| Author (Person) | Glass, Jerome |
|---|---|
| Series Title | European Voice |
| Series Details | Vol.11, No.14, 14.4.05 |
| Publication Date | 14/04/2005 |
| Content Type | News |
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By Jerome Glass Date: 14/04/05 Economic migration, so it would seem, is a bit like bacteria. Without the 'good' sort, nothing would work. Too much of the 'bad' sort, on the other hand, is distinctly unhealthy. The trick lies in fostering the former and preventing the spread of the latter. According to Hans-Werner Sinn of the Ifo Institute for Economic Research at Ludwig Maxmilian University of Munich, this is precisely the challenge facing the EU member states in decades to come. With productivity growth slowing in the EU, it is clear that more needs to be done to encourage workers to move from low-productivity areas to high-productivity areas. This sort of economic migration results in an efficient allocation of labour and therefore increased productivity and lower unemployment. Economic migration also partly explains why the US is so much more productive, as American workers are far more inclined to travel across their continent to find work than their EU counterparts. Migration of this sort would do the EU good. It is necessary for meeting the Lisbon Agenda targets and vital for economic prosperity. But European policymakers are now becoming increasingly concerned about another form of economic migration, which Sinn terms 'bad' migration. Bad migration, he argues "is driven by the generosity of the welfare state". Instead of moving for higher wages or to take advantage of productivity differences, there is concern that an increasing number of people will move to where social security benefits are greatest. Not only that, but in countries with a high minimum wage there is also a significant chance of displacement of native-born workers by foreign workers for whom the minimum wage represents a significant increase on their income. The result is an increasing number of nationals in what Sinn calls "the chair the welfare state provided them with". To prove his point, Sinn compares the increase in unemployment of German workers since 1970, 3.2 million, with the number of immigrants now in work, 3.1m. The results of such a phenomenon are obvious: an increased burden on already creaking social security systems, higher unemployment, lower productivity. The issue is given a greater urgency thanks to legislative developments and enlargement. Last year's directive on free movement makes it easier for people who are not active in the labour force to gain right of residence in another member state and therefore to benefit from the social security system. But the 2004 enlargement has introduced into the EU a greater disparity in wages than any previous enlargement. Income per person in western Germany is seven times larger than the average in the new member states. At the time of the Spanish accession in 1986, it was only twice that of Spain. The wage differences increase the competitive pressure from eastern European labour. In Germany, a taskforce from the economic and finance ministries reported this week on possible responses to businesses using cheaper labour from eastern Europe. The proposals include an extension of a minimum wage mechanism to sectors beyond the construction sector. But some employers complain that, despite record levels of unemployment, only foreign workers are prepared to fill their vacancies. All this has led to some dire predictions about the amount of migration that will occur, despite the short-term restrictions that were introduced with accession. The Ifo institute estimates that, were it not for the restrictions, some 4-5% of the population of the new member states would migrate, mostly to Germany and Austria. The picture is complicated somewhat by the findings of the European Foundation for the Improvement of Living and Working Conditions (Eurofound). According to a study carried out last year to coincide with enlargement, migration is a far less pressing problem than the economic models predict. Eurofound estimated that only 1% of the population of the new member states expressed a firm desire to migrate and those that did hardly seemed to fit the model of a benefit-seeker. In fact, the type of person most likely to migrate from the new member states to the old member states, was identified as "a young, well-educated woman". The study even warned that the new member states should be concerned about a potential "brain drain" as "the sending countries are in danger of losing between 3% and 5% of people who have achieved third-level education, and more than 10% of their students". Even if the problem is not as pronounced as some have feared, "welfare shopping" presents a potential threat to the viability of the European social model. The ultimate danger is that there might arise a "race to the bottom" as countries seek to reduce benefits to reduce the country's attractiveness to those seeking them. Sinn cites the example of New York in the 1970s, driven to the brink of bankruptcy by the demand for its generous benefits and warns, "free migration, full social inclusion and the maintenance of the European welfare state are three goals that simply cannot co-exist." Article discusses the alleged threat of economic migration to the European welfare model referring to studies by the Ifo Institute for Economic Research and the European Foundation for the Improvement of Living and Working Conditions. |
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| Subject Categories | Employment and Social Affairs, Justice and Home Affairs |
| Countries / Regions | Europe |
