The refugee crisis: Europe needs more migrants, not fewer

This has been a shameful summer for Europe. We have witnessed the daily news coverage of Mediterranean drownings, suffocated truckloads, razor-wire fences, baton-wielding police and half a million desperate and dispirited migrants. They are now the focus both of Europeans’ fear and sympathy.

The ‘migrant crisis’ has revealed a topsy-turvy world of prejudices, misunderstandings and sheer political opportunism. The absence of an EU policy to cope with the flow of conflict refugees and others who are simply seeking a better life is shaming, yet at its root is a European mindset that sees immigration as a danger instead of welcoming it as an opportunity.

World opinion has derided the spectacle of European governments squabbling over sharing the burden of who should shelter the victims of war or poverty. So yes, it’s shameful, but why topsy-turvy? Because Europe needs more migrants, not fewer.

The surge of people seeking a better life in Europe has caught almost all the EU governments on the hop. Yet even in the short term it was predictable. The outbreak of the Arab Spring in late 2010, and the ousting of Libya’s Muammar Gaddafi the following year were early portents, and the exodus of people from Arab countries became inevitable when Syria was engulfed by civil war three years ago.

In the longer term, the UN agencies that grapple with migratory issues and the estimated 250m displaced people worldwide have been warning that the revolutions in transport and communication are stimulating migrations. The means to travel are more available than before, and the lure of western lifestyles fills TV screens. The exploding populations of developing countries have created a new generation of under-employed but ambitious young people. With Africa’s population of a billion set to double within 30 years, these migratory pressures are sure to grow.

Policymakers at national and local levels right across Europe should have begun some time ago to plan for this ‘surprise’ crisis. But politicians in most EU countries have either preferred not to risk voters’ disapproval by addressing immigration, or they have made political capital out of opposing it.

And that’s where we Europeans need to fundamentally alter our mindsets on migration. No one would deny that integrating millions of non-Europeans into our societies will be difficult and costly, but the key point to be driven home is that Europe has no choice. EU countries need more people if their standards of living are to be maintained, and perhaps even improved.

When urging austerity policies as the solution to the eurozone crisis, Germany’s chancellor Angela Merkel’s mantra has been that Europe cannot go on accounting for half of the world’s spending on social benefits. But the challenge is far greater than slimming down with healthcare and pension cuts. Europe’s ageing is so dramatic that by mid-century the number of working-age people to support each pensioner will have shrunk from four today to only two.

Demographic projections are complicated by unknowns like the number of immigrants, but the signs are that the population of the EU will within just 35 years be down to 450m from the present 500m. Europe’s active labour force of 240m looks set to drop to 207m people by then, assuming that immigration has run at around the present level. If there were to be a sharp reduction in immigration, or even a halt, then the result would be an EU workforce of some 169m. The effect of removing some 70m jobs, and therefore taxpayers, from the European economy can only be guessed at.

This shrinkage of the EU workforce would be disastrous for a number of reasons, and none of them has attracted attention in the often hysterical media coverage of the migration crisis. To the contrary, migrants from Arab countries and Africa have been portrayed as benefit scroungers who will impose intolerable social and economic burdens on Europe.

The projections of Europe’s demographic trends are no secret, but they are given little prominence by political parties and their leaders. That’s not only because of populist pressures but also because politicians aren’t very interested in macroeconomic trends when they believe they can garner votes by championing their own specific policies.

There’s a widespread consensus, though, that the growth of a country’s workforce helps significantly to power its economic growth. Although the chorus of conservative voices in the United States has helped stem the flow of migrants across the Rio Grande, many American economists point to high birth rates in immigrant communities and the arrival of more newcomers as positive indicators to the country’s wellbeing.

The U.S. population is set to rise from around 300m now to 400m by mid-century, promising an even more muscular economy. And Americans are also well aware that their immigrants bring quality as well as quantity; over half of Silicon Valley’s start-ups and breakthroughs are led by people born outside the U.S.

