EU’s fork in the road
To welcome or not to welcome immigrants
Low birth rates and higher life expectancies has shifted the population age demographic in the EU, whereby pensioners exceed the working aged population. The table below shows the EU's actual age demographic distribution in 2022 and the expected distribution in 2100 assuming current birth rates and life expectancy. In both cases the distribution is top heavy but from 2022 to 2100 we see a shrinking labour force and youth population. By 2100, 32% of the population will be older than 65 years compared to 21% in 2022. [1] Clear signs that the EU is barrelling towards structural labour shortages.
EU’s population pyramid comparing data from 2022 and projections from 2100. (in millions of people)[2]
As per a March 2024 EC press release 63% of small and medium-sized businesses reported that they are not able to find the talent they need.[3] France, EU’s 2nd largest economy reported a decline in manufacturing end 2023 into 2024 partially due to labour shortages[4]. Similarly, a recent study by newspaper Berlingske found that 21% of Danish companies had to turn down new orders because of labour shortages[5]. Besides the immediate negative impact to GDP, in the medium-term labour shortages affect economic competitiveness and create inflationary pressure. While in the long run structural labour shortages result in capital flight and contraction of the states’ GDP.
As early as 2012 an ILO study found that Germany’s labour force was estimated to decrease from 50 million in 2008 to 32.6 million by 2060[6] with similar trends in other European countries. Certain EU states like Germany that tend to offer higher salaries are able to attract skilled labour from within the EU. Although, as all of EU’s population ages relying on intra-EU migration is short sighted. As per a 2022 ELA (European Labour Authority) report “Over the longer-term, from 2010 onwards, it is also apparent that the vacancy rate has been increasing over time, but its rate of increase has accelerated over the last couple of years such that by 2022, Q2 it stood at a substantially higher level than a simple extrapolation of its longer-term trend might suggest.”[7]
Vacancy rate in the EU27[8]
Hence it is no surprise, when campaigning for the Pact on Migration and Asylum, EU’s Home Affairs Commissioner Ylva Johansson stressed that the EU’s work force is shrinking by 1 million a year and that member states will have to aggressively increase migration from non-EU states to cover the growing work force gaps.[9]
On 10th April 2024, the European Parliament voted in favour, the Pact on Migration and Asylum (the Pact). A unified approach to streamline and increase regular skilled migration and deter irregular migration. Over 160 rights organization have denounced the Pact[10] and per Amnesty International, the new pact will result in “a surge in suffering on every step of a person’s journey to seek asylum”.[11] Not surprisingly, the press release by EU President von der Leyen focuses on how the Pact will deter irregular migration and combat migrant smugglers, lauding the Pact as a European solution for Europe’s migrant problem.[12] But does the EU have a migrant problem?
As of 2022 only 5.3% of EUs population were not citizens which is low when compared to countries like Australia (29.2%) and United States (13.5%).[13] Further as per IOM’s Ola Henrikson “the data is clear: migration to the EU is overwhelmingly regular.”[14] Per Eurostat, in 2023 only 300,000 off the 3.5million migrants that entered were irregular.[15] As per IOM estimates, less than 7% of immigration into the EU is irregular.[16] Yet off the Pact’s four pillars only one (and that too partially) focuses on regular migration.[17]Overwhelmingly the Pact is targeted to counter irregular migration, ignoring EU’s ballooning labour crisis. Aclear indication that the anti-immigrant political right is gaining political ground across EU.[18]
No amount of human rights washing can hide the fact that by voting in favour of this Pact, the has EU moved towards the lowest denominator required to adhere to international human rights treaties. The implementation of aggressive return programs, reinforcement of bi-lateral agreements with non-EU states to crack down on human trafficking groups both on land and sea, and the creation of offshore detention centres[19] while on the right side of the law shows a clear acceptance on the part of EU governments to turn a blind eye to potential human rights violations to keep irregular migrants out.
As per Judith Kohlenberger, “studies show that there is direct correlation between a country’s asylum policy, and rhetoric, and its attractiveness to highly qualified foreigners” and that “a persistent anti-migration discourse and restrictive national policies on “unwanted” migrants and refugees put off highly qualified foreign workers.”[20] Thus as the EU combats structural labour shortages how will the amplified anti-immigrant voices impact the EU’s ability to attract skilled migrants?
