The European dimension to the situation of immigrants in the labor market Martin Kahanec DPP, CEU Budapest June 27, 2011

The demographic context and the need for immigrants Migrants in Europe Immigration and integration policy perspectives Three 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?

Demographic changes ( ) Population share aged – Projection 2005/2020 Source: Eurostat, EuroPOP2004 (No migration variant), and IZA, AMS, Niras (2008), Geographic Mobility in the European Union: Optimising its Social and Economic Benefits. Report to the European Commission  Scope of intra-EU mobility in cushioning demographic ageing appears limited  Excess demand for immigrants will increase especially in EU-15 Share of working age population will decrease across the EU

Ageing ( ) Old-Age Dependency Ratios – Projection 2005/2020 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  Inevitably, the share of young mobile workers will decrease  Hence, EU societies have to cope with shrinking innovation dynamics  Even growing intra-EU mobility will not offset ageing Share of old people relative to working age population will increase

Mobile EU-27 Citizens by Country of Origin (2006) Source: Eurostat, LFS, spring data for available countries; IZA Research Report No. 19 (2008). But mobility is low in the EU anyway…. …so we need immigrants from outside the EU

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 Sensitivity to the crisis? 84.5% report no effect of the crisis on their evaluation of the long-term demand for immigrants

…so there is need for immigrants. … do we have any?

Migrants in Europe

Gross immigration, non-EU, % population

…so in CEE we have few immigrants (bad), but their numbers are growing (good) and they are relatively skilled (also good). …in the rest of Europe the situation varies: e.g. Ireland, Denmark and the UK have substantial populations of skilled immigrants, whereas Austria, Germany or the Netherlands attract less skilled immigrants. … what policies are needed?

Immigration and integration policy perspectives

The context of immigration policy Bad demographics Arguments that Europe needs immigrants, especially skilled ones, to alleviate the demographic problems Empirical evidence on the effects of immigration on host labor markets –generally non-negative, –perhaps local adversities, –but many positive effects documented Not many immigrants in CEE, larger numbers in EU15 (but their integration a challenge) Immigration and integration policies problematic (see MIPEX)

ESHSLI results: Preferable policy approach

… but this can only work if immigrants are integrated … are they? … how?

The risk of poverty Mostly significantly higher than that of the natives ESS, mimeo

The risk of social and labor market exclusion High and increasing The situation has worsened between 2007 and 2010 IZA EOS 2007, 2010

The risk of social and labor market exclusion All major immigrant groups at serious risk! IZA EOS 2007, 2010

The risk of social and labor market exclusion …same for Italy, and most EU15. Asians do relatively well in some countries. IZA EOS 2007, 2010

The risk of social and labor market exclusion In CEE: Autochthonous ethnic minorities, but also immigrants at high risk IZA EOS 2007, 2010

The risk of exclusion from welfare (UB) --- controls for characteristics --- raw data controls for characteristics --- and eligibility

Integration barriers

What do minorities want: Areas integration policies most desired Almost all minorities want to change their situation (86% of all respondents, 98% of minority respondents) Mainly in paid employment, education, attitudes and housing.

Preferred policy principles Equal treatment! But some room for positive action

Conclusions High need for (skilled) migrants in European labor markets But immigration policies often lacking and backfiring Very limited integration policy The debate often ill-informed and a paradigm shift needed – access vs. abuse, win best brains vs. allow on “sacred soil” Missing an opportunity!

Martin Kahanec Tel/Fax: Department of Public Policy Central European University Nador utca 9 Budapest 1051 Hungary