Europe’s shrinking workforce, on the other hand, has for some time been seen by economists as a major headache. A decade ago, Europe’s World published an important article by German economist Klaus Regling warning of the ceiling being imposed on the EU’s potential GDP growth.

He calculated that the maximum economic growth rate of western Europe’s richer EU-15 member states would fall from 2.3% in 2005 to appreciably less than that after 2010. Labour shortages and the absence of an expanding workforce would, he forecast, limit to 1.8% those countries’ average growth rate throughout the two decades up to 2030. And from then until mid-century it will cut that still further to only 1.3%.

Regling’s is an influential voice; he was at that time the European Commission’s Director-General for economic affairs and is currently head of the eurozone’s bail-out fund, the European Stability Mechanism. But his warnings came on the eve of the 2007-8 global financial panic and the ensuing economic crisis, and so were eclipsed by sharply slower growth prospects throughout Europe. The ceiling on GDP growth rates he cited became of purely academic interest once recession gripped Europe.

The positive economic effects of immigration are all too evident in one EU country that is among the most opposed to the arrival of non-native job seekers – the United Kingdom. The British government is powerless to prevent citizens of other EU countries from finding work there, and has repeatedly voiced its frustration with net immigration figures now running at an annual rate of 300,000 people. Fuelled by youngsters from eastern Europe and the Baltic states eager to price themselves into work, Britain is enjoying a boom. Prime minister David Cameron points proudly to GDP growth that is considerably higher than on the continent, but gives no credence to the idea that it is the expansion of the UK’s active labour force that is largely responsible.

The sluggish economic outlook for Europe as a whole doesn’t mean that its labour shortages are any the less damaging. The shrinkage of the EU workforce has been hidden by rising unemployment. But European countries will in the years ahead all need substantial pools of employable young people if their economies are not to wither and die. It’s hard to argue this case, of course, when the natural reaction of many people is to ask why, with youth unemployment so high, should Europe import more young people whose lot will be to join the ranks of the jobless and discontented?

There are five answers to this question, and each on its own is a powerful argument for re-thinking our attitude to the hundreds of thousands of people wanting to come to Europe now, and the tens of millions who will be heading our way in the future.

The first is that Europe’s youth unemployment crisis is not as severe as it appears. The second is that Europeans’ low fertility rates make today’s labour market conditions irrelevant to tomorrow’s. The third is that employers in sectors as far apart as hotels, restaurants or seasonal agriculture at one end of the scale and high-tech manufacturing and services at the other are already complaining of acute staffing difficulties.

The fourth is that the problems of Europe’s very patchy regional economies can only be addressed by increasing the availability of local labour. The fifth and arguably most important reason of all is that newcomers to the labour market do not take jobs away from anyone. Economists have long derided what is known as the lump of labour fallacy – the idea that there is a finite number of jobs in an economy that have to be divided up. In fact, each new arrival also brings demand to the economy, and is therefore a source of dynamism.

Misguided lump of labour thinking gave rise to France’s 35-hour week, which after a decade has yet to create more jobs. But it takes a brave politician in France or elsewhere to denounce the concept of sharing out the available work. It takes even braver politicians to tackle the first of the myths listed here and say that joblessness amongst the under-24s isn’t as high as the figures tell us. It nevertheless is true; there are two sets of unemployment figures collated by the EU’s Eurostat statistical service. The one the media unerringly selects is the more dramatic unemployment rate, whereas the alternative calculation, the unemployment ratio, gives a far more realistic picture.

Youth unemployment rates of around 50% in Greece and Spain and 30% in Italy and Ireland are calculated as a percentage of unemployed people divided into the total number of people in the labour force. They make big headlines, but distort the picture and make tackling joblessness appear hopeless. That’s bad politics, of course, and one of the reasons that public opinion across Europe is increasingly sceptical of the benefits of the EU and the goal of deeper European integration. It has also encouraged the rise of populist parties at both ends of the political spectrum.

