People on the move: impact and integration of migrants in ...bruegel.org/wp-content/uploads/2017/12/Presentation-by-Zsolt-Darva… · Note: Net immigration (non-adjusted) indicates

People on the move: impact and integration of migrants in

the European UnionUuriintuya Batsaikhan, Zsolt Darvas and Inês Gonçalves Raposo

Bruegel workshop:

Better policies for people on the move

13th December 2017

Dramatic changes in EU demographics

2Note: Net immigration (non-adjusted) indicates the data as included in the population

statistics. Net immigration (asylum-adjusted) also considers pending asylum seekers.

• Immigration: more

important source of

population change

than natural

change since 1990s

• Scale of

immigration in

2015-16: not

unprecedented

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

Natural change

Net immigration (non-adjusted)

Net immigration (asylum-adjusted)

Components of population change in the EU28,

1960-2016 (percent of population)

Purpose of our report

•Assess the migration challenge that Europe faces, by analysing:

1. Public perception

2. The scale of immigration

3. The economic impact of immigration

4. Integration of migrants• With a special focus on financial integration

5. Policy implications

3

Public perception

4

Immigration and terrorism top the list of public concerns

5

Source: Eurobarometer. Question QA5 “What do you think are the two most important

issues facing the EU at the moment?” Maximum of two answers possible.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90% Terrorism

Immigration

Economic situation

Member States' public finances

Unemployment

Most important issues facing the European

Union, share of respondents

Attitudes towards immigration globally, share of respondents

6

Source: Gallup and IOM (2015) How the world views migration, Figure 1.2 and Table 5.1.

Note: The question "In your view, should immigration in this country be kept at present

level, increased or decreased?". Groups are weighted by population size.

• EU: more

negative

views on

immigration

than

elsewhere in

the world

34

26

39

39

40

29

48

22

41

34

30

21

18

36

21

28

23

18

26

24

8

22

5

4

13

12

29

8

0% 20% 40% 60% 80% 100%

Global

Oceania

North America

Latin America and Caribbean

Africa

Asia

European Union

Decreased Present level Increased Don't know/refused to answer

Perceptions vs reality: perceived and actual stock of immigrants, 2014 (percent of population)

7

Sources: IPSOS. The question asked: “What percentage of the [Country] population do

you think are immigrants to this country (i.e. not born in [Country])?”

• Citizens

overestimate

the actual

number of

immigrants

0

5

10

15

20

25

30

35

Perceived

Actual: foreign population by nationality

Actual: foreign-born population

Perceptions on handling the refugee crisis & common asylum policy & border control

• EU citizens generally disapprove of the way the refugee crisis was handled in Europe.

• Nevertheless, a large majority of Europeans is in favour of:

• a common European asylum policy and

• increased EU efforts to fight illegal immigration.

8

Support for intra-EU immigration is on the rise

9

0%

10%

20%

30%

40%

50%

Very positive Fairly positive Fairlynegative

Very negative Do not know

May-15 Nov-15 May-16 Nov-16 May-17

Support for immigration from inside the EU, percent or

responses, EU average

Source: Eurobarometer surveys, The question asked: “Please tell me whether each of the following statements

evokes a positive or negative feeling for you – Immigration of people from other EU Member States

Support for migration from inside the EU vs. from outside the EU, percent of respondents

10

Source: Eurobarometer, May 2017

• Lower support

for extra-EU

immigration

• Yet is also

relatively high

in some

countries,

including the

United

Kingdom

No negative relationship between the share of immigrants and the support for immigration across EU countries

11

Intra-EU immigration Extra-EU immigration

Immigration support vs the share of immigrants

in resident population, 2016

Mapping migration in the European Union

12

Annual dynamics of immigration and emigration: home and foreign citizens, 2009-2015 (percent of population per year)

13Source: Eurostat. EU27 does not include Bulgaria.

• Immigration

from outside

the EU

increased in

2015

• Recall our 1st

chart: current

level not

unprecedented

• Unchanged

return

migration and

emigration

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

2009 2010 2011 2012 2013 2014 2015

EU 27

Emigration: home citizens

Immigration: home citizens

Emigration: foreign citizens

Immigration: foreign citizens

Annual dynamics of immigration and emigration: home and foreign citizens, 2009-2015 (percent of population per year)

14

Source: Eurostat. North-West 11: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Luxembourg,

Netherlands, Sweden, United Kingdom. CEE 10: Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland,

Romania, Slovakia and Slovenia. South 4: Greece, Italy, Portugal and Spain.

