Boon or burden? Immigration and reform of European welfare states London, 13 October 2008 Seminar report This seminar formed part of Policy Network s 12-month research programme on the Myths and realities of labour migration, supported by the Barrow Cadbury Trust, which has sought to disentangle public perceptions of migration often influenced by inaccurate reporting in the media from a more balanced understanding of migration s actual economic impact. It was the final event in a series of three expert workshops and specifically tackled one of the central features of the immigration debate that has raged across Europe in the past two decades: the relationship between immigration and Europe s cherished welfare states. The seminar took place at a time when research bodies and government institutions around Europe, including the UK government, are attempting to make cost-benefit analyses of immigration. Perceptions of immigrants competing unfairly for public services have been coupled with fears that increasing diversity erodes the cultures of solidarity that support our welfare states. At the same time, falling birth rates and ageing populations have led to concerns about a decline in working-age populations in many European countries, raising the possibility that future immigration will in fact be essential in solving these structural difficulties. The seminar addressed some of the questions and implications raised by this paradox. Session one: do immigrants burden our welfare states? What we think and what we know Dr Michael Fertig began the presentations with an exploration of the contradictions in German public perceptions of migration. On the one hand the economic benefit that immigrants bring is recognised and valued against a backdrop of labour shortages. On the other hand, large majorities both fear that migrants are a drain on the welfare state and prefer enforced return for immigrants who become unemployed or commit crimes. 1
These contradictory perceptions have been compounded by Germany s immigration policy history, including the guestworker scheme of the 1960s, whereby low-skill workers from abroad were recruited to fill labour shortages and fuel Germany s industrial boom. Whilst this policy was successful at the time, in terms of economic gains, long-term problems have not been resolved. Not only is immigration still perceived to be a temporary process and immigrants treated as temporary residents, but the original guestworker community and their descendants have remained in the poorly paid and poorly educated strata of society. Whilst German society perceives the high ratio of immigrants who claim welfare benefits as a problem of immigration, in fact the data confirms a different picture. It was found that educational and economic attainment in Germany is affected greatly by social position and family background, and thus once human capital endowments are controlled for, residents with a migration background are no more dependent on the state than native Germans. The problem, Fertig argued, is therefore one of education and social mobility rather than of immigration. Many second generation immigrants do badly in the education system not because they have an immigrant background, but because that immigrant background was one of low skills and low levels of education, and opportunities for social mobility have been limited. Fertig s presentation thus highlighted the systemic link between immigration policies for example the recruitment of predominantly low-skilled workers and welfare state apparatuses including public services such as education and social assistance payments in shaping the wellbeing and prosperity of society as a whole. Reasons for large numbers of welfare dependents among immigrants must be understood in context, taking into account a broader interplay of factors, before the issue can be properly tackled. The point that a holistic perspective and approach towards welfare and immigration is necessary was further supported by Professor Jorgen Goul Andersen s presentation on the Danish experience. In response to the thesis that extensive welfare states cannot survive in culturally and ethnically heterogeneous societies, Andersen argued that the temporal order of welfare statebuilding and heterogeneity matter. Traditionally heterogeneous countries such as the US, with only residual (if highly developed) welfare apparatuses may well be unable to now mobilise support for further state intervention. It does not follow, however, that countries such as those in western Europe and Scandinavia, which have traditionally more homogenous societies but where strong and comprehensive welfare systems have already been built, should respond similarly. In fact, Anderson argued, the latter are in a very strong position to maintain these structures despite the introduction of increasing diversity, because such state apparatuses can be used to mobilise support for immigrants and thus greater solidarity within a culturally diverse society. Whilst Denmark may seem to contradict this thesis, given its traditionally very generous welfare system and recent history of xenophobic politics, public opinion polls over time reveal an interesting trend. Public support for state spending on welfare and public services has not declined despite high rates of new immigration, but has actually increased. The 2
