Migration as an Adjustment Mechanism in a Crisis-Stricken Europe

Transcription

1 Migration as an Adjustment Mechanism in a Crisis-Stricken Europe Martin Kahanec Central European University (CEU), Budapest Institute for the Study of Labor (IZA), Bonn Central European Labour Studies Institute (CELSI), Bratislava EMN Dublin, June 14, 2013

2 Four themes The demographic context and the demographic imbalances Mobility in Europe Crisis and adjustment Lessons

3 The demographic background Demographic change presents nearly all EU states with formidable challenges: Ageing populations Scarcity of skilled labor Dynamic loss in the economy (innovation deficits) Financial risks in social security systems Financial and economic crisis adds to the difficulties: Rising risk aversion Economic decline Negative attitudes toward immigration and new Fortress Europe?

4 Ageing ( ) Old-Age Dependency Ratios Projection 2005/2020 Bulgaria Czech Republic Estonia Hungary Latvia Lithuania Poland Romania Slovakia Slovenia Cyprus Greece Italy Malta Portugal Spain Austria Belgium France Germany Luxembourg Netherlands Denmark Finland Ireland Old-Age Dependency Ratios in ,15 0,2 0,25 0,3 0,35 0,4 0,45 Development ,05 0,1 0,15 0,2 Share of old people relative to working age population will increase 40% of workers aged over 45 and expected to grow The share of labor force aged is to decrease by 20% by 2020 Inevitably, the share of young mobile workers will decrease Hence, EU societies have to cope with declining innovation dynamics Sweden United Kingdom Source: Eurostat, EuroPOP2004 (No migration variant), calculations by IZA staff; IZA, AMS, Niras (2008), Geographic Mobility in the European Union: Optimising its Social and Economic Benefits. Report to the EC

5 Skill gaps and demand for migrants in the EU: Especially in the EU-15 in order to fill in replacement and newly emerging jobs (both high skilled and low skilled) Shortages due to inefficiencies in job matching and skill deficiencies; sales, services and elementary occupations will be most in demand by 2020 and not attractive to native workers; IZA Expert Survey on High-Skilled Labor Immigration: A survey of 234 labor market experts from Europe; 89.0% - the EU needs at least as many immigrants as it has now, and 57.7% - the EU needs more or many more immigrants Less conviction that the EU needs low-skilled immigration (60.7 and 27.3%) However, 96.7% - the EU needs at least as many high-skilled migrants, and 80.3 % - the EU needs more or many more high-skilled migrants

6 so there is need for mobility and immigration. do we have any?

7 Intra-EU Mobility Mobile EU-27 Citizens by Country of Origin (2006) 14.0 EU mobility low: 1%, compared to 3% in the US and 1.7% in RF In Southern Europe mobility even lower: 0.5% But given widespread demographic imbalances, even growing intra-eu mobility will not offset ageing CY LU IE PT MT RO BG FI SK BE SI LT LV PL DE NL FR DK EE SE CZ IT UK ES EL HU AT % Source: Eurostat, LFS, spring data for available countries; IZA Research Report No. 19 (2008).

8 Immigrants across the EU Other EUN EU12 EU15+EFTA 5 0 RO BG PL SK HU CZ FI LT PT DK ES SI NL GR IT EE LV FR UK SE AT BE IE CY Highest shares CY, IE, BE, AT, SE, UK; lowest RO, BG, PL, SK, HU, CZ. Source: Kahanec, EU LFS 2010

9 so mobility in Europe is low (bad), but we have some immigrants in Europe (good), and their numbers are growing (good) so are there any problems?

10 Unskilled immigrants? No, rather educated! c) Percent high-educated EUN immigrants and natives Percent high skilled, EUN PT CZ IT RO SK HU AT LV PL SI GR LT FR NL DE EE SE UK DK ES CY IE FI BE Percent high skilled, natives d) Percent high-educated other immigrants and natives Percent high skilled, other origin RO PT HU IT CZ AT SK EE IE UK SI SE BE LT FR DK DE CY PL NL FI LV ES GR BG Percent high skilled, natives Non-EU immigrants well-educated, especially in NMSs. Less skilled than natives are EUNs in the EU15, other immigrants in eg ES and FI. Tertiary education. Source: Kahanec, EU LFS 2010

