nationals, is so wide-spread, that all companies within the sectors concerned have adapted to this situation, and employ illegally themselves or cope with unfair competition by other means.

Illegal migrants contribute positively economically to both the host economies (by making companies or even sectors more competitive due to low salaries) and the countries of origin. Migrant sending countries benefit significantly from labour outflows as these offer relief from unemployment, boost the participation of female workers and produce a flow of remittances. For many third countries the dependency on these remittances, as a source of foreign exchange and as a percentage of the GDP, has increased over the years. However, there are significant costs that offset these benefits, e.g. lack of payment of social security contributions, exploitation of many illegal migrants, and the distortion of the labour market by downward pressure on wages and conditions[?].

The problem tree below summarises the links between the problems and impacts in relation to the employment of illegally staying third country.

Problem tree

[pic]

Existing national measures targeting employers

At least 26 of the 27 EU Member States already have employer sanctions and preventive measures in place to deal with employment of illegally staying third-country nationals. The legislation of 19 Member States provide for criminal sanctions. Annexes 4, 5 and 6 provide more details on the national measures[?]. However, not only does the content of these measures vary greatly, but also the combinations of measures implemented. The effectiveness of measures currently in place seems to be highly dependent on efforts and resources put in place for enforcement. Across the EU, it seems that units or agencies responsible for enforcement often struggle with scarce financial and human resources and that enforcement in general needs to be improved. The low numbers of prosecutions suggest that many employers that break the law avoid detection or prosecution.

Most Member States have high numbers of illegally staying third-country nationals in work despite having employer sanctions in place and this does not seem to be linked with types and levels of employer sanctions, but rather geographical location and possibilities to find work in certain sectors. This leads to the conclusion that the fact that Member States have adopted certain sanctions or other means to combat illegal employment of third-country nationals does not mean they are effective. Many stakeholders (Member State authorities, employer organisations, trade unions and enforcement bodies) instead point out that enforcement of the sanctions is key for an effective instrument.

Notwithstanding the creation of new enforcement bodes by Member States, information gathered indicates that there are a number of challenges that EU Member States face in enforcing their policies in relation to undeclared work. These include:

- Lack of coordination and cooperation between the actors responsible for combating illegal work at the local level and between the local, regional and national levels;

- Absence of a structural and/or legislative framework that governs such coordination and cooperation;

- Insufficient human resources allocated to the bodies or units that are expected to deter, detect and penalise undeclared work;

- Inadequate financial resources at the disposal of the competent bodies or units to undertake monitoring and act upon violations observed;

- Obstacles to field operations (e.g. legislation that allows employers to deny access to inspectors if they regard conditions on the site as unsafe);

- Lack of information to undertake effective controls (e.g. few risk analyses, limited access to information from tax authorities and banks on companies under suspicion, employees reluctant to testify against those who exploit them);

- Lack of data to assess the outcome of inspections; and,

- Insufficient international cooperation.

The inadequacy of enforcement is thus not just about the level of financial and human resources in the Member States. But nor can it be excluded that more such resources would be needed to achieve effective enforcement.

Member States have worked towards addressing some of these problems through new, or amendments to existing, legislation, through increasing the human and financial capacity of enforcement bodies, and pursuing the more active involvement of all stakeholders. Stakeholders, such as enforcement bodies, employer organisations and trade unions, underscore the importance of such steps in enhancing the effectiveness of planned and on-the-spot inspections. However, the competitive and financial advantages of informal employment, whether done by illegally staying third-country nationals or by EU citizens, is often still perceived as dwarfing the risk of being caught violating regulations.

Alongside the problem of enforcement, the variety of existing national measures is also a problem. First, the diversity in particular of preventive measures is negative for the creation of a level playing field for employers across the Union. Although a large proportion of Member States now require employers to declare and verify the status of new employees, interviews with stakeholders have highlighted significant problems with such measures. The procedures that employers are to follow are often experienced as complex, long and hampering rapid responses to changes in the (labour) market.

Secondly, the great variety of e.g. fines for employers of illegally staying third-country nationals, which range from a maximum amount of €700 in one Member State to an unlimited amount in another, does not provide the picture that it is an EU common goal to fight the employment of illegally staying third-country nationals. An important part of the fight against illegal immigration is attacking the problem at the root, i.e. reducing the impetus for third country nationals to leave their home countries for an illegal job in the EU or preventing them from obtaining such a job once in the EU. It is likely that a message to third countries that measures against illegal work by third-country nationals have been stepped up across the EU would have more impact than an individual or group of Member States revising their sanctions. In that sense, the current variation of measures can indeed be considered a problem.

Does the EU have the right to act?

The legitimacy for EU interventions in this field derives from the following: the common EU borders; the single market and policies to ensure fair competition between employers within the EU; and, commitments at the EU level to the free movement of persons within Europe.

The legal base for EU level action is Article 63(3) of the EC Treaty that establishes that the Council is to adopt "measures on immigration policy within the following areas: (b) illegal immigration and illegal residence, including repatriation of illegal residents". As from 1 January 2005, decisions in this field are taken by qualified majority-voting in Council, in co-decision with the European Parliament.

If Member States act alone there is a risk of significantly different levels of sanctions and enforcement in different Member States. This could lead to distortions of competition within the single market and to secondary movements of illegally staying third-country nationals to Member States with lower levels of sanction and enforcement.

In an area without internal borders, action against illegal immigration needs to be undertaken on a common basis. This is the case not only at the common borders but also with regard to action to reduce pull factors. Community action will be more effective in reducing the employment pull factor. A common minimum level of sanctions (with effective enforcement) on employers will ensure (1) that all Member States have sufficiently high sanctions to have deterrent value, (2) that sanctions are not so different as to give rise to secondary movements of illegally staying third-country nationals, and (3) that there is across the EU a level-playing field for businesses.

OBJECTIVES

3.1. The objectives of this exercise

Whilst the overall objective is to contribute to reducing illegal immigration, the specific focus of this initiative is to tackle the pull factor for illegal immigration that is the employment of illegally staying third-country nationals.

In terms of general objectives:

- To contribute to reducing illegal immigration.

In terms of specific objectives:

- To reduce employment of illegally staying third-country nationals

- To create a level playing field for EU employers.

- To contribute to reduced exploitation of illegally staying third-country nationals.

Although the last of those specific objectives (to contribute to reduced exploitation) does not fall within the scope of the relevant legal base, Article 63(3)(b) EC, it is appropriate to include it in view of the exploitative conditions which often exist in this area. The Conclusions of the 1999 Tampere European Council stipulate that in tackling the root causes of illegal migration it has to combat “ those who engage in trafficking in human beings and economic exploitation of migrants. ” The EU has adopted legislation, such as Framework Decision 2002/629/JHA on combating human trafficking[?] and Council Directive 2004/81/EC on issuing residence permits for victims of human trafficking[?]. This objective is however secondary: while the policy options should be assessed as to the extent to which they contribute to reduced exploitation, the primary aim of this initiative is not to fight exploitation.

3.2. Fundamental rights

Positive and negative impacts on relevant fundamental rights have also been considered. The following fundamental rights of the Charter of Fundamental Rights are relevant:

- Respect for private and family life (Art. 7)

- Protection of personal data (Art. 8)

- Equality before the law (Art. 20)

- Non-discrimination (Art. 21)

- Fair and just working conditions (Art. 31)

- Right to an effective remedy and fair trial (Art. 47)

- Principles of legality and proportionality of criminal offences and penalties (Art. 49)

The impacts on some of these rights are inter-related. For example, if personal data (Art. 8) are not protected, there will be negative impacts on the respect for private and family life (Art. 7). These two fundamental rights are therefore considered together when the impacts of policy options are assessed. Similarly, equality before the law (Art. 20) is considered together with the right to an effective remedy and trial (Art. 47). Fair and just working conditions (Art. 31) are included in the policy objective and related assessment criterion ‘to reduce exploitation of illegally staying third-country nationals’.

