Anna Triandafyllidou provides us today with a comparative analysis the place of immigration in the debates about the demographic trends and the sustainability of welfare states in the EU. Anna Triandafyllidou is Professor at the College of Europe in Bruges, Senior Research Fellow at the Hellenic Foundation for European & Foreign Policy – ELIAMEP and Assistant Professor at the Democritus University of Thrace. She works occasionally as expert for the European Commission and the Greek government. The second part of her analysis will follow tomorrow.
The EU 27 has experienced a net demographic growth of 2.4 million people in 2007 reaching a total of 497 million (Eurostat, Statistics in Focus, 81.2008). Of those 2.4 million, 1.9 million are due to immigration. It is more than 15 years that immigration has a higher incidence than natural demographic growth in shaping the demography of EU countries. Regional disparities are of course noticeable with Ireland and Cyprus recording the highest demographic growth rates while seven new member states and one old member state (Bulgaria, Germany, Estonia, Latvia, Lithuania, Hungary, Poland and Romania) continue to experience a decrease in their population. France, the Netherlands and the United Kingdom are the only countries where positive natural change is the main factor driving population growth. Ireland”s and Cyprus” positive scores are directly related to their receiving of more than 10 net migrants for every 1000 inhabitants.
Considering these demographic trends, it becomes obvious that migration is not the answer to an ageing Europe but is certainly an element of the mix that will guide European societies to a sustainable future with functioning labour markets and welfare systems.
It is clear that immigration in conjunction with demographic trends and labour market performance will have different effects on different European countries. For southern Europe, immigration is seen to have a positive net effect on labour market, GDP, and the welfare system today as immigrants belong in their vast majority to the economically active population, they are young and employed and do not rely on the welfare state excessively. Moreover, they contribute significantly to the worker/pensioner ratio making the welfare system viable. Studies of social accounting however have shown that if all immigrants remain in their countries of settlement after retirement (assuming a time horizon of 35 years of work) they will largely use up their contributions for their own pensions. In other words, in a 30-40 year time frame, the current immigrant population will use up what it contributes now to the welfare funds of the country.
The situation is different and indeed less optimistic in Central and Eastern European countries whose welfare and pension systems are clearly unsustainable if the present demographic trend continues. These countries have started experiencing labour shortages in several sectors, both low and high skill as either type of workers are attracted by higher wages in old member states. Moreover the overall decline in welfare service provisions in these countries and a demographic generation effect suggest that population growth will take a while to pick up again.
The situation in the northern and western EU member states that have been experiencing immigration for several decades is more complex. In several countries including for instance, the UK, Germany, France, Denmark, Belgium or the Netherlands ethnic minorities of immigrant origin and/or immigrant residents appear to be more welfare dependent than their native counterparts. Thus, while these countries attract new immigrant workers who are young and economically active and hence contribute positively to the welfare system, they continue to experience a certain drain of their welfare resources from their settled ethnic minority populations. In these countries, immigration does not provide for a short term answer to welfare state shortages. But it does respond to labour market demand in the ‘ethnicised” sectors of the labour market such as cleaning, caring, tourism, construction, tourism and small manufacture, as well as to some high skill sectors such as IT and health services.
The above observations show that the current migrant intake in the EU is no long term solution to the demographic growth problem… if it stops! The assumption is and should be that immigration will continue to feed into Europe”s labour force, welfare and pension systems. Naturally this is a truth hard to admit in public for most governments.