percentage of people who felt the government should spend more on education and social assistance rose between 1990 and 2007 by 16% and 26% respectively. Furthermore, although the early 1990s saw a steep rise in public concern about immigration and negative attitudes towards state spending on immigrants, this trend appears to be in reverse. Large numbers of Danes continue to see immigration as an important political issue, yet a rapidly growing percentage of these would prefer to see more money spent on improving the life chances of immigrants, suggesting more solidaristic attitudes towards immigrants are emerging (see survey data presented in Andersen s powerpoint presentation). According to Andersen, the trend has changed because the fundamental foundations of the debate were misconstrued by the major political parties in the first place. The explosion of immigration as a widespread topic of public concern was primarily the result of the selfreinforcing dynamics of party competition, a downward spiral which was largely neutralised by a set of very restrictive immigration reforms introduced in 2001. However, although the Danish People s party has maintained a highly xenophobic character, Andersen argued that the foundations of their extensive support amongst the working classes lie primarily in the party s strong interventionist stance on welfare policies rather than their anti-immigration position. The danger of the DPP is rather their particular brand of welfare chauvinism. Is the universality of the Danish welfare state at risk, in light of the introduction of certain conditional welfare policies that have implicitly sought to reduce immigration? Andersen argued that these policies have not only been unsuccessful, given that immigration flows have not declined, they have also had damaging social consequences. Furthermore, they must be viewed within the context of a larger raft of welfare reforms, such as unemployment benefit and pension reform, which have sought to solve more fundamental structural difficulties facing the Danish welfare state. With regards to the interaction between migration and the welfare state, Professor Andrew Geddes called for greater attention to certain specificities. He argued that the link between labour migration, work and welfare can best be analysed at a specific nexus where vulnerable employment takes place. The phenomenon of labour migration does not itself subvert the welfare state, but rather it can provide an important opportunity to analyse the regulatory capacity of the state, and thus the effectiveness of government welfare objectives. By narrowing the lens of the labour migration debate, it is clear that rather than moving into countries, migrants move into very specific types of economic activity. Predominantly these are forms of informal, temporary, or agency work, such as is found in the agricultural sector; industries which are notoriously difficult to regulate for various reasons. Despite sophisticated schemes such as Britain s gangmaster licensing authority, these employment sectors, and the welfare of the workers they employ, are thus in many ways beyond the reach of the state. Geddes argued that one must also not forget the broader structural variables that are at play. The supply chain of labour is a product of (often global) economic realities. Powerful 3
stakeholders such as multinational retailers, but also trade unions play an extremely important role in influencing the form and conditions of employment and recruitment at the very low-skilled and routinised level. Thus it is not labour migrants who drive the gangmaster systems that exist in these industries. Rather, labour migrants move into areas where exploitative negotiations between casual and low-wage employees and strong employers take place. Such labour negotiations and gangmaster cultures have existed for centuries and have variously made use of marginalised and vulnerable groups of workers throughout history. Whilst there is a strong sense that migration policies somehow fail, Geddes points out that looking at the specificities of such a global process, numerous new questions are raised about the perspectives and pay offs for different respective actors. For certain actors including the multi-national retailers labour migration is most certainly a boon. For others, such as lowskilled and casualised workers, more direct competition may be felt. However, it is the extent to which the state can effectively regulate and manage these relations, along with other actors concerned such as trade unions, which will ultimately determine the balance of impacts and the wellbeing of society s most vulnerable people. Session two: getting it right: immigration and Europe s reform agenda The second session moved from looking at certain aspects of how the relationship between migration and the welfare state is and should be perceived, to a more critical analysis of how effectively if at all European countries have taken migration into account in efforts to reform their welfare policies. Professor Grete Brochmann began the proceedings, drawing attention to the important effects of different immigration flows and immigration policies, and, most importantly, the structure of the receiving labour market and welfare state, for reform efforts. Scandinavian countries have had many things in common, not least the famous Nordic welfare model of robust, inclusive, tax-based welfare systems which provide high levels of support. All three countries also experienced large influxes of non-labour migrants, in particular of refugees, in the early 1990s, resulting in disproportionate transfers of income to (particularly non-eu) immigrants. In Denmark, for example, 35% of public social assistance went to non-eu immigrants, who made up only 5% of the population. In Sweden, 50% of payments went to the 11% of the population of non-eu immigrant origin, and Norway experienced a similar ratio of public spending amongst immigrant groups. Such discrepancies were taken up in the media debate and used to criticise government integration policies, a backdrop against which extreme right parties in Norway and Denmark managed to mobilise large anti-immigrant constituencies. However, to speak of a Nordic bloc is no longer accurate as large variations now exist between the Nordic countries. Reforms have taken place across the region, and differences 4
