Immigration - benefit or burden?

21st of December 2015
Immigration - benefit or burden?

Not so long ago, immigration was welcomed as a godsend to Europe’s burgeoning economies. Since the recession times have changed and jobs are in short supply, yet we are now being asked to soak up a mass migration of people on an scale not seen since the Second World War. Benefit or burden? Hartley Milner considers the likely economic impact of the refugee crisis.

Harrowing scenes of migrants fleeing from Syria, Iraq, Afghanistan and other conflict hotspots fill our TV screens almost daily. We cannot fail to be moved by the plight of these beleaguered people as they risk their lives to seek a new start for themselves and their families in Europe.

Tens of thousands of Europeans have taken to the streets of their cities in recent months to show solidarity with the huge numbers of refugees streaming across our borders. But there have been counter-demonstrations too, mainly, though not exclusively, in eastern European countries.

Public concern about the impact of immigration on the national and cultural identity of European countries has simmered for decades. Governments, however, have been more swayed by the benefits of being able to call upon a seemingly bottomless pool of cheap and willing labour to help run public services and fuel economic growth.

Then came the financial crash in 2008, followed by a massive jobs cull as governments and businesses sought to tighten their belts. Over the past seven years, long-term unemployment in Europe has swelled. The latest figures show around half of the region’s 25 million unemployed have been jobless for more than a year and 12 per cent have not worked in over four years.

Only Germany has seen a continuous fall in unemployment, down to 4.5 per cent in August 2015 – its lowest level since unification in 1990. In the UK the jobless rate rose to 5.6 per cent during the period March-May after falling during the previous two years.

Now the EU has told member states they must sign up to a refugee resettlement programme imposing mandatory quotas for the numbers they take in. Backed into a corner, governments are beginning to wake up to their electorate’s growing concerns about levels of immigration and are cautious about agreeing precise figures.

Chief among people’s anxieties highlighted in surveys are the effects of high immigration on jobs, welfare benefits, housing, public services and infrastructure, in addition to any historic concerns over loss of national identity.

However, these concerns are based on nothing more than the public’s perceptions of the likely impact of the rise in immigration, not on any hard evidence. Indeed, economists and business leaders argue that far from doing Europe harm the current mass influx of migrants provides a timely opportunity for the region to secure its future as a vibrant trading force within the global economy.

So far this year more than 464,000 migrants are known to have made the perilous journey across the Mediterranean to enter Europe - more than twice as many as in 2014. The total figure could exceed one million by early 2016, according to some estimates. Given their countries of origin (the largest numbers are from Syria, Eritrea and Afghanistan), most refugees are likely to have a credible claim for refugee status under human rights legislation.

“Firstly we must see this issue for what it is – a humanitarian crisis on an scale rivalling the flight of the Jews in the last world war, which is something my family knows about only too well,” said consultant demographic analyst Adam Breslau. “So there is a moral obligation here for Europe to act.

“That said, we need to recognise that it is not all one-way traffic. For Europe, the migration represents a challenge, yes, but also an opportunity. The continent faces a major demographic change with an increasingly ageing population, and in some countries the population is actually in decline. Fertility in the EU now averages out at one-and-a-half children for each female. We will need a healthy influx of labour just to maintain our workforce at its current level, let alone meet the demands of future growth.”

In Greece and Italy last year there were more deaths than births, while in Germany more jobs are being created than there are people to do them. Across Europe to date, immigration has led to a substantial increase in overall employment, and therefore GDP, without any significant negative impacts on the employment prospects of those native to the host country.

Working age

“By far, the majority of migrants we see coming into Europe are of working age, or will be in the not too distant future, as they need to be relatively fit just to make the hazardous journey here in the first place,” Breslau continued. “Being in a younger and more economically active age group, they will have lower average dependency levels than much of the native-born population, so they are unlikely to be a burden.

“Migrants provide a ready labour source in areas of employment such as agriculture, office cleaning, fast-food catering and for repetitive task roles in manufacturing, often taking jobs that native-born people shun. Others arrive here with high skill levels, expertise and technical know-how, and then among them are entrepreneurs who go on to create employment opportunities.

“The concerns about high unemployment in Europe are well stated, but its economies will not remain depressed forever and when the good times return the continent will need to be in a position to compete in rejuvenated world markets, and this will require having a workforce in place that is able to respond to the challenge.

Pressure on infrastructure

“Regarding public services it is certainly true that population growth creates pressures on health, welfare and education provision, but the experience of host countries to date shows that these issues are more than compensated for by increased tax revenues.”

There will inevitably be a short-term cost to an intake of so many refugees until they are absorbed into the mainstream, and it is difficult to accurately predict how each country will cope. But while many governments are vacillating over the numbers they are prepared to let in, Europe’s biggest economy, Germany, sees the refugee crisis as an opportunity and is set to accept 800,000 asylum-seekers this year alone.

“If we can integrate them quickly into the jobs market, we’ll be helping the refugees, but also helping ourselves as well,” said Ulrich Grillo, head of the powerful BDI industry federation.
Business leaders in Germany are concerned that the rapidly ageing population and low birth rate are slowly depleting the pool of skilled as well as unskilled workers. It is estimated that the country is short of 140,000 engineers, programmers and technicians and has 40,000 training places across all sectors that will remain unfilled this year.

France has said it is prepared to take 24,000 refugees immediately. Less keen to welcome the migrants in such large numbers is the UK, which has committed to accepting 20,000, but by 2020. Rising immigration is set to be a central issue when the Brits vote at their referendum on EU membership in 2017, or earlier. In response to the electorate’s concerns, prime minister David Cameron has pledged to cut net immigration to the UK in the long term. But UK business groups have warned him about the risks of sending out a message to its trading partners that Britain isn’t ‘open for business’.

“In the short term, failing to increase the skilled migration cap will make it more difficult for businesses to access the skills they need to succeed,” said Katja Hall, deputy director-general of business lobbying organisation the CBI.

The Institute of Directors, meanwhile, accepted companies could not have a ‘tin-ear’ to public unease about the level of immigration, but added: “Companies need migrants to be able to fill skills gaps.”

This has certainly been true of Iain Ludlow’s poultry farming business in the east of England, where he employs 37 full and part-time staff in his meat processing and packaging unit.
Good supply of labour

“I would not call this skilled work, but you have to know what you are doing with the cutting implements we use and be aware of the need for good hygiene practices,” he said. “It can also be a messy job and does not pay particularly well. I pay more than the minimum wage, but it is work that does not appeal to local people, so I rely heavily on labour from overseas. And I have found that generally these people work harder and are more reliable.

“Luckily, immigrant labour is in good supply at the moment which greatly influenced my decision two years ago to expand my meat processing unit to also take poultry from other farms in the area. I know of many businesses in the region that are benefiting from having such a readily available workforce to call on and creating much-needed jobs.

“It would be foolish, and probably disastrous for many businesses, if this reliable labour supply was ever put in jeopardy simply to satisfy some unconscionable political agenda.”



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