POLICY OPTIONS

The option of regularising illegally staying third-country nationals was considered at an early stage of the project, but has been left out due to a lack of data on current practices and effects of regularisation measures. In its July 2006 Communication on Policy priorities in the fight against illegal immigration of third-country nationals[?], the Commission identified the need to address regularisations given that recent large-scale regularisation programmes in some Member States have given rise to expressions of concern and interest in other Member States. Given the current lack of sound evidence and up-to-date information a study to be launched in 2007 on current practices, effects and impacts of regularisation measures will constitute the basis for future discussion. Regularisation was therefore not considered as a policy option for this exercise. Moreover, regularisation is argued by many to be a pull factor for illegal immigration and therefore unhelpful in this exercise.

Policy Option 1 – Status quo

No changes are made to the current situation, i.e. the following EU level measures (legislative instruments, funding, and general measures) are maintained:

- Council Recommendation of 22 December 1995 on harmonising means of combating illegal immigration and illegal employment[?] recommends that employers wanting to recruit foreign nationals should be encouraged to verify their residence or employment situations and that an employer of a foreign national without authorisation should be made subject to penalties. Council Recommendation of 27 September 1996 on combating the illegal employment of third-country nationals[?] recommends in particular that employment of third-country nationals who do not possess the necessary authorisation should be prohibited and should give rise to criminal and/or administrative penalties.

- Directive 2002/90/EC and Framework Decision 2002/946/JHA . This Directive and Framework Decision define the facilitation of unauthorised entry, transit and residence and sets out a penal framework to prevent these phenomena. The Directive[?] stipulates (Art. 1) that Member States are to adopt sanctions on "any person who, for financial gain, intentionally assists a person who is not a national of a Member State, to reside within the territory of a Member State in breach of the laws of the State concerned on the residence of aliens". The Framework Decision provides for criminal penalties.

- Framework Decision 2002/629/JHA of 19 July 2002 on combating trafficking in human beings. This provides that Member States are to incriminate any form of recruitment, transportation, transfer or harbouring and any other treatment of a person for the purposes of labour exploitation, and provides for penalties[?].

- In 2007 the Framework programme Solidarity and Management of Migration Flows will be launched. This programme encompasses four new funds related to: refugees; external borders; the integration of third-country nationals; and, return.

- General measures against undeclared work in the framework of the EU’s economic and social policy . For example the European Employment Strategy and the Employment Guidelines call for action to “foster regular employment”. National measures and strategies to combat undeclared work in general, including illegal employment of third-country nationals, have been developed in this context.

The following instruments were included in the Council Conclusions of 14 and 15 December 2006[?] and are in preparation. Even though the content has not yet been decided, the adoption of such instruments nevertheless needs to be taken into consideration in the status quo option:

- The creation of an entry-exit system : The proposal would lead to the creation of a generalised and automated entry-exit system, complementing databases like VIS and SIS. It includes biometric technology.

- Improved management of the European Union's external borders on the basis of the integrated border management strategy adopted by the Council in 2006.

- Improved coordination and cooperation between country of origin and country of transit.

- Commission proposals within the framework of the Policy Plan on Legal Migration of December 2005, including the facilitation of immigration of highly skilled individuals, seasonal workers and rights of migrants.

Measures are also available at national level. At least 26 of the 27 EU Member States[?] have employer sanctions in place in terms of administrative and/or penal sanctions. In several Member States, sanctions have been increased in recent years. All Member States already have preventive measure(s) in place, including measures placing the responsibility on the employer to declare new employees and verify their status, measures encouraging employment of documented workers, and, partnership agreements for cooperation and initiatives to prevent illegal work (between (1) Member States, and, (2) Ministries and Social Partners). Enforcement is undertaken with varying degrees and effectiveness.

Policy Option 2 – Harmonised sanctions for employers of illegally staying third-country nationals across the EU, with an enforcement obligation on Member States

In this option, which requires EU level regulatory action, harmonised sanctions for employers of illegally staying third-country nationals would be established across the EU[?]. The infringement would be the employment of an illegally staying third-country national through the present employment. Fines, other penalties and criminal sanctions would be put in place.

Except for serious cases, sanctions would consist of a fine and/or other penalties. The fine would amount to a sum per employee . The level of penalty would be proportionate to the offence and likely to represent more than the ‘savings’ that the employer would have made through not employing legally. Thus the fine should be viewed as both fair and as a deterrent. No maximum amount would be established. A ‘menu’ of penalties would be put in place, including, for example, temporary ineligibility for public contracts and subsidies, temporary suspension of activity, temporary withdrawal of trading licence and/or confiscation of equipment. One or several penalties could be imposed. Small scale offences would be considered ‘administrative’.

The exact amount of fine and/or what penalty/ies would be at the discretion of relevant body[?] in the Member States. The level of the fine / penalties would be based on the following criteria:

- Intention / knowledgeable act: whether the employer deliberately and knowingly hired (an) illegally staying third country national(s);

- Repeat offence;

- Other circumstances (e.g. economic situation)

In serious cases employers could also be subject to criminal sanctions, based on the following alternative criteria:

- Repeat offence (e.g. second or third time / within a certain time period);

- Employment of a significant number of third-country nationals; and/or

- Particularly exploitive working conditions.

Under this option, the sanctions would cover all employers, i.e. both the employer and any intermediaries / subcontractors who themselves act as employers of (an) illegally staying third-country national(s).

In view of the importance of enforcement, Member States would be required to undertake a certain number of controls on company premises (expressed as a % of number of registered companies) and on the basis of risk assessment.

Policy Option 3 – Harmonised preventive measures: common requirements across the EU for employers to copy the relevant documentation (residence permit) and to notify the competent national bodies

This option would involve legislative action at Community level to require common measures to prevent the employment of third-country nationals across the EU. The policy option would involve actions by the employer and competent national authorit ies[?].

The employer would be required to ask the prospective employee for the following documents concerning residence rights in the Member State, and copy and forward them to the appropriate public authorities: residence permit or other authorisation to stay valid for the period of employment in question.

The employer would be obliged to retain a copy and ensure the safe-keeping and confidentiality of these documents.

The relevant national authority would be responsible for checking whether the documents are valid / not forged, and the status of the migrant and informing the employer if the employee cannot be legally employed.

The employer would not have to wait for the response from the authority to hire the new employee, but would need to lay off the person in case of a negative reply from the authorities.

This obligation would not be restricted to collection of documentation ‘upon suspicion’, but the employer would always be required to submit this type of information in order that the authorities responsible for issuing residence permits can verify whether the prospective employee is allowed to stay in the country.

Employers failing to submit copies of relevant documentation to the competent authority would not necessarily be subject to a penalty, but employers who could show that they had carried out those checks would not be considered to have infringed the prohibition and thus not liable to sanctions if the worker were subsequently found to have been an illegally staying third-country national. This could be the case for example if the competent national body later finds that the document presented by an employee had in fact been forged or misused.

Policy Option 4 – Harmonised employer sanctions and preventive measures

This regulatory option, which would imply EU level legislative action, consists of a combination of options 2 and 3 above.

Policy Option 5 – EU awareness raising campaign on consequences of hiring an illegally staying third-country national

This non-regulatory option would consist of the organisation of an EU awareness raising campaign. It would seek to make employers aware of their legal obligations and negative consequences of hiring illegally staying third-country nationals in terms of:

- unfair competition at sectoral, regional, national and/or EU levels;

- negative impact on tax income and social security payments;

- depression of wage levels for labourers in formal employment at sectoral, regional, or national level;

- general lowering of employment conditions for those working in informal and formal markets (rights of worker, minimum wage, working hours, etc.).