11 Educated but brain waste! c) Percent high-skilled EUN immigrants and natives High-skiled share, EUN RO HU BG LT 25 SK CY IE UK 20 FI EE CZ FR DK NL LV 15 PL SI SE BE 10 PT GR 5 AT DE IT ES High-skilled share, natives d) Percent high-skilled other immigrants and natives High-skiled share, other origin RO PT HU BG PL SK EE IE SI AT CZ LV LT FR FI GR CY IT ES UK BE High-skilled share, natives DE DK SE NL Non-EU immigrants more often work in less-skilled occupations (especially ES, IT, AT, DE, SE, NL), except for some NMSs. ISCO 1-3. Source: Kahanec, EU LFS 2010

12 and unemployment Country Nationality Country of birth Nationals Non-EU Native-born Non-EU foreign-born Nationals Total Reside >5 years Reside 5 years France Men Women N Germany n.a. n.a. n.a. Men n.a. n.a. n.a. Women n.a. n.a. n.a. N n.a. n.a. n.a. Italy Men Women N Sweden Men Women N UK Men Women N Source: Kahanec and Zimmermann, 2010.

13 Therefore rather: mobility in Europe is low and the potential benefits of immigration are not fully utilized but what benefits, and any costs?

14 Is immigration a threat? No, rather opportunity! Labor markets absorb immigrants well (no negative effects on wages or unemployment on aggregate. Micro adjustment) Macro: positive effects on total and per capita GDP and employment rate Immigrants especially regular ones contribute to taxes. Migrants respond to labor market skill gaps more than natives Migrants respond to economic conditions No welfare abuse, no welfare tourism. Rather lack of access Relief for sending labor markets struggling with redundancies

15 OK, but not during the crisis? precisely during the crisis!

16 Migration flows respond to economic shocks: Flows of Poles to the EU EU15 Germahy UK Ireland Post enlargement increase, stymied by dearth of opportunities in EU15 in , then improvement in EU15 and continued push factors in EU12

17 Migration flows respond to destination economy: Flows of Slovaks Working abroad by destination country 100% 90% 80% 70% 60% 50% 40% 30% 20% IT DE IR AT HU UK CZ 10% 0% After 2008 diversion away from the UK, IE and HU to DE and AT. Precisely what is needed.

18 Return migration Post-enlargement migration primarily temporary (self-reported) Slow down in receiving countries may lead to return migration However, similar or even more severe slow down, or persistent gaps, may lead to postponement of the decision to return. Recent evidence (Zaiceva and Zimmermann, forthcoming) Brain circulation emerging High educated more likely to return Returnees more likely to migrate again The proportion of potential movers is larger in countries most affected by the crisis. Emerging mobile stratum in the population cushioning the asymmetric shocks and providing for a better allocation of resources.

19 Migration and the Great Recession which common sense? Common sense 1: Migrants take our jobs and compete for zerosum welfare. Seems to be more appealing with high unemployment during the recession Common sense 2: In a monetary union (and no fiscal union) mobility of labor force is a powerful vehicle of economic adjustment especially in times of asymmetric shocks Painstaking analysis and hard data show that Common sense 1 is rather common nonsense based on generalization fallacy. Generally: No effects on wages No welfare abuse/tourism Positive effects on GDP and employment rate Filling up skill gaps, relieving redundancies

20 what should be done?

21 Key policy challenges Adverse immigrant selection High costs of immigration procedures (pecuniary and nonpecuniary), intransparent and ill-defined entry procedures EU not attractive for skilled migrants Labor market barriers Institutional barriers in legal framework, poor access to institutions, markets, etc. Poor transferability of qualifications and skills (issues with recognition of qualifications); Discrimination, negative attitudes; Lack of information about market opportunities; taxation issues; no grace period if job lost; language barriers; Poor access to social rights Lack of provisions for tied migrants Lack of harmonization across the EU

22 Conclusions Europe needs efficient mobility and qualified immigrants We have some, but due to inadequate policies we are also losing the best Those we have are educated but not integrated, so we are losing talents, potentials are lost The policy discourse needs to be well informed, not based on myths -- mentally, we need a paradigm shift Pragmatically, to improve the situation we need active policies Uphold free mobility Provide for efficient labor migration, temporary and permanent Improve integration, access to social rights/welfare

23 Thank you for your attention! Martin Kahanec Central European University (CEU) Institute for the Study of Labor (IZA) Central European Labor Studies Institute (CELSI)

24 Martin Kahanec Tel/Fax: kahanecm@ceu.hu Department of Public Policy Central European University Nador utca 9 Budapest 1051 Hungary