Labor migration to Austria Recent labor market trends in the context of the opening of the labor markets Immigration and the Austrian Labor Market Thomas Horvath Bratislava, 21.4.2016

Overview Brief history of labor migration to Austria How did the open labor market affect labor supply in Austria? What are the consequences of increased labor supply for the local population? Conclusion

Brief history of labor migration to Austria

(some) Milestones of Austrian Migration 1961: Start of the „guest worker model“ 1974: Oil crisis led to recruitment stop 1989: Fall of the Iron curtain and Balkan wars  1990: introduction of ceiling for foreign labor supply  1993: immigration quota on regional level 1994: member of the EEA  freedom of settlement and free access to labor market  third country vs. EU workers 2003: restriction of work permits to highly qualified third country nationals 2011: criteria based settlement system instead of quota (red-white-red card)

Migration to Austria since 1960 Source: Main Association of Austrian Social Security Institutions, Statistics Austria.

Access to the Austrian Labor market When joining the EEA the Austrian labor market was opened for all EU members For new member states (EU2004, EU2007) Austria applied maximum transition period (7 years) Since 2011 (2014) full labor market access (except Croatia) Labor migration today only partly directly controllable (third countries) For third country nationals settlement and work permission restricted RED-WHITE-RED Card System aiming at highly qualified Quotas in place mainly for family reunion

How did the open labor market affect labor supply in Austria?

Labor market and economic performance in Austria Values for 2016 and 2017 based on WIFO-forecast (March 2016) Source.: Labour market service, Main Association of Austrian Social Security Institutions, Statistics Austria, WIFO-calculations.

Employment by country of birth Q.: Main Association of Austrian Social Security Institutions, WIFO-calculations.

Educational level by country of birth (population, 25-64 years) Source: Statistics Austria, Labour Force Survey; WIFO-calculations.

Characteristics of recent work migration In total the number of workers from EU2004 states increased from 65.000 to 162.000 between 2010 and 2015 Slovakia: from 10.000 to 27.000 Hungary: from 26.000 to 71.000 Skill composition shows higher education levels than earlier migrant groups Concentrated in Eastern Region and tourism, construction and service Work migration often only temporary and often no relocation (commuters!)

What are the consequences of increased labor supply for the local population?

Unemployment by nationality Source: Public Austrian Employment Service AMS, Main Association of Austrian Social Security Organisations, WIFO calculations.

Unemployment by educational level Source.: Statistics Austria: Labour force survey, Labour market service, Main Association of Austrian Social Security Institutions, WIFO-calculations.

Impact of immigration: Empirical Evidence Impact of immigration depends on multiple factors (education structure, degree of complementarities to natives, business cycle..) Empirical evidence implies generally small effects on native workers on average Highly qualified natives hardly affected while low skilled experience increased competition and declining wages Recent labor market trends imply that increased labor supply from opening labor markets affected mainly earlier migrant cohorts and low qualified Regional and sectoral differences Overall Austria profited from European Integration in terms of GDP and employment growth (Breuss, 2014)

Conclusion Economy benefits from European Integration Labor Migration became less directly controllable Labor supply clearly increased due to open labor markets Currently weak economic growth and growing labor supply leads to increased unemployment among earlier migrant cohorts and low skilled (Labor Market) Integration is main challenge: Former guest workers struggle with increased competition and disadvantages (language skill) Also 2nd generation migrants face disadvantages (higher drop outs,..)

Thank you for your attention!

Cross-border commuters Source: Labour market service.

Access for Third Country Nationals: Red-White-Red Card System Aim: attract highly qualified migrants and hinder low qualified migration Criteria based system (catalog) without quotas for: Very highly qualified (e.g. University degree) Skilled workers in shortage occupations (specified by PES) Other key workers (labor market test, minimum earning levels) Graduates from Austrian Universities (minimum earnings level) Self-employed key workers (assessment by PES, „requires some value added“) Blue-Card: highly qualified, no criteria system but income requirement and labor market test Both cards bound to specific employer „Red-white-Red card Plus“ grants full labor market access After 5 years permanent residence and work permit Family reunion subject to quotas in some cases (requires prove of income, residence and social insurance) For students an other specific groups special rules

Population (15-64) by country of birth foreign-born austrian-born Realisation Main Scenario Q.: Statistics Austria, WIFO Calculations. Forecast: 3.12.2015.