The campaign could address social consequences such as:

- increased (risk of) exploitation and slavery-like conditions for illegally staying third-country nationals;

- preventing such employees from benefiting from social welfare provisions that employees in the formal sector have access to;

- poor housing and living circumstances; and

- increased (risk of) violation of the human rights of these workers.

Social partners and other relevant actors could be involved in the elaboration of the content of such a campaign.

Policy Option 6 – Identification and exchange between Member States of good practices on the implementation of employer sanctions

This option would involve the identification and exchanges of good practices and information between Member States on different subjects (e.g. enforcement mechanisms, legislative means, identification and seizure of facilitators, etc.) taking place in a structured form, e.g. peer learning, with assistance from the Commission in issuing guidelines, identifying national contact points and arranging meetings. Good practice guidance and hand-books for training staff could be elaborated.

ANALYSIS OF IMPACTS

Assessment criteria

A multi-criteria analysis has been used to assess and compare impacts: each policy option has been assessed against a set of criteria which derive from the problems in the current situation, policy objectives and the Charter of Fundamental Rights. In view of limits of the data available, no attempt has been made to quantify the impacts of each option.

For each policy option, the anticipated impact has been assessed on an ‘intuitive’ scale of positive impact from one to five (five being the best score). Negative impact is highlighted by – , whilst 0 means that there would be no effect. A brief explanation of rating and aspects of the policy options necessary to achieve impacts is also provided in the grids.

Identifying and assessing measurable impacts of each of the policy options

The assessments of policy options are presented in Tables 5.1 to 5.6 below.

Table 5.1 – Policy Option 1: Status Quo

Objective to be achieved/ problem addressed | Rating of impact (from – to √√√√√) | Explanation of rating and aspects of the policy option necessary to achieve impact |

To reduce employment of illegally staying third-country nationals | 0 or √ | No effect or small decrease due to existing and forthcoming measures, such as the proposed entry-exit system and measures to tackle undeclared work. While most MS have employer sanctions and preventive measures in place, necessary enforcement is poor. |

To reduce illegal immigration to the EU | √ | Existing and forthcoming measures, are likely to reduce the inflow and stock of illegal migrants to some extent. |

To create a level playing field for employers | 0 or – | Fails or situation would deteriorate, because the differences between MS in terms of legislation, enforcement and work opportunities would remain or even increase. |

To contribute to reduced exploitation of illegally staying third-country nationals | 0 or – | No effect or worsening situation for such workers. Push factors for labour migration are gaining force, and many are pressed to accept clandestine jobs with low wages and poor working conditions. |

To develop common rules which are likely to be complied with in practice and enforced | 0 | No effect, as there would be no common rules. |

To complement and reinforce existing (and forthcoming) acquis | N/A | N/A |

To reduce human trafficking, organised crime and smuggling | 0 or – | Push factors for labour migration are gaining force, resulting in fiercer competition to secure passage to the EU and jobs upon arrival. |

Fundamental rights |

Protection of personal data (Art. 8) | 0 | No effect. |

Right to an effective remedy and fair trial (Art. 47) | 0 | No effect. |

Non-discrimination (Art. 21) | 0 | No effect. |

Principles of legality and proportionality of criminal offences and penalties (Art. 49) | 0 | No effect. |

Benefits and advantages of option | MS are not required to adopt new measures. No costs. Existing and forthcoming measures are likely to contribute to the reduction of such employment. |

Disadvantages and risks of policy option (including negative economic and social costs in EU and third countries) | No clear message to employers and third countries. Marked variations between MS in opportunities to escape sanctions continue. Some deterioration in the position of those at risk of exploitation. |

Essential accompanying measures | N/A. |

Economic effects on EU level | Minor economic effects. Due to Member States acting on own initiative, as well as better monitoring through the proposed entry-exit system, some reduction in positive economic effects might be anticipated. EU companies, especially those in the most affected sectors, will continue to have to cope with unfair competition. |

Effects on EU labour markets | Pressures on wages for low-skilled work (whether by EU citizens or legally resident and working TCNs) will remain particularly in the most affected sectors. |

Effects on consumers | For some goods and services in the affected sectors (e.g. horticultural products), consumers continue to benefit from lower prices resulting from employers use of (low paid) illegally employed TCNs. |

Financial cost | Zero. |

Effects on third countries | Minor or no economic effects. Numbers of illegal TCN workers may decrease slowly, but their earnings and remittances would remain stable or increase slightly (due to rising labour costs, better networks, improved skills, and decreasing taxation). |

Issues raised in stakeholder consultations | Many employer organisations and trade unions have highlighted that even though legal means exist today at national level which have the aim to combat employment of illegally staying third-country nationals , poor enforcement undermines their effectiveness. |

Issues raised by Member States | The Council Conclusions of 14 and 15 December 2006 invited the Commission to present a proposal on measures against employers of illegal immigrants. However, in a survey by the Commission a majority of MS considered their current legislative framework to be effective. Some Member States have pointed to the need to reinforce preventive measures and effective enforcement. |

Table 5.2 – Policy Option 2: Harmonised sanctions for employers of illegally staying third-country nationals, with an enforcement obligation on Member States

Objective to be achieved/ problem addressed | Rating of impact (rated from – to √√√√√) | Explanation of rating and aspects of the policy option necessary to achieve impact |

To reduce employment of illegally staying third-country nationals | √√ | Small reduction of such employment, because the minimum level of sanctions is significantly raised in several MS, and criminal sanctions introduced in those MS that currently do not have them. This could discourage employers, but would require (more) effective enforcement in many MS. |

To reduce illegal immigration to the EU | √√ | Compared with the status quo the stock of illegal migrants could be reduced through improved detection, and the flow of illegal immigration could be reduced through a clear message being transmitted to third countries and prospective illegal economic migrants. The impact would however depend upon the success of implementation and enforcement. |

To create a level playing field for employers | √√√ | Establishes common sanctions in MS, including as regards criminal sanctions. However, even with the enforcement obligation, variation among MS capacity of enforcement would remain. |

To contribute to reduced exploitation of illegally staying third-country nationals | 0 or - | Some researchers, as well as NGOs, argue that stricter sanctions against employers are accompanied by increased exploitation of illegally staying third-country nationals, because such workers are pushed further underground and have a weaker bargaining position. However, such possible effects would be counterbalanced by the deterrent effect of especially the proposed criminal sanctions in cases of particularly exploitative working conditions. |

To develop common rules which are likely to be complied with in practice and enforced | √ | The instrument consists of sanctions which have been evidenced as effective in MS. However, compliance is still highly dependent on the enforcement of the sanctions which is the responsibility of the MS. |

To complement and reinforce existing (and forthcoming) acquis | √√ | The policy option complements existing acquis. It is unclear if it will complement forthcoming measures. |

To reduce human trafficking, organised crime and smuggling | 0 or – | No discernible effect on human trafficking and smuggling. Situation might deteriorate. Unclear effect on organised crime. If sanctions are effectively imposed on employers, organised crime may be uncovered and tackled. |

Fundamental rights |

Protection of personal data (Art. 8) | 0 | No effect. |

Right to an effective remedy and fair trial (Art. 47) | 0 | No effect. |

Non-discrimination (Art. 21) | 0 | Although there would be different treatment between the irregular employment of illegally staying third-country nationals and that of by EU citizens, such difference is justified by their objectively different statuses and thus cannot be considered discriminatory. |

Principles of legality and proportionality of criminal offences and penalties (Art. 49) | √ | Crime has to be defined across the EU and same sanction is imposed on those who commit this crime. |

Benefits and advantages of option | Reduces variation in legislation and its enforcement. Fosters level playing field. Clear communication to employers and third countries. |

Disadvantages and risks of policy option (including negative economic and social costs in EU and third countries) | Some negative effects on economy. |

Essential accompanying measures | Simplification of bureaucratic procedures for recruiting third-country nationals legally and hereby reducing waiting period. Awareness raising campaigns targeted at the employers and employees. Protective measures for workers, including back payment of wages, burden of proof of payment on employer, and complaint procedures that are safe. Enforcement of sanctions by administrative units with sufficient capacity. |

