Greece after the 1990s immigration wave: A difficult adaptation to an economic windfall

Transcription

1 Antigone Lyberaki Professor of economics, Panteion University Greece after the 1990s immigration wave: A difficult adaptation to an economic windfall LSE, March 2006

2 Retrospect and Prospect Evaluation of the episode Historical watershed unlikely to be repeated soon Has altered Greece decisively Will shape perceptions and reaction in future Hence two items in the papers agenda 1. Digest what happened Give a narrative and derive stylised facts 2. Bring out tensions likely to be met in future Work in progress with Prof. Dertilis of the EHESS, Paris

3 3 crucial reversals in the 1990s Greece was transformed from a country of emigration into one of immigration Greece shifted from being a net receiver of private foreign direct investment (FDI) into a net exporter of capital The Greek economy switched from a diverging economic performance vis a vis the EU into vigorous convergence.

4 Migration: a facet of globalization? Free movement of goods, services, capital, people? Is movement of goods and capital substitute or complement to movement of people? Substitute: if goods can move then factors of production need not move. Complement: non-traded goods and services (childcare), imperfections (non-equalisation of prices, mainly wages), part of value chain. Short-term effects of globalization: turmoil, societies under duress, increasing outflow of people

5 Not unprecedented : approximately 10% of world population moved Over the last 15 years: 3% of world population. So, international migration is the great absentee of Millennial globalisation. Qualitative new elements: 1. Different subjects 2. Different destinations So, Countries find themselves in unaccustomed roles From migrant source to destination. From developing world poverty to 1 st world riches.

6 European experience since 1985 The number of migrants increased by 50% While 30% come from other EU countries 65% (or 3,4% of population) come from other countries Over half of population increase in Europe (64%) is due to migration The process of ageing cannot be cancelled even if there were a doubling of migrants in the years to come.

7 Positive? Crucial questions towards evaluation Do migrants contribute to growth? Do they hijack jobs from the domestic working class? Do they freeze wages? Do they create an underclass of socially excluded groups? What is to be done?

8 Economic Literature : positive aspects prevail for the host Depending on: First: the characteristics of migrants themselves (skills and adaptability) Second: the characteristics of the receiving (host) economy. Migration tool for what? (low cost vs. quality-related competitive strength)

9 Implications for economy of origin (sender) Alleviation of unemployment pressure Inflow of remittances Family strategy: empowerment and guarding against risks and abrupt fluctuations of incomes However: brain drain and deprivation from the more dynamic elements (age and risk) Depends on whether, when and how they return

10 Gains for would-be migrants Life free of danger And corruption Better chances for children BUT mainly immense boost to earning potential (Jim Smith of Rand calculated that recent immigrants getting a green card gain on average $ per year or $ over a life-time in net present value terms).

11 Migrants in Greece: How Many? Legalisation process: 600 thousands submitted application in 1997 Plus 150 thousand Greek Pontians Plus Northern Epirotes Plus non-applicants Total at least 750 thousands Census: Estimated population ,5 million «Closed population» 10,2 million Registered in census 11 million. Total around 800 thousand plus those not counted in census SO: Population between 850 th. and 1 million (7%- 8.5% of total) % of the labour force.

12 Migrants in Greece: Who? Legalisation applications 65% from Albania 18% Bulgaria, Romania, Serbia, Georgia, Russia Even if we include Pontians in migrants, then still over 50% of the total are Albanians Majority from Southern Albania (where commercial and investment links concentrated). Radically different from rest of Europe Bulk of arrivals until 1998 (after pyramid scheme collapse). In comparison arrivals since are a trickle Very large and very abrupt change.

13 Thessaloniki Research Findings (2000) 1. Educational backwardness? Education (economically population) level active Greece total (%) Albanian migrants Higher 17.0% 15.2% Upper Secondary 29.4% 39.4% Lower Secondary 8.9% 21.8% Primary 37.2% 11.9% Less than primary - 7.5% 11.7% Relatively well educated

14 2. Financial situation Family income 3,24 million GDR. Poverty line for I person 1,3 m GDR in Pay rates comparable to Greeks Concentration around the minimum wage Labour law not irrelevant Expenditure low large savings Family expenditure 1,9 million GDR Improvement through time As the stay is extended and Through legalisation

15 3. Position improves with time Jobs improve with time Normalisation of labour situation 65% have health insurance Less avoidance of minimum wage Comparison with other studies: clear improvement Only 18% «without papers» Consumption standard also improving 76% have telephone 98% TV. 46% VCR 16% car

16 The 2003 Athens Survey: Key facts Interviews in Athens 9/ /2003 Snowball sampling informal networks Only way to approach illegals. Otherwise bias. Original sample frame not directly related to employment (orthogonal) 500 structured interviews answered by household head and Conducted by private survey agency. (Kapa research). 60 separate surveys conducted as a control by the researchers. Data cleaned and first tabulations focus on perceptions and social factors Fuller analysis to follow, focussing more on economic factors Separate survey has companies as the sampling frame (130 in total) conducted, but will not be reported on today.

17 Employment findings Very high participation rate (though bias expected) 96,1% for men; 65% for women. Note gender gap (30 per cent). Similar to native gap 88% pay social insurance contributions regularly. Sectoral mix of sample (men): Construction (41%), Mfg and services (30%). Self-employed and business owners (25%). Women (as % of population) Domestic services 34%, 12% mfg and restaurants 20% self-employment. 34% inactive Job turnover very small 75% has not changed employment over last 3 years.