The more revealing way to calculate youth unemployment is to work out the ratio of under-24s without a job in relation to the total youth population. This method cuts Spain’s youth unemployment rate to 19%, Greece’s to 13% and those of Ireland and Italy to 12% and 8% respectively. For the eurozone as a whole, it reduces the percentage of under-24s without a job from over 20% to under 9%.

That doesn’t mean there’s no challenge to be addressed through better training and improved methods of matching job seekers with possible employers, but it does mean that the excuse of a “lost generation” to justify the immigration barriers of a Fortress Europe is hollow.

The second reason for saying today’s youth employment figures aren’t relevant to the debate over migrants is indisputable. Birth rates across Europe have been falling for half a century, and at around one and a half children per family are not only far below the 2.1 ‘replacement rate’ but with successively smaller child-producing generations Europe’s indigenous population cannot possibly provide the workforce needed in years to come.

Drawing a true picture of labour shortages across the EU is difficult because local conditions vary so much. And it is certainly wrong to dismiss the difficulties young people face when looking for a job; university graduates reduced to taking banal work for which they are vastly over-qualified and youngsters from under-privileged backgrounds facing discrimination on racial or social grounds are a very real challenge. But that doesn’t alter the hard facts of Europe’s dislocated labour markets.

Universities and technical colleges aren’t delivering job seekers with the right skills. Employers’ organisations reckon that there’s an EU-wide shortage of approaching a million ICT workers with the computer and software writing skills they need. It’s a problem that has been brewing for many years, illustrated perhaps by the Stuttgart-based Daimler company that makes Mercedes-Benz automobiles. Daimler’s main worry is that about half of its workers are now over 50 years old, and it sees no way of replacing them.

On top of the skills gap, there’s the mismatch problem. Europeans, including its young, don’t move to where the jobs are. Often they can’t because of language barriers or housing shortages. For immigrants, however, the mobility issue is likely to be far less important. If they offer attractive incentives in terms of housing and education, Europe’s disadvantaged regions should be able to attract the labour they need to revitalise themselves.

The silver lining to the clouds of this summer’s migrant crisis has been the heart-warming welcomes laid on by many German communities, notably small towns and villages. Rural Germany, along with ‘la France profonde’ and all those parts of Europe that have undergone population drifts to the cities, is acutely aware of its manpower needs. The French call it “desertification” and see it as a major structural challenge, although those areas are often strongholds of the anti-immigration Front National party.

Germany’s emergence as the EU country most open to migrants is not the surprise portrayed by many reporters and commentators. Its demographic decline is Europe’s steepest; on present trends its population of 82m will by 2060 have shrunk to 65m and it will most probably have been overtaken by the UK as Europe’s largest nation. And without an influx of young people, Germany’s pensioners will have grown from a fifth of the population to a third. It is a scenario that haunts the country’s policymakers, but has made little impact on the overall political debate.

Never a country to neglect planning, Germany has for some years been making itself a magnet for migrants. For instance, the federal government’s powerful GIZ development body has a programme for recruiting young women in South East Asia to train as nurses in Germany and after working there for several years to return home should they wish with a substantial gratuity.

That sort of initiative is easily managed, of course, whereas the arrival this year of huge numbers of people – at least 400,000 and possibly 800,000 in Germany alone and well over a million for the whole EU – is a very different proposition. To put this year’s figures into a wider context, a 2010 study led by Spain’s former prime minister Felipe Gonzalez reckoned that to keep the workforce at its present strength, Europe will need to bring in 100m migrants over the 40 years to mid-century.

It is clearly time for the EU and its member governments to analyse the migrant crisis and its solutions in a far more structured way than the woolly thinking and buck passing that has characterised their efforts so far.

Several different although linked policy developments are needed if Europe is not to find itself assailed by ungovernable floods of migrants whose arrival, although pitiful, divides governments in the EU and exacerbates anti-immigration prejudices. Action is therefore needed in six areas:

1. The chaos of unregulated arrivals has to be addressed. That will demand EU-level agreement both on asylum criteria and the acceptance of economic migrants.