Economic effects on EU level | Some reduction of illegal employment and tax revenues foregone may occur in those MS where sanctions will increase. Not likely to have significant impact on those MS with a developed informal economy. Employers may circumvent long-lasting sanctions by setting up new companies. Companies in the most affected sectors will be less exposed to unfair competition. |

Effects on EU labour markets | Wages and conditions of workers (whether EU citizens or legally resident and working third-country nationals) in certain low-skilled jobs may incrementally benefit from the tighter supply of labour resulting from reduced employment of illegally staying third-country nationals. Services with a stable domestic demand, i.e. catering and construction, are likely to benefit most. Sectors facing more international competition, e.g. the textile industry and parts of agriculture and horticulture, reliant on low-paid workers, may lose jobs and economic output. |

Effects on consumers | For goods and services in countries and the affected sectors where the employment of (low paid) illegally employed third-country nationals will significantly decrease, consumers may have to pay more. This may affect catering services and construction, the textile industry and certain seasonal horticultural goods with high labour intensity and less foreign competition (due to Protected Designation of Origin, its perishable nature and/or high relative transportation costs). Other goods will face a loss of price competitiveness and increasingly be replaced by substitute products. Altogether, no significant effects are expected. |

Financial cost | Additional burden for at least some MS for enforcement, but many MS have already such measures and administrative and criminal sanctions in place. There will also be additional costs for supporting measures. |

Effects on third countries | Clear message to third countries. As more stringent regulation will be introduced in some of the most popular target countries, it may reduce labour migration and, as a result, have small economic effects in the countries of origin concerned. |

Issues raised in stakeholder consultations | Employer organisations generally prefer administrative sanctions. Criminalisation of individuals – and not of companies – is considered legitimate if an employer is found to engage in criminal activities. Employer organisations and trade unions agree that fines have to be determined according to the severity of the offence. They also share a preference for a fine per illegally staying third-country national employed and that offsets the economic advantage of such employment. Difference of opinion regarding the need for additional administrative measures, such as withdrawing trading licence, suspension of activity, and closure of company. Employer organisations stress the negative impact of such measures on local economies (e.g. loss of jobs). Trade unions emphasise that a discussion about the nature of sanctions is only meaningful if tied to a ‘serious’ discussion about the enforcement of these sanctions. Some enforcement bodies indicated a preference for administrative sanctions. In the case of criminal sanctions, inter-regional variance in the level of sanctions imposed on employers has been observed. The discretion given to judges were considered too great and ineffective in discouraging employers. |

Issues raised by Member States | Most Member States are of the view that EU legislation should contain both administrative and criminal sanctions. One Member States is of the view that administrative sanctions should be given preference. |

Table 5.3 – Policy Option 3: Harmonised preventive measures: common requirements across the EU for employers to copy the relevant documentation and to notify the competent national bodies

Objective to be achieved/ problem addressed | Rating of impact (from – to √√√√√) | Explanation of rating and aspects of the policy option necessary to achieve impact |

To reduce employment of illegally staying third-country nationals | √ | Reduces, because the administrative procedure allows the employer to determine if a potential employee is allowed to work at an early stage of employment. Limited effect, because it requires effective enforcement and additional sanctions for those who recruit such individuals anyway. |

To reduce illegal immigration to the EU | √√ | Compared with the status quo the stock of illegal migrants could be reduced through improved detection and the flow of illegal immigration could be reduced through a clear message being transmitted to third countries and prospective illegal economic migrants. The impact would however depend upon the success of implementation and enforcement. |

To create a level playing field for employers | √√√ | Promotes a level playing field, because the instrument requires employers across the EU to follow the same procedures. |

To contribute to reduced exploitation of illegally staying third-country nationals | 0 | No effect. |

To develop common rules which are likely to be complied with in practice and enforced | √√ | The instrument consists of preventive measures evidenced as effective in MS. Straightforward procedures, which are easy to understand and comply with. Compliance still requires monitoring and enforcement. |

To complement and reinforce existing (and forthcoming) acquis | √√ | Complements existing acquis. It is unclear if it will complement forthcoming measures. |

To reduce human trafficking, organised crime and smuggling | 0 or – | No discernible, positive effect on human trafficking and smuggling. Possible negative effect on organised crime, as it may increase the problem of identity fraud and the forgery of documents. |

Fundamental rights |

Protection of personal data (Art. 8) | – | Negative effects if data not appropriately handled. Depends on the type of information about the employee that employer is obliged to collect and submit to the public authorities. |

Right to an effective remedy and fair trial (Art. 47) | 0 | No effect. |

Non-discrimination (Art. 21) | 0 | No effect. |

Principles of legality and proportionality of criminal offences and penalties (Art. 49) | √ | Improves. |

Benefits and advantages of option | Places minimum burden on employers. Straightforward procedures, which can be easily complied with. Creates level playing field as obligations are imposed on all employers across EU. Small reduction of illegal employment. |

Disadvantages and risks of policy option (including negative economic and social costs in EU and third countries) | Some, albeit limited, effects on prevention and reduction of such employment. May increase organised crime due to increased demand for forged documents. |

Essential accompanying measures | Measures safeguarding protection of personal data. Identify competent authorities to collect and process data. Develop procedures to be followed by employers as documents to be submitted will depend on national legislation (residence permit or other authorisation for stay). Awareness raising campaigns targeted at employers and employees. Policies on issuing of work permits reflecting labour market needs. |

Economic effects on EU level | Limited, due to limited effect on prevention and reduction of such employment. Illegal employment of TCNs is usually intentional, and is, as undeclared work, combined with tax evasion in the sectors primarily associated with this kind of work. It is not likely to effect reductions on labour market pressures and reduce unfair competition. Companies in the most affected sectors will continue to be exposed to unfair competition. |

Effects on EU labour markets | Workers (whether EU citizens or legally resident and working third-country nationals) in certain low-skilled jobs may incrementally benefit from the tighter supply of labour resulting from reduced employment of illegally staying third-country nationals. Services with a stable domestic demand, i.e. catering and construction, are likely to benefit most. Sectors facing more international competition, e.g. the textile industry and parts of agriculture and horticulture, reliant on low-paid workers, may lose jobs and economic output. The effects are however not considered significant. |

Effects on consumers | For goods and services in countries and the affected sectors, where the employment of (low paid) illegally employed third-country nationals will significantly decrease, consumers may have to pay more. This may affect catering services and construction, the textile industry and certain seasonal horticultural goods with high labour intensity and less foreign competition (due to Protected Designation of Origin, its perishable nature and/or high relative transportation costs). Other goods will face a loss of price competitiveness and increasingly replaced by substitute products. Altogether, no significant effects are expected. |

Financial cost | Small, because many countries have already such preventive measures and administrative sanctions in place, but there will be additional costs for supporting measures. |

Effects on third countries | Does not send a particularly clear message to third countries. Only limited economic effects. The number of TCNs working illegally in the EU may be only slightly reduced. |

Issues raised in stakeholder consultations | Consensus among employer organisations and trade unions that procedures to declare and verify the status of the third-country national should be simplified and modernised. In addition to dealing with the complicated nature of current procedures, waiting period for obtaining work and/or residence permits should be significantly reduced to allow a more flexible and immediate response to labour shortages. Many employer organisations emphasised the need for additional support with fulfilling obligations through, for example, awareness raising and identification of information points. Trade unions argued for a credible system, which does not ignore the local or national labour force in analyses of labour shortages. Some stakeholders suggested that analyses of labour shortages in regions or sectors which are agreed by stakeholders and are regularly updates might secure widespread support and speed up applications. |

Issues raised by Member States |

Table 5.4 – Policy Option 4: Harmonised employer sanctions and preventive measures (i.e. Options 2 and 3 combined)

