Migration Challenge or Opportunity? - Introduction 15th Munich Economic Summit Clemens Fuest 30 June 2016
What do you think are the two most important issues facing the EU at the moment? 40 35 2014 2015 30 25 20 15 10 5 Immigration Economic Situation Unemployment Public Finances Terrorism EU's influence in the world Source: Eurobarometer.
Economic issues related to migration 1. Does migration lead to economic benefits? 2. What do we know about the most recent migration wave? 3. Is immigration a relief for the welfare states of our ageing societies? 4. Is immigration into the UK different?
1. Does migration lead to economic benefits?
It depends. If migrants go from where they have no jobs or low wages to countries where they are more productive, yes. The efficiency gain does not mean that everybody benefits: There will be winners and losers in source and destination countries Taxes and the welfare state can distort migration
2. What do we know about the most recent migration wave?
Asylum applications in the European Union 1.600 1.000 persons 1.400 1.200 1.000 800 600 400 200 0 Source: Eurostat.
Asylum applications per 1,000 inhabitants, 2015 Hungary Sweden Austria Finland Germany Luxembourg Malta Belgium Denmark Bulgaria Cyprus Netherlands EU-28 Italy Greece France Ireland United Kingdom Poland Spain Estonia Latvia Czech Republic Slovenia Lithuania Portugal Romania Slovakia Croatia Source: Eurostat. 4,4 4,3 2,8 3,7 4,0 2,7 1,4 2,6 2,7 1,2 1,1 0,7 0,6 0,3 0,3 0,2 0,2 0,1 0,1 0,1 0,1 0,1 0,1 0,0 5,9 5,9 10,3 16,7 18,0 0 5 10 15 20
Asylum applications in Germany 500 1.000 persons 400 300 200 100 0 Source: Federal Office for Migration and Refugees.
Migration figures for Germany 1.400 1.000 persons 1.400 1.200 1.000 800 600 400 200 0-200 -400 Germans Foreigners Total 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 1.200 1.000 800 600 400 200 0-200 -400 Source: German Federal Statistics Office.
Countries of origin of refugees registered in Germany, January May 2016 (in %) Nigeria: 0,9 Russ. Federation: 1,0 Eritrea: 1,7 Pakistan: 1,7 Albania: 1,9 Iran, Islam. Republic: 2,9 Undefined: 3,6 Afghanistan: 13,7 Other countries: 11,2 Syria, Arab. Republic: 46,6 Iraq: 14,8 Source: Federal Office for Migration and Refugees.
Registered persons in the EASY-System 250 1.000 persons 200 2015: 1.091.894 persons 150 100 50 0 Source: Federal Office for Migration and Refugees.
Education and professional skills
Adult illiterate persons*, 2015 (in %) Afghanistan 61,8 Pakistan Nigeria 41,3 40,4 Eritrea 26,2 Iraq 20,3 Syria Iran 13,6 13,2 Albania Russ. Federation 0,3 2,4 0 10 20 30 40 50 60 70 * Population 15+ years Source: United Nations Educational, Scientific, and Cultural Organization (UNESCO), Institute for Statistics.
Educational level of migrants 2/3 of migrants from Syria (65%) and Albania (59%) have no professional qualifications (Source: Wößmann 2016) 70% of Syrians, Iraqis and Afghanis, who began their education two years ago, have now discontinued it (Source: Handwerkskammer München und Oberbayern)
Employment & unemployment rates, February 2016 (in %) Total 7,8 64,8 Foreigners 16 44,3 Balkan countries* Countries at war & in crisis** 15,3 17,9 44,1 Employment rate Unemployment rate 48,2 0 10 20 30 40 50 60 70 * Albania, Bosnia-Herzegovina, Kosovo, Macedonia, Montenegro and Serbia ** Afghanistan, Eritrea, Iraq, Iran, Nigeria, Pakistan, Somalia and Syria. Source: Institute for Employment Research, Flüchtlingsmonitor May 2016.
3. Is immigration a relief for the welfare states of our aging societies?
OECD estimates of the net fiscal impact of immigrants, 2007-2009 2,5 2,0 1,5 1,0 0,5 0,0-0,5-1,0-1,5 % of GDP Source: OECD, International Migration Outlook 2013.
Immigration and population size in Germany Source: Bonin (2016).
Net contributions and education levels, 2014 Source: Bonin (2016).
Implications The refugee wave of 2015 to Germany mainly included immigrants with low professional skills It cannot be expected that the migrants will be net contributors to the tax and transfer system The one time net fiscal cost to Germany is estimated to be 5-8% of GDP (with considerable uncertainty) An increase in GDP through higher public spending is not the same as an economic benefit for the host country Refugees should be received for humanitarian reasons, not because an economic benefit can be expected
4. Is immigration into the UK different?
Migration figures for the United Kingdom 800 600 1.000 persons Immigration Emigration Net Migration 400 200 0-200 -400-600 Source: ONS, International Migration Data.
Immigration from the European Union has been rising: EU and non-eu inflows have caught up 400 350 Inflows of migrants to the United Kingdom in thousands EU Non-EU 400 350 300 300 250 250 200 200 150 150 100 100 50 50 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0 Source: OECD.
Asylum applications in the United Kingdom 120 1.000 persons 100 80 60 40 20 0 Source: Eurostat.
Immigration is an important driver of employment: Contributions to the change in total employment by country of birth 3,0 2,5 2,0 1,5 1,0 0,5 0,0-0,5-1,0 Million UK-born EU-born Non-EU-born Total Source: OECD.
UK employment rates by country of birth, Q4-2015 90 85 80 75 70 65 60 55 50 As a percentage of population aged 16-64 Source: OECD.
Conclusions
International migration driven by the desire of migrants to find better jobs and economic opportunities has economic benefits This is not true for migration motivated by welfare state transfers and public services The refugee wave of 2015 does not bring economic advantages to the German economy Refugees should be received for humanitarian reasons, not because an economic benefit can be expected
Immigration into the UK was mainly immigration into the labour market the effects on the UK economy were mostly positive That does not exclude that some groups of the population are negatively affected by immigration
Thank you very much!