are particularly apparent in terms of immigration policies. Denmark has experienced the most sweeping changes to its previously generous welfare system, which was thought to create large disincentives for marginalised groups to work. Yet even in Norway, and more recently in Sweden, unemployment benefits have been cut back. According to Brochmann, this change can be seen as the grand entry of duty into the system. An ideological shift towards the duty side of the welfare state has taken place at the expense of the rights side. Nonetheless, Brochmann argued that there was a limit to the rationality of welfare cuts. Ultimately, introducing new conditionality will not work unless effective integration is achieved. Integration must be the central process if marginalised groups are not to threaten the viability of the whole system. In Denmark, whilst cuts in unemployment benefit were aimed at getting more people into work, they have left low paid families struggling to support themselves and ultimately more dependent on social assistance. Such examples show that policymakers must take into account how immigration and welfare policies can affect one another, when introducing reforms in these fields. The full economic and social integration of all those eligible to use the system is an absolute must. Professor Martin Baldwin-Edwards drew a rather different picture of the experience of southern European countries. The welfare states in these countries have traditionally been predominantly skewed towards pension provision and have been heavily reliant on the family to provide the most basic care services (although Spain is now becoming the exception to this rule). With significant demographic shifts towards ageing and declining populations, ever more pressure has been placed on care providers and has threatened to undermine the viability of the pension system. Highly regulated labour markets have also meant that large informal sectors flourish, creating attractive opportunities for labour migrants. The combination of such factors has thus created a situation where migrant labour plays a central role in the working of the southern European welfare state, with predominantly female migrants filling roles in the low-paid and informal private care industry. For example, during the Italian regularisation programme of 2002, 27.6% of regularisation applications were made for home helpers, and 20.4% were made for carers of the elderly. A similar outcome was seen in the Spanish regularisation of 2005, where the majority of female applicants were working as domestic helpers. In some ways, the indispensable nature of migrant labour in southern European welfare systems has created a positive influence, with controversial mass regularisations being heavily endorsed by pensioners and other groups who rely on the care services migrants provide. Nonetheless, over-regulated labour markets and stringent work permit, residency and family reunification laws mean that the carers themselves are largely unprotected and uninsured, and are rarely in the position of paying into the overall welfare regime, let alone receiving its benefits. 5
Baldwin-Edwards regretted that no attempts were being made by the southern European governments to address these realities, and minimal reforms aimed at deregulating some areas of the labour market have had little overall impact. Instead, governments should be undertaking wholesale reforms to ensure greater effectiveness of fiscal transfers to pensioners to pay for carers, registration and training for care providers, and awarding longerterm residence permits for carers so that they are more protected from frequent periods of irregularity. Grant Fitzner closed the presentations with an overview of the extent to which immigration and welfare reforms in Britain have been coordinated. The UK s new points-based system has replaced an archaic and cumbersome policy infrastructure and has signalled a new era of innovation in immigration policy thinking. Fitzner initially pointed out that changes in flows have reflected changing business environments and labour market opportunities, and thus migrants who initially came to the UK due to more favourable opportunities here are beginning to return home as their own economies grow. Furthermore, whilst recent migrants from eastern Europe have in general had very little impact on certain public services, for example housing and health, in areas where there have been pressures, public services are getting better at responding. He followed by reflecting on four related strands of Britain s immigration and welfare transition. First of all, policy has been concerned with properly managing migration flows. Secondly, sponsoring community cohesion and supporting integration have been central concerns. Thirdly, the government has implemented schemes to help protect vulnerable workers, including migrant workers, temporary and agency workers. And finally, the debate about immigration and welfare reform in Britain has concerned public services far more than income support measures. Whilst there have been reforms implemented to help people reduce their dependency on benefit payments, these reforms are not de facto targeted at immigrant groups, as was found in the case of Denmark. Nonetheless, the ensuing discussion did bring to light how new stipulations under the Path to Citizenship green paper proposed cutting welfare rights for certain categories of migrants. Rather, Fitzner pointed out that there is a far more critical debate to be had about immigration and public services. Whilst significant pressures cannot be ignored, it must be remembered that in general the impact of migrants is very minimal, yet their contributions can be invaluable. Annie Bruzzone, policy researcher abruzzone@policy-network.net 6