Objective to be achieved/ problem addressed | Rating of impact (from – to √√√√√) | Explanation of rating and aspects of the policy option necessary to achieve impact |

To reduce employment of illegally staying third-country nationals | √√√ | Loopholes in the system of employing TCN are reduced. The state provides the employer with tools and information to verify the status of employees at the stage of recruitment. High sanctions (including criminal sanctions) seek to persuade the employer of the need for compliance. Effectiveness still depends significantly on enforcement. |

To reduce illegal immigration to the EU | √√√ | Compared with the status quo and either policy option 2 or 3 the stock of illegal migrants could be further reduced through improved detection and the flow of illegal immigration could be further reduced through a clear message being transmitted to third countries and prospective illegal economic migrants. The sustained impact would however depend upon the success of implementation and enforcement. |

To create a level playing field for employers | √√√√ | The combination of simplified procedures and potential sanctions increases the likelihood of a level playing field. The effectiveness still depends on the MS capacity to enforce the common regulations. |

To contribute to reduced exploitation of illegally staying third-country nationals | 0 or - | Possible negative effect from such workers being pushed further underground and having a weaker bargaining position would be counterbalanced by the deterrent effect of especially the proposed criminal sanctions in cases of particularly exploitative working conditions. |

To develop common rules which are likely to be complied with in practice and enforced | √√ | The instrument takes on board employer sanctions and preventive measures which have been evidenced as effective in MS. Compliance, however, is easier with preventive measures than with sanctions; the need for enforcement is particularly high in relation to the latter. |

To complement and reinforce existing (and forthcoming) acquis | √√√ | Complements existing acquis. It is unclear if it will complement forthcoming measures. |

To reduce human trafficking, organised crime and smuggling | – | No discernible, positive effect on human trafficking and smuggling. Possible negative effect on organised crime, as preventive measure may increase the problem of identity fraud and the forgery of documents. |

Fundamental rights |

Protection of personal data (Art. 8) | – | Negative effects if date is not appropriately handled. Depends on the type of information about the employee that employer is obliged to collect and submit to the public authorities. |

Right to an effective remedy and fair trial (Art. 47) | 0 | No effect. |

Non-discrimination (Art. 21) | 0 | Although there would be different treatment between the irregular employment of illegally staying third-country nationals and that of by EU citizens, such difference is justified by their objectively different statuses and thus cannot be considered discriminatory. |

Principles of legality and proportionality of criminal offences and penalties (Art. 49) | √ | Crime has to be defined across the EU and same sanction is imposed on those who commit this crime. |

Benefits and advantages of option | Straightforward verification procedures, which can be easily complied with. Creates level playing field as obligations are imposed on all employers across EU. Some reduction of such illegal migration and employment. Clear communication to employers and third countries. |

Disadvantages and risks of policy option (including negative economic and social costs in EU and third countries) | Limited reduction and prevention of such employment. If measures effectively cut cheap supply of labour for low-skill jobs, the competitiveness of certain horticultural activities and firms may be impaired. |

Essential accompanying measures | Identify competent authorities to collect and process data of employee. Develop procedures to be followed by employers as documents to be submitted will depend on national legislation (e.g. residence permit or other authorisation for stay). Simplification of bureaucratic procedures for recruiting third-country nationals legally and hereby reducing waiting period. Awareness raising campaigns targeted at employers and employees. Enforcement of sanctions by administrative units with sufficient capacity. Protective measures for workers, including back payment of wages, burden of proof of payment on employer, and complaint procedures that are safe. Measures safeguarding protection of personal data. |

Economic effects on EU level | Positive effects in terms of some reduction in illegal employment of TCNs, and resulting expansion of tax revenues might be expected in Member States where the stricter sanctions will be introduced. Wage pressure on the labour market may only slightly be reduced, as this is regarded as less sensitive to the actual number of illegal workers. If measures effectively cut cheap supply of low-skilled labour, the competitiveness of certain horticultural activities and firms may be highly impaired. Labour shortages in certain MSS may worsen. However, companies in the most affected sectors will be less exposed to unfair competition. |

Effects on EU labour markets | Wages and conditions of workers (whether EU citizens or legally resident and working third-country nationals) in certain low-skilled jobs may incrementally benefit from the tighter supply of labour resulting from reduced employment of illegally staying third-country nationals. Services with a stable domestic demand, i.e. catering and construction, are likely to benefit most. Sectors facing more international competition, e.g. the textile industry and parts of agriculture and horticulture, reliant on low-paid workers, may lose jobs and economic output. |

Effects on consumers | For goods and services in countries and sectors where the employment of (low paid) illegally employed third-country nationals will significantly decrease, consumers may have to pay more. This may affect catering services and construction, the textile industry and certain seasonal horticultural goods with high labour intensity and less foreign competition (due to Protected Designation of Origin, its perishable nature and/or high relative transportation costs). Other goods will face a loss of price competitiveness and increasingly replaced by substitute products. Altogether, no significant effects are expected. |

Financial cost | Additional burden for at least some MS for enforcement, because many countries have already such preventive measures and administrative and criminal sanctions in place, but there will be additional costs for supporting measures. |

Effects on third countries | Conveys clear message. May reduce labour migration and, as a result, may have small economic effects. |

Issues raised in stakeholder consultations | See comments in relation to policy options 2 and 3. |

Issues raised by Member States | See comments in relation to policy options 2 and 3. |

Table 5.5 – Policy Option 5: EU awareness raising campaign on consequences of hiring an illegally staying third-country national

Objective to be achieved/ problem addressed | Rating of impact (from – to √√√√√) | Explanation of rating and aspects of the policy option necessary to achieve impact |

To reduce employment of illegally staying third-country nationals | 0 | No effect, because employers, employer organisations and trade unions are already well aware of the negative consequences of such employment. |

To reduce illegal immigration to the EU | 0 | No effect as the pull factor of EU wage rates would not be reduced. |

To create a level playing field for employers | 0 | No effect. |

To contribute to reduced exploitation of illegally staying third-country nationals | 0 | No effect, as stakeholders are well aware of the negative economic and social consequences of such employment. |

To develop common rules which are likely to be complied with in practice and enforced | 0 | No common rules are developed. |

To complement and reinforce existing (and forthcoming) acquis | √ | Complements existing and forthcoming acquis, but will not add significant value. |

To reduce human trafficking, organised crime and smuggling | 0 | No discernible effect on human trafficking, smuggling and organised crime. |

Fundamental rights |

Protection of personal data (Art. 8) | 0 | No effect. |

Right to an effective remedy and fair trial (Art. 47) | 0 | No effect. |

Non-discrimination (Art. 21) | 0 | No effect. |

Principles of legality and proportionality of criminal offences and penalties (Art. 49) | 0 | No effect. |

Benefits and advantages of option | Requires minimal human and financial resources for its organisation. May have a temporary, positive contribution to compliance. |

Disadvantages and risks of policy option (including negative economic and social costs in EU and third countries) | No medium- or long-term reduction and prevention of such employment. |

Essential accompanying measures | None |

Economic effects on EU level | No effect. Companies in the most affected sectors will continue to be exposed to unfair competition. |

Effects on EU labour markets | No effect. Pressures on wages for low-skilled work (whether by EU citizens or legally resident and working TCNs) will remain particularly in the most affected sectors. |

Effects on consumers | No effect. For goods and services in the affected sectors (e.g. horticultural products), consumers continue to benefit from lower prices resulting from employers use of (low paid) illegally employed TCNs. |

Financial cost | Requires minimal human and financial resources for its organisation. |

Effects on third countries | No effect. |

Issues raised in stakeholder consultations | Employers, employer organisations and trade unions are already well aware of the negative economic and social consequences of such employment. |

Issues raised by Member States | All Member States that replied to the survey undertaken in this assignment have recently organised awareness raising campaigns. |