• These rules must then be applied at EU borders and also at points of departure. That will mean constructing camps while applicants are being processed and then organising transport.

• Migrants’ final destinations in the EU must be established at these points, with acceptance and integration mechanisms that link national and local authorities.

• A clear picture of immigrants’ gender, age, qualifications and languages must be established and made public. Rabble-rousing politicians’ claims of benefits scrounging will be deterred by a transparent profile of migrants.

1. An objective EU-level research project should be launched to establish the extent to which economic migrants burden social welfare systems or have a dynamic effect. Europe’s governments need to be much clearer about the differences between EU and non-EU job seekers.

• The challenges of assimilating non-European migrants are considerable, but the cost of failing to do so is greater still. New intra-EU mechanisms are needed to share best practices.

The reality, of course, is that Europe’s governments are a long way from such an organised and forward-thinking approach. Shifting the emphasis away from attempts to block migrant routes northwards through the Balkans or across the Mediterranean and Aegean seas is not going to happen overnight. The spotlight looks firmly fixed on quotas under which each EU country would accept a share of asylum-seeking refugees.

As much as countries like Germany and Sweden understand the value of the influx of migrants, the strains created by the lack of solidarity between EU members is a growing irritant. Chancellor Merkel has made it plain that the Schengen Agreement on the free movement of EU citizens within the Union is at risk. As free movement is one of the benefits most widely appreciated by voters in Europe, and is fundamental to the single market, it would be catastrophic to sacrifice Schengen to short-term squabbling between governments.

The need to protect free movement cannot disguise the costs of accepting migrants. Their housing, education and re-settlement in Germany this year is being estimated at €3bn-plus; even if it’s a good investment, it is not a minor consideration in these cash-strapped times. And for transit countries like Italy, Hungary, Bulgaria and the Balkan states there clearly needs to be an equitable financial burden-sharing arrangement.

The uncomfortable fact is that the efforts made so far to integrate immigrants into European society have not been successful, and that has contributed to the rise of nationalist political movements. Germany’s large Turkish community lags behind academically and complains of being discriminated against, and in France and Belgium people originally from Maghreb countries are underprivileged and after many generations are still seen as outsiders. Britain’s post-colonial wave of English-speaking West Indian and Pakistani immigrants are sometimes presented as a success story, but even there the integration process has been complex and often expensive. The spectre of ‘home-grown terrorism’ fostered by the tensions surrounding immigrant communities has also inflamed xenophobic protests against people of other races and religions.

Right now, Europe’s fevered debate over the migrant crisis veers from discussion of the correct ethical responses to human misery on such a vast scale to reviews within the European Commission of when and how economic migrants can be repatriated. The subtext to these discussions is that this is a temporary problem best resolved by agreeing short-term measures. The meetings between various EU leaders smack of ‘Canutism’, the laughable effort of an 11th century King of England and much of Scandinavia to demonstrate his authority by ordering the ocean’s tide to recede.

The tide of humanity displaced by conflict or poverty is not going to recede because Europe finds it uncomfortable and is too short-sighted to understand its advantages. The European Union has been pre-occupied since the beginning of the 21st century with its internal challenges, and has failed to raise its sights to the horizon. Stabilising its southern neighbourhood, especially in the wake of the Arab Spring, and extending its economic benefits to Africa and the Arab world have been very secondary considerations.

Pulling up the drawbridge of an even more redoubtable Fortress Europe is not the answer. There are instead twin solutions to the migrant crisis. The first is to reach out across the Mediterranean with a far greater determination to stabilise security there and strongly develop economic growth. If Europe doesn’t meet trouble halfway, trouble will come to it. The second is for the EU’s political elites to understand the sheer necessity of attracting more migrants, and to convince voters that Europe’s future is at stake. As Giuseppe di Lampedusa’s novel The Leopard, set in Garibaldi’s Risorgimento Italy, put it: “Everything must change, so everything can remain the same.”