In today’s global economy, the EU needs to compete for skilled migrants with Australia, Canada, other non-EU European states and even the GCC.[21] When deciding on where to emigrate a skilled migrant considers several factors: 1) the ease of immigration 2) systemic education bias, 3) the quality of job opportunities available and 4) perceptions on how society views all kinds of immigrants. Via the Blue Card Directive and Single-Entry Permit, the Pact is expected to reduce bureaucratic complexities and create legal pathways for skilled migrants. Although what about the other factors?
In 2019, an EU parliament study found that about 48% of highly-skilled migrants worked in low or medium skilled jobs[22] due to systemic education bias. Education bias is when the migrant’s skills and degree are undervalued or disregarded whereby the migrant is forced to accept a job where he/she is overqualified and underpaid. To circumvent the bias, non-European educated, skilled migrants are often forced to re-certify under a European institution to get access to better jobs. By way of the 2019 report, the EU is aware that systemic education bias exists. Yet the November 2023 recommendation leaves it up to individual member states[23] with no unified approach.
Next, as per a 2022 ELA[24] (European Labour Authority) report labour shortages are in both low-skilled and higher skilled jobs. The top 5 occupations that are currently facing severe labour shortages are brick layer, carpenter, heavy truck driver, metal working machine tool setters and operators and nursing professionals. Overall, low — medium skilled opportunities which are likely to be low-paying.
Further, under the banner of European Solidarity, Ukrainian refuges are exempt from the new Pact and will continue to receive preferential treatment under the Temporary Protection Directive. The directive erases the line between migrants and asylum seekers, giving any Ukrainian a residence permit that then allows them to legally work and open a bank account in the EU.[25] Over 4.2 million Ukrainians currently benefit from this scheme.[26] Most important The Recognition of Prior Learning (RPL) initiative ensures that Ukrainian degrees are recognized in the EU creating an easy path to get employment. OECD records show that the RPL initiative proved very beneficial to medical doctors, teachers, economists, dentists and engineers.[27] An open bias and two-tiered system favouring Ukrainian asylum seekers; a reality that is not lost on migrants from non-European states.
Considering the information thus far, a non-EU educated, non-European faces systemic education bias which complicates and lengthens the legal immigration process. Even though the EU recognizes this hurdle it has done little to fix the systemic bias in the Pact. Data shows that the bias has led to under-employment and low-paying opportunities or additional costs for recertification. Lastly the bias towards European immigrants is likely to negatively impact the non-European migrant once they are legally in the EU. Add to this the growing support for right-wing political parties[28], the vocal anti-immigrant hate across the EU[29], and open discussion on how non-European migrants are diminishing European values with rhetoric around culture wars[30].
In conclusion, the public discourse around migration is not welcoming. Actually, it is outright threatening. Such conditions will not deter irregular migrants but will deter skilled-educated migrants making it less likely for the EU to meet it’s annual 1 million regular skilled migrant target. It is also likely to cause attrition of existing skilled migrant workers to other competing economies. Overall, a lose-lose scenario as this will further exacerbate the labour shortages and over time set into motion cascading economic factors that will lead to long term GDP contraction. As things stand now, the EU member states face a fork in the road: Continue down the path of hate and face the consequences of structural labour shortages or shift public opinion and discourse away from immigrant xenophobia and towards welcoming both irregular and regular immigrants.
[4] https://www.euronews.com/business/2024/01/23/france-faces-four-major-economic-challenges-in-2024
[5] https://www.nordfranceinvest.com/expert-insights/why-is-there-a-labour-shortage-right-now/
[6] Labour shortages and migration policy (page 90) — this is a direct quote from PDF. Needs proper ref.
[7] https://www.ela.europa.eu/sites/default/files/2023-09/ELA-eures-shortages-surpluses-report-2022.pdf
[8] https://www.ela.europa.eu/sites/default/files/2023-09/ELA-eures-shortages-surpluses-report-2022.pdf
[12] https://ec.europa.eu/commission/presscorner/detail/en/statement_23_6781
[13] https://unric.org/en/migration-to-the-eu-facts-not-perceptions/#
[14] https://unric.org/en/migration-to-the-eu-facts-not-perceptions/#
[16] https://ec.europa.eu/commission/presscorner/detail/en/statement_23_6781
[18] https://foreignpolicy.com/2023/11/01/the-far-right-is-winning-europes-immigration-debate/
[24] https://www.ela.europa.eu/sites/default/files/2023-09/ELA-eures-shortages-surpluses-report-2022.pdf
[29] https://www.statista.com/chart/6852/seats-held-by-far-right-parties-in-europe/
[30] https://www.npr.org/2022/02/28/1083423348/europe-welcomes-ukrainian-refugees-but-others-less-so