Table 5.6 – Policy Option 6: Identification and exchange between Member States of good practices on the implementation of employer sanctions

Objective to be achieved/ problem addressed | Rating of impact (from – to √√√√√) | Explanation of rating and aspects of the policy option necessary to achieve impact |

To reduce employment of illegally staying third-country nationals | √ | Better methods for enforcement may improve the identification and sanctioning of employers hiring such workers. However, the level of sanctions will continue to vary and may not offset the economic advantage in some countries. |

To reduce illegal immigration to the EU | √√ | Compared with the status quo exchange of experience and good practice and capacity building of enforcement bodies is likely to lead to more effective enforcement. The policy option is, however, only likely to increase the effectiveness to some extent, as numbers of inspectors will still be dependent on resources set aside by Member States. |

To create a level playing field for employers | √ | Limited contribution, because variation in sanctions and preventive measures remains and may increase depending on MS actions. However, greater enforcement could ensure that existing regulations and sanctions are actually imposed. |

To contribute to reduced exploitation of illegally staying third-country nationals | √√ | Reduce exploitation as a result of exchange of good practices on how to protect victims of such exploitation. Share info on how to mitigate negative effects for those who collaborate with law enforcement. |

To develop common rules which are likely to be complied with in practice and enforced | √ | No common rules would be developed. However, stricter and better enforcement is likely to increase compliance. |

To complement and reinforce existing (and forthcoming) acquis | √√√ | The option is likely to reinforce national policy and legislation as well as EU level acquis. Exchange of information and good practice increases the capacity of law enforcement bodies, which in turn strengthens the monitoring of the implementation of regulations. |

To reduce human trafficking, organised crime and smuggling | √√ | Reduce, because as MS exchange info and good practices on how to encourage such workers to report violations the chances of catching employers systematically engaged in criminal activities increases. |

Fundamental rights |

Protection of personal data (Art. 8) | 0 | No effect. |

Right to an effective remedy and fair trial (Art. 47) | 0 | No effect. |

Non-discrimination (Art. 21) | 0 or √ | No effect or positive effect, because the detection and sanctioning of undeclared work in general would also benefit from a greater capacity in law enforcement. |

Principles of legality and proportionality of criminal offences and penalties (Art. 49) | 0 or √ | No effect on the definition of the crime. However, enhancing the capacity of law enforcement makes it more likely that all those who violate the regulations are identified and adequately sanctioned. |

Benefits and advantages of option | EU added value. Complements existing acquis and national measures adopted in the fight against such employment. Addresses the problem of lack of enforcement capacity and of knowledge of effective approaches. Potentially sends clear message to third countries that EU MS are actively cooperating. Reduces such illegal employment. Contributes to the reduction of exploitation and organised crime. |

Disadvantages and risks of policy option (including negative economic and social costs in EU and third countries) | Does not address the variation in sanctions and preventive measures in MS. |

Essential accompanying measures | None. |

Economic effects on EU level | Better regulation, newly introduced preventive and punitive measures may result in reduced illegal employment of TCNs. Improved effectiveness and efficiency of enforcement bodies could positively influence the number of offences uncovered. This will in return reduce tax evasion. Companies in the most affected sectors may become less exposed to unfair competition. |

Effects on EU labour markets | Wages and conditions of workers (whether EU citizens or legally resident and working third-country nationals) in certain low-skilled jobs may incrementally benefit from the tighter supply of labour resulting from reduced employment of illegally staying third-country nationals. Services with a stable domestic demand, i.e. catering and construction, are likely to benefit most. Sectors facing more international competition, e.g. the textile industry and parts of agriculture and horticulture, reliant on low-paid workers, may lose jobs and economic output. |

Effects on consumers | For goods and services in countries and sectors where the employment of (low paid) illegally employed TCNs will significantly decrease, consumers may have to pay more. This may affect catering services and construction, the textile industry and certain seasonal horticultural goods with high labour intensity and less foreign competition (due to Protected Designation of Origin, its perishable nature and/or high relative transportation costs). Other goods will face a loss of price competitiveness and increasingly replaced by substitute products. Altogether, no significant effects are expected. |

Financial cost | Some limited resources needed to undertake the identification and exchange activities. |

Effects on third countries | If combined with Policy options 2 and 3, conveys clear message to third countries. May reduce (illegal) labour migration and, as a result, have economic effects. |

Issues raised in stakeholder consultations | Trade unions emphasise that a discussion about the nature of sanctions is only meaningful if tied to a ‘serious’ discussion about the enforcement of these sanctions. Employer organisations and especially trade unions claimed that the number of inspections in the country or in their sector was insufficient to deter employers to employ illegally staying third-country nationals. Greater enforcement was deemed necessary to persuade employers that the risk of being uncovered and sanctioned is high. Enforcement operations often go hand in hand with media reports, in which the illegal employment practices of particular companies or employers are unveiled and offenders are confronted with their potential fate. |

Issues raised by Member States | Poor enforcement has been highlighted as the main problem in the current situation by many Member States. |

Compliance costs for public authorities and business under the policy options

The table below summarises the estimated relative compliance costs of the six policy options. These include enforcement costs and administrative costs[?] of the six policy options. Policy option 1 would not require additional resources.

The enforcement obligation on Member States that is part of option 2 may require additional resources at Member State level. They would be created by the need to carry out additional on-the-spot checks in companies. Considerable differences exist among Member States as regards the frequency of checks. Data is only available for some Member States[?]. This evidence suggests that some Member States carry out significantly more checks than others[?]. Italy and Spain alone conduct per year checks on a number of companies representing more than 1% of European companies. Available evidence suggests that other countries conduct a significantly lower amount of checks. Comparing these figures with the number of companies in the EU (22 million in 2005)[?], an estimate would be to assume that across Europe, 2% of companies are being checked yearly.

The proposal foresees 10% of registered companies to be checked. An additional 8% of companies to be checked would amount to 1.76 million checks, costing an estimated €1.14 billion of enforcement costs across the EU to Member States authorities[?].

Administrative costs for employers would only be incurred as regards the increased number of checks. A limited number of inspections can be estimated to be conducted in the Member States, as mentioned above. The introduction of an obligation to check 10% of registered company per year would lead to an estimated 8% of companies being checked in addition. Associated costs of €190 million would have to be borne by companies per year[?].

Additional costs stemming from prosecutions of employers are not included in this estimate but it is reasonable to assume that these would be offset by fines paid. In practice these enforcement costs would not necessarily be additional because most countries have existing sanctions and enforcement regimes, and the inspections could be used to also check compliance with other employment legislation.

Apart from the enforcement aspect, options 2 and 3 would require low levels of administrative resources at the EU and Member State levels in order to draft, transpose and implement the legislation. The costs of option 4 in this respect are only marginally greater than policy option 2 but greater than option 3. Option 5 would require a budget of a minimum of €2 million and funding at the EU level. Some ‘matching’ resources would also be required at Member State level to ensure that the campaign communicated the key messages effectively. It is envisaged that option 6 would require the commitment of time and resources at the Member State level.

Beyond the costs for additional checks, other options would not impose significant additional costs on employers that were acting legally because the procedures envisaged would only impose ‘light’ obligations on them. Moreover, it has to be noted that the preventive measures currently in place in most Member States impose significantly higher obligations on employers than those proposed in option 3 and 4 (e.g. 20 Member States require employers to verify the status of the migrant worker)[?].The costs on third country governments would be low but in so far as they contributed to communication to prospective illegal migrants the nature of the new regime, and hence its potential deterrent effect, then some costs would be incurred.

The evidence cited in this report that there are very large number of third country nationals working in the EU that do not have the right to do so does raise questions over whether current methods of enforcement of existing sanctions are cost effective. Available data from enforcement bodies in three Member States show that the number of inspectors (Full Time Equivalent) has been increased in two of the three Member States from 2003 to 2005: In Spain from 1,526 to 1,632; and in Latvia from 98 to 116. In Italy from 2,215 numbers decreased from 2,215 to 1,949. However, these figures cover inspections in general and not only of illegal employment of third-country nationals. No figures on costs for running the body are available for any of the three Member States.

