Replacement migration in ageing Europe: challenges and perspectives for CEE countries

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1 Replacement migration in ageing Europe: challenges and perspectives for CEE countries Zsolt Gál Alissa Tolstokorova

2 Effects of Immigration: Host countries, countries of origin, migrants Economic, demographic, social, political, security, etc. Fiscal impact (direct, short-term) term), impact on labour market (wages, employment), impact on native workers, on profits of employers, prices of goods and services, etc. Do immigrants pay their way? (contribute more to public budgets than get from it = positive fiscal balance = immigration helps to reduce the fiscal consequences of ageing)

3 Decline of fertility: EU

4 Age structure of the EU-15 population 2002

5 Economic consequences of ageing Demographic Support Ratio (Population of Working Age relative to Pensioners) (EU15 v US) Economic Support Ratio (Number of Workers per Pensioner) (EU15 v US) Source: Mc Morrow, Kieran Roeger, Werner [2002]: EU pension reform An overview of the debate and an empirical assessment of the main policy reform options. EU Commission, p. 15, 16

6 Jacques Barrot,, vice president of the European Commission: The demographic situation of Europe means a need for focused migration Immigration is both an economic and moral obligation.

7 Fiscal balance positive or close to equilibrium In those countries which: (Australia, UK, US), which: Had liberalized, flexible labour markets Favoured labour migration Limited the access of immigrants to public welfare

8 Most European countries do not fulfil any of these criteria: Eurostat regional yearbook, 2007, p. 49 Labour markets: Rigid, over-regulated regulated High tax wedge on labour cost Extensive welfare systems Demographic change, ageing Social and cultural differences

9 Unemployment rates of EU nationals and non- EU nationals, 2005 Source: European Commission Directorate-General for Employment, Social Affers and Equal Opportunities [2006]: Employment in Europe 2006, Luxembourg, p. 73

10 Employment rates of EU nationals and non- EU nationals, 2005 Source: European Commission Directorate-General for Employment, Social Affers and Equal Opportunities [2006]: Employment in Europe 2006, Luxembourg, p. 73

11 What kind of migrants are arriving? - Workers - Asylum seekers, refugees - Family reunification - Illegal migration

12 What kind of migrants are arriving? Source: International Organisation for Migration [2005]: World Migration 2005, Costs and Benefits of International Migration, p. 400

13 The estimated net impact (net cost or revenue) of immigration on the Australian budget by visa category and length of stay (per 1000 immigrants in 2004/2005 constant million $) Source: Access Economics PTY Limited: 2004 Update of the Migrant s Fiscal Impact Model. Department of Immigration and Multicultural and Indigenous Affairs (DIMIA), 2004, p. i.

14 Milton Friedman It s s just obvious that you can t t have free immigration and a welfare state.

15 Social consumption of immigrants in US Camarota, Steven A. [2008]: Immigrants in the United States, A Profile of America s Foreign-Born Population. Center for Immigration Studies, Washington D.C. p. 20.

16 Welfare use gap in Europe is even higher: European welfare states are more extensive (USA no full government no full government-supported health-care system, no child support to all families and no paid maternity leave.) Big differences in employment and unemployment rates between EU citizens and foreign born extra-eu immigrants (not like in the US) The migrant s s access to welfare is barely limited (exception Denmark) The differences in fertility are higher (more children cost more money)

17 Age pyramids,, UK 2001 census

18 Fertility rates of women in France by country of birth (1999) Source: INSEE - Institut National de la Statistique et des Études Économiques [2005]: Les immigrés en France - Édition p. 65

19 Overrepresentation of foreign prisoners in European prisons 70 69, Source: International Centre for Prison Studies. King s College London (foreign prisoners) and OECD: International Migration Outlook 2007, p. 330, 343 (stock of foreign population) ,9 43,1 41, ,8 34, ,8 20,8 20,3 29,5 27,5 26, ,9 6,2 19,2 0 USA Australia * Switzerland Greece 5,2 Austria 9,7 Belgium 8,6 Italy 4,6 6,2 Spain Netherlands 4,2 5,3 Sweden Germany 8,8 France 5,6 UK ** 5,2 14,2 Percentage of foreign population (2005) Percentage of foreign prisoners in total prison population (2007)

20 Main factors affecting the fiscal balance: State of the labour markets Composition of immigrants The extent and accessibility of welfare benefits Education, skills Socio-cultural cultural and family models of immigrants Crime and imprisonment rates

21 Major factors contributing to negative fiscal balance in Europe: High, mainly structural unemployment, low slowly rising employment Composition of immigrants (low percentage of labour migration) Extensive welfare systems mostly open to immigrants Gap in education and skills of immigrants Family models and female roles brought in Overrepresentation in crime

22 Some conclusions: Replacement migration can't solve the fiscal problems related to aging alone. Pension and labour-market reforms are also needed. To improve the fiscal balance some changes are needed: concentrate on labour migration, Welfare reform general and limits to immigrants Limit the access to welfare, instead of limiting the access to labour market (lessons for CEE countries also)

23 THE END Zsolt Gál, Department of Political Science, Faculty of Arts, Comenius University, Bratislava, Slovakia, 00421/2/

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