18 Income adequacy Sample relatively well off (monthly hh income). 30% Have income less than 900 EUR 24% have more than 1500 EUR per month (ECHP poverty line for 4 member household 840 EUR 2002) Savings high but remittances over time show downward trend. Mobility and improvement of housing conditions over time. No ghettoes One in three owns a car. 74% have bank accounts.

19 Conclusions Community on an upward trajectory Appears to resemble the indigenous in a number of respects Resemblance grows over time: prone to selfemployment Individual success combined with lack of trust to all non-relatives, regardless of nationality. Similar findings for Greeks lack of social capital. Situation is still fluid and attitudes ambivalent. How things will turn out depends on future policy and integration initiatives

20 Overall comparison between Greeks and foreign-born EU-SILC (2003): sample of foreign-born Confirms general picture: Though not in the top gear, immigrants are better off than groups such as women Younger with more children and less elderly members, less likely to receive state benefits (7,7% vs 14% of hh) More likely to participate in the labour market if male (71,5% vs 66%) but less likely if female (by 5 percentage points) Less likely to do supervisory work (3% vs 15%) Less likely to hold a part-time job than women Wages of Greek males are 18,5% higher than Greek females, and 19,8% higher than foreign-born wages. The largest wage differential is between women: Greek earn 33,7% more

21 The Greek economy: from stagnation ( ) to growth Impressive growth performance in the period (8,0), slowing down up to 1979 (3,2). Very poor performance in (-0.05) and (1,85) periods:divergence. New growth phase since the mid-1990s and convergence with EU. Substantial transfer of resources from the EU throughout the last 25 years (from 1,5-3,6% of GDP annually). Growth (despite public finance problems) continues post 2004

22 Annual rate of increase in GDP European Union Greece

23 How did the labour market absorb these immigrants? Fast growth and high unemployment: Two speed Labour market? Resistance to labour market reform The Greek paradox is that unemployment does not involve low-skill Co-existence of unemployment with demand for lowskilled and flexible labour The Greek economy finds itself stuck in the middle Hence Low labour costs and flexibility provide a breathing space Migrants exploit niche

24 Accelerating employment growth Growth of Employment (thousand persons), Employed 20-64

25 Steady decline of unemployment Total Unemployment (1,000 individuals), % 11% 10% 9% 8% Unemployed Unemployment Indicators

26 Positive overall effect on the Greek economy 5 Positive elements : 1. Creation of new jobs (mainly in services) 2. Growth speeded up 3. Defensive strengthening of sectors and regions 4. Alleviation of bottlenecks in labour market 5. Personal services allow women to enter the labour market However, two potential counter-developmental temptations 1. Abundance of low wage labour. 2. Strengthening of grey economy. Immigration key driver in the Growth Spurt of the Greek economy, starting mid-90s and still unwinding

27 New trends in immigration after 2000 Immigration flows change. Three distinct groups alter the simple picture: Albanians (plus other Balkan and E. Europe) Informal networks with 1990s migrants Close links with Albania and source countries Post 2008 Bulgaria and Romania in EU Third country migrants E.g. Pakistan, Africa Greater importance of trafficking Greater cultural distance Chinese migration Self employed and self-contained Part of international value chain of Chinese manufacturing.

28 The global picture is also positive: The potential gains from liberalising migration are far more important compared to those from removing barriers to world trade. Dani Rodrik of Harvard : relaxing restrictions on the international movement of workers would yield benefits 25 times larger than those that would be realised by liberalising goods and capital flows. Tito Boeri of Bocconi: migration of 3% of Eastern Europeans to Western Europe would increase the total EU GDP by up to 0.5%.

29 Economic logic thwarted by political constraints A temporary visa scheme (3-5 years) amounting to no more than 3% of rich countries labour force would easily yield $200 billion annually for the citizens of the developing nations (Rodrik) Relaxing restrictions to migration has a compelling economic logic. But those gains can be made only at great political cost. However, the same applies to trade, which is being liberalised.

30 Explaining the immigration/ free trade political paradox Is it public opinion? It is against both free trade AND immigration equally. Rodrik: the beneficiaries from free trade have organised successfully and become politically effective. By contrast, the beneficiaries of labour flows are not easily identifiable, neither known ex ante.

31 Migration as a mirror: societies get what they deserve Evidence (and common sense) suggest that positive attitudes to immigrants maximise economic and social benefits from migration. Two main challenges for the rich world s governments: 1. How to manage the inflow of migrants 2. How to integrate those who are already there.

32 From the point of view of Greece All in the same neighborhood: differences in current performance BUT common future (in the EU?) The economic argument is easier to win but the cultural terrain is less conducive Essentially it is about overcoming the fear of change and building open societies. How to reap the economic windfall? How do economic and political actors respond? Some concluding remarks

33 The Civil Actors: Ambivalence The Church Tirana Anastasios vs. Thessalonika Anthimos Civil society The Albanian flag carrier vs. Gangs The Unions Solidarity vs Prevention of labour flexibility The Employers Short-termism vs. Investing in people

34 The political actors: Pusillanimity The politicians: Even when recognise positive role, afraid to say so. Ex-minister of Labour: when confronted with an unemployed man, you cannot defend being liberal in immigration The Parties Rhetorical differences large esp after 2004 In practise hesitant between treating as public order issue or social policy The Government After legalisation in 1998, very few new initiatives Progressive outlook when confronted with EU Yet unclear whether much is done to counter street level discrimination by the State machinery

35 Conclusion The situation is becoming harder New immigrant groups harder to integrate Growth episode may peter out However, there are grounds for optimism Integration of first wave Balkan win-win How it will turn out depends largely on political economy.