A number of limitations of the enforcement cost and administrative cost calculations need to be stressed: the calculations provided in annex rely on a number of assumptions as regards the duration of checks, their number, and the hourly employment costs involved. The preferred option does for example not decide on the duration of checks, whilst this is a crucial parameter to calculate the costs. Also, the current level of checks in Member States was only available for selected Member States.

Table 6.7 – Summary of the relative financial and administrative costs of the policy options

Types of costs | Policy Options |

Member State Governments | No additional resources | Transposition of legislation 2 months FTE per Member State Transposition, implementation report. 4 months per 2 years Additional resources for meeting enforcement obligation and for supporting measures (see enforcement costs calculation in annex 10) | Transposition of legislation 2 months FTE per Member State Transposition, implementation report. 4 months per 2 years Additional resources for effective enforcement and supporting measures (no estimates made but costs not a direct result of PO) | Transposition of legislation 3 months FTE per Member State Transposition, implementation report. 5 months per 2 years Additional resources for meeting enforcement obligation and for supporting measures (see enforcement costs calculation in annex 10) | Say €2.0 million to implement and convey messages of awareness campaign | Costs of time of participants in the activities. Notional costs of time of participants, say 0,5 month FTE per Member State |

Employers (acting legally) | No additional resources | Possible additional costs for undergoing checks (see administrative costs calculation in annex 9) | Possible reductions in processing costs | Possible reductions in processing costs; possible additional costs for undergoing checks (see administrative costs calculation in annex 9) | No additional costs | No additional costs |

Third Country Governments | No additional resources | Potential costs if they become involved in communicating new regime to TCN | Potential costs if they become involved in communicating new regime to TCN | Potential costs if they become involved in communicating new regime to TCN | No additional costs | No additional costs |

COMPARING THE OPTIONS

Comparison of policy options

Table 6.1 compares the ‘ratings’ of the six policy options elaborated in Section 5.

Table 6.1 – Assessment of Policy Options – comparison

Objective to be achieved/ problem addressed | Policy Options (Anticipated impacts rated from – to √√√√√) |

To reduce illegal immigration to the EU | √ | √√ | √√ | √√√ | 0 | √√ |

To create a level playing field for employers | 0 or – | √√√ | √√√ | √√√√ | 0 | √ |

To contribute to reduced exploitation of illegally staying third-country nationals | 0 or – | 0 or - | 0 | 0 or - | 0 | √√ |

To develop common rules which are likely to be complied with in practice and enforced | 0 | √ | √√ | √√ | 0 | √ |

To complement and reinforce existing (and forthcoming) acquis | N/A | √√ | √√ | √√√ | √ | √√√ |

To reduce human trafficking, organised crime and smuggling | 0 or – | 0 or – | 0 or – | – | 0 | √√ |

Fundamental rights |

Protection of personal data (Art. 8) | 0 | 0 | – | – | 0 | 0 |

Right to an effective remedy and fair trial (Art. 47) | 0 | 0 | 0 | 0 | 0 | 0 |

Non-discrimination (Art. 21) | 0 | 0 | 0 | 0 | 0 | 0 or √ |

Principles of legality and proportionality of criminal offences and penalties (Art. 49) | 0 | √ | √ | √ | 0 | 0 or √ |

Costs relative to status quo + Higher cost than status quo; 0 Unchanged costs; – Lower costs than status quo | 0 | + | + | + | + | + |

The preferred option

On the basis of the comparison of the options and their impacts on meeting policy objectives and contributing to and respecting fundamental rights, and in the light of Member States’ and stakeholder views, and practicality and costs, the preferred option is a combination of:

- Option 4: Harmonised sanctions for employers of illegally staying third-country nationals, with an enforcement obligation on Member States, and harmonised preventive measures: common requirements across the EU for employers to copy the relevant documentation and to notify the competent national bodies; and,

- Option 6: Identification and exchange between Member States of good practices.

Harmonised sanctions for employers who employ illegaly staying third-country nationals would increase clarity over the nature of the offence within the EU. Universal presence and minimum levels of sanctions across the Union would increase their deterrent effect. There would be rapid progress towards a level playing field for companies across the EU and employers could be confident that the principles of sanctions would be applied in a consistent manner. The preventive measures would impose a universal but ‘light’ burden to request and keep documentation on prospective employees but the onus on checking the bona fide nature of these documents would rest with competent authorities. This would allow employers to proceed in good faith to engage workers who had provided documentation that appeared to meet requirements.

As illustrated in the assessment of option 4, beneficial impacts on the main policy objectives would result from the combination of sanctions and preventive measures. However, the impact and effectiveness of option 4 is heavily dependent upon whether the legislation envisaged is transposed and enforced in practice. For this reason option 4 includes a requirement for Member States to undertake a particular level of enforcement activity, and it is proposed to complement the legislative measures within option 4 with the proposal in option 6 for the identification and exchange of good practice on implementation and enforcement.

Requiring Member States to inspect 10% of registered companies, as foreseen in the legislative proposal, would be a significant step towards improving the enforcement of harmonised sanctions across the EU. Such a level of enforcement would send a clear message to employers that the threat of being caught in case of violation is real or increased. Employer organisations would be more reassured that unfair competition stemming from the recruitment of illegally staying third-country nationals is taken seriously by national governments and is being dealt with across the EU.

Option 6 has been described above as a mechanism for fostering cooperation and exchange of experience of current national policies and practices. However, in the preferred option the exchange of experience would in particular aim to ensure that the new legislation in terms of harmonised sanctions and preventive measures is effective. In this new context it is envisaged that the identification and communication of good practice could cover activities such as: systems of employer inspections; the training of employers; methods for regularising/ removing third country nationals identified as working illegally; the application of sanctions; the detection of systematic and large scale illegal employment; the links between employment of illegally staying third country nationals and the wider informal economy. The methods used in this exchange of experience could include research, evaluation and peer learning activities. In order to provide a framework for the exchanges, a network of national contact points could be established.

This combination of policy options would contribute EU added value and complement existing and forthcoming acquis by targeting the employment pull factor. The preferred option would achieve a better result than any of the options alone, or any other combinations of options. However, the positive effects of adopting the preferred option would be limited and none of the objectives would be fully achieved nor the problems fully eliminated. Common employer sanctions and preventive measures across the EU, supported by identification and exchange of good practices would, however, reduce both the problems due to the variation of types and levels of employer sanctions between the Member States and the current lack of enforcement, which was highlighted by stakeholders across the EU as the key challenge in the present situation.

Because enforcement is the main problem in the current situation it could be argued that there would be merit in adopting Option 6 in the first instance. However, exchange of experience would be more effective where the applicable legislation was harmonised rather than varied as at present between Member States. Also, prevention within countries of origin is of key importance. If harmonised measures are effective in reducing employment and this message is conveyed to third countries, it is likely to lead to a decreased impetus to enter or stay in the EU illegally and thereby result in decreases in illegal immigration. A clear message from across the EU of the commitment to fighting employment of illegal third country nationals is likely to be stronger and have greater impacts than mere signals that it is difficult to find work in one or a few Member States. The message is likely to be even stronger if harmonised sanctions and improved enforcement mechanisms are adopted at the same time.

The main benefits of the preferred option

The preferred option would have positive impacts on the reduction of illegal employment of third-country nationals. The preventive notification procedures employers would be obliged to follow would be straightforward and easy to comply with. Minimum sanctions would help to persuade the employer of the need for compliance and the employer would know what sanction s/he faces if s/he employed an illegaly staying third-country national. More resources and better methods of enforcement may improve the identification and sanctioning of employers hiring illegally staying third-country nationals. There would also be positive impacts on the creation of a level playing field at sectoral level as employers across the EU would be subject to the same sanctions. This would be particularly relevant for those employers who do not hire illegally staying third-country nationals, as salaries of the latter are in general lower. Furthermore, in some countries where verification of status of workers is required from employers, there would be a slightly decreased administrative burden on employers as the new requirements to copy and forward documentation would require less work than current obligations.

