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
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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
• The demographic context and the demographic imbalances
• Mobility in Europe • Crisis and adjustment
• Lessons
Four themes
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?
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
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 20-29 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
0,15 0,2 0,25 0,3 0,35 0,4 0,45
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
Sweden
United Kingdom
Old-Age Dependency Ratios in 20200 0,05 0,1 0,15 0,2
Development 2005 - 2020
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
…so there is need for mobility and immigration. … do we have any?
Intra-EU Mobility Mobile EU-27 Citizens by Country of Origin (2006)
• 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.
Migration and the Great Recession – which common sense? • Common sense 1: Migrants take our jobs and compete for zero-
sum 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
– High costs of immigration procedures (pecuniary and non-pecuniary), 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
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
Thank you for your
attention!
Martin Kahanec Central European University (CEU)
Institute for the Study of Labor (IZA) Central European Labor Studies Institute
Martin Kahanec Tel/Fax: +36 1 235 3097 Email: [email protected] Department of Public Policy Central European University Nador utca 9 Budapest 1051 Hungary www.publicpolicy.ceu.hu