The preferred option takes account of employer sanctions and preventive measures which have been evidenced as effective in Member States. Exchange of information and good practice world increase the capacity of law enforcement bodies, which in turn would strengthen the monitoring of the implementation of regulations. The enforcement obligation would ensure stricter and better enforcement, and thus increased compliance.

As concerns fundamental rights, overall it can be expected that exploitation would be reduced as a result of exchange of good practices on how to protect victims of such exploitation and sharing of information on how to mitigate negative effects for those who collaborate with law enforcement. Positive impacts are also likely on the principles of legality and proportionality of criminal offences and penalties as the crime would be defined across the EU.

The preferred option is also likely to have a positive impact on the reduction of human trafficking, organised crime and smuggling, because as Member States exchange information and good practices on how to encourage such workers to report violations the chances of catching employers systematically engaged in criminal activities would increase.

The main disadvantages of the preferred option

Illegal employment of third country nationals would not be eliminated. Effectiveness in this respect depends largely on enforcement, which is the responsibility of the Member States. Even with the enforcement obligation and the the sharing of good practices, the effectiveness of inspections would still be dependent on the Member States.

Also, in terms of reduction of illegal immigration to the EU, as only one pull factor (employment) is affected by the preferred option, impacts are likely to be limited. The extent to which illegal immigration is reduced is dependent on (1) the effectiveness of the measures introduced; (2) the effectiveness of enforcement thereof; and, (3) communication of this to third countries (so as to reduce the impetus for third-country nationals to try to find employment in the EU illegally).

For employers, disadvantages include that more employers would be criminalised. In some countries where verification of status of workers is currently not required, there would be a slight additional administrative burden on employers due to the new requirements to copy (and ensure the safe-keeping of) and forward documentation.

In purely economic terms, sensitive sectors (mainly construction, agriculture, housework/cleaning, catering and other hospitality services), are likely to be negatively affected with respect to international competition, as they to some extent rely on the flexible and relatively cheap labour of illegaly staying third-country nationals provide. As a result, certain Member States, where these sensitive sectors are particularly important, may see a negative economic impact on their national economies.

Concerning fundamental rights, there is a risk that exploitation of some illegally staying third-country nationals may increase as higher employer sanctions may lead those who still employ them to seek greater control over the movements and activities of their employees. However, that risk should be counterbalanced in particular by the proposed criminal sanctions in cases of particularly exploitative working conditions. There are also possible negative effects on protection of personal data. To what extent this would occur depends on what measures are taken by employers and authorities to ensure the confidentiality thereof.

The preferred option may have a small negative effect on organised crime, if the preventive measures lead to increased identity fraud and the forgery of documents.

Third (sending) countries would also experience negative impacts if illegal employment of their nationals in the EU decreased, as the level of remittances would be likely to decrease. Support measures for the preferred option

In order to maximise the positive benefits and mitigate or minimise disadvantages / risks, it is proposed that this preferred policy option would be accompanied by the following supporting measures at Member State level:

- Each Member State would identify the competent authorities to which employers are to submit relevant documentation.

- Protective measures would be introduced in order to deal with the threat to privacy and data protection that such data exchange / collection entails.

- Member States would need to ensure compliance with the requirement to submit relevant documentation.

- Establishment of protective measures for illegally employed third-country nationals in case of sanctions for the employer , e.g. back payment of (minimum) wages; burden of proof on the employer to show that s/he has paid the employee; safe channels for employees to report illegal practices (confidentiality secured, ombudsman or responsibility for trade unions); and, payment of return of the illegal worker.

- Support in the form of awareness raising campaigns [?] targeted at the employers (in particular SMEs) and employees.

Assessment and considerations of proportionality and EU added value

Proportionality

The preferred option would constitute a relatively minor change from the status quo in terms of both the weight of legislation and the burden on legitimate employers. Most Member States have both sanctions and employer obligations in place similar to those envisaged in the preferred option. Member States may have increased burdens resulting from the need to enforce the rules, but these are justified in relation to the objectives.

The preferred option should be seen as just one contributory measure in the management of migration in the EU and in achieving the objectives of reducing illegal immigration and reducing employment of illegaly staying third country nationals.

European added value

The preferred option has the potential to generate the following European added value:

A more level playing field : every EU employer would be aware that their peers and competitors were subject to the same minimum sanctions should they employ illegally staying third-country nationals, and minimum obligation to request provide and keep documentation. Were employers also confident that levels of enforcement were consistent there would be increased European added value.

The identification and transfer of good practice : the challenges of achieving effective enforcement and the mitigation of negative consequences are great. The exchange of experience component of the preferred option would bring significant EU added value.

Key messages to third countries and prospective illegal migrants : The following circumstances are relevant: there are large numbers of illegally staying third country nationals who are working; there are many employers acting illegally; it is apparently ‘easier’ to find illegal employment in some national/sectoral contexts than others; it is possible to move relatively freely within the EU; and, the likelihood of existing sanctions being imposed is low and varies between countries/regions. Given those circumstances, the adoption of the preferred option would provide a signal that these problems are being addressed and that the risks to illegal migrants have increased. Such a message emanating from the EU level would have a value distinct from and potentially greater than that stemming from the national level. The value would be enhanced were the likelihood of enforcement strong and were the preferred option seen as part of a range of measures to improve the management of migration and the possibilities for legal migration and to reduce the marked economic disparities between the EU and countries of origin of illegal migrants.

MONITORING AND EVALUATION

Table 7.1 includes some suggestions for indicators that could be developed to assess the progress and effectiveness of the preferred option in achieving the main policy objectives.

Table 7.1 – Potential monitoring and evaluation indicators of the preferred option

Main Policy Objectives | Potential indicators | Sources of information |

To reduce the employment of illegally staying third-country nationals | Number of illegally staying third-country nationals detected through inspections. | Implementation agencies Member State statistics to be collected under forthcoming Regulation on Community statistics on migration and international protection[?]. |

Estimates of the numbers of illegally employed third country nationals. | Sources as used by the external study in characterisation of problem. |

To reduce illegal immigration to the EU | Numbers of illegal migrants apprehended at EU borders. | Member State statistics to be collected under forthcoming Regulation on Community statistics. |

Number of overstayers. Estimates of flows of illegal migrants. Estimates of the stocks of illegal migrants. | Sources as used by the external study in the characterisation of problem. |

To create a level playing field for employers | Transposition of legislation Actual sanctions and obligations imposed | Member State monitoring reports Implementation agencies |

To contribute to reduced exploitation of third-country nationals no or limited rights to work that are exceeded | Conditions of work of illegally employed third country nationals detected through inspections | Implementation agencies |

To develop common rules which are likely to be complied with in practice and enforced | Resources available for implementation Numbers of successful administrative proceedings and criminal prosecutions Numbers of administrative proceedings and criminal prosecutions relative to estimates of scale of the problem | Member States |

To complement and reinforce existing (and forthcoming) acquis | Progress with respect to other measures | EU level monitoring |

To reduce human trafficking, organised crime and smuggling | Number of successful prosecutions originally detected through inspections |

Impacts on fundamental rights |

Protection of personal data (Art. 8) | Measures put in place to protect personal data |

Impacts of identification and exchange of good practices and experience |

Instances of validated good practice |

Products developed (e.g. training products) |

Application of products |

Activities undertaken |

ANNEX 1 – METHODS FOR ASSESSING NUMBERS OF ILLEGALLY STAYING THIRD-COUNTRY NATIONALS

By the very nature of the phenomenon “illega