• Most immigration to North-West 11

• Central Eastern Europe (CEE): higher emigration than elsewhere

• South 4: recent increase in emigration, but below EU average

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%North-West 11





0.0%

0.2%

0.4%

0.6%

0.8%

1.0%CEE 10





0.0%

0.2%

0.4%

0.6%

0.8%

1.0%South 4





Intra-EU mobility

• Intra-EU mobility has not reached high levels

• E.g. population of 11 north-west EU countries include:

• 1.88% residents from Central and Eastern Europe

• 0.15% posted workers from Central and Eastern Europe

• 1.18% residents from southern Europe

• 0.02% posted workers from southern Europe

• 1.13% residents from other north-west countries

• 0.04% posted workers from other north-west countries

• Altogether, other EU citizens (both residents and posted workers) account for 4.4% of total population of 11 north-west EU countries

• Non-EU citizens: additional 4.31% 15

Key concern in brain drain and labour shortages

16

Labour shortages as a factor impeding business

Industry

0

5

10

15

20

25

30

35

199

6-Q

1

199

8-Q

1

200

0-Q

1

200

2-Q

1

200

4-Q

1

200

6-Q

1

200

8-Q

1

201

0-Q

1

201

2-Q

1

201

4-Q

1

201

6-Q

1

CEE-10 NW-11 SE-4

Services

0

5

10

15

20

25

30

35

200

3-Q

3

200

4-Q

3

200

5-Q

3

20

06

-Q3

200

7-Q

3

200

8-Q

3

200

9-Q

3

201

0-Q

3

201

1-Q

3

201

2-Q

3

201

3-Q

3

201

4-Q

3

201

5-Q

3

201

6-Q

3

201

7-Q

3

CEE-10 NW-11 SE-4

Source: European Commission, European Business and Consumer Surveys.

Question: ‘Factors limiting the business: labour force’

Changing source countries and reasons for immigration from outside the EU

17

EU residence permits by main sending countries and

reason for issuance, 2016, thousands

3-11 months

0

100

200

300

400

500

Employment Other Education Family

-

50

100

150

200

250

300

Employment Other Education Family

One year or longer

Source: Eurostat ‘First permits by reason, length of validity and citizenship’ dataset, code: migr_resfirst.

First time asylum applications in the EU by place of application, Jan 2008 - Sep 2017

18

Source: Eurostat.

• Average 2008-11:

265 thousands/year

• 2015: 1.26 million

• 2016: 1.21 million

• 2017 (expected):

640 thousands 0

20

40

60

80

100

120

140

160

180

200

8M

01

200

9M

01

201

0M

01

201

1M

01

20

12

M0

1

201

3M

01

201

4M

01

201

5M

01

201

6M

01

20

17

M0

1Germany Sweden Austria

Hungary Italy Greece

France United Kingdom Rest of the EU

Huge differences in asylum decisionsLikely reason: different implementation of EU asylum rules

19

Source: Eurostat.

0%

20%

40%

60%

80%

100%

EU

28

Austr

ia

Belg

ium

Bulg

aria

Cro

atia

Cypru

s

Czech R

ep

.

Den

mark

Esto

nia

Fin

land

Fra

nce

Germ

any

Gre

ece

Hun

gary

Ire

lan

d

2015 2016 2017

0%

20%

40%

60%

80%

100%

Italy

Latv

ia

Lithuan

ia

Lu

xe

mb

ou

rg

Malta

Neth

erland

s

Pola

nd

Port

ugal

Rom

ania

Slo

va

kia

Slo

ve

nia

Sp

ain

Sw

ed

en

UK

2015 2016 2017

Positive first instance decisions on asylum applications,

% of applications, 2015-17

Uneven distribution of 1) first time applications, 2) accepted asylum, 3) GDP

20

0%

10%

20%

30%

40%

50%

60%

70%

2017

First time applications Positive decision GDP

Economic Impact of Immigration

21

Labour market impact

• Immigrants take jobs from and depress wages for natives?

• There is a lack of conclusive evidence. Impact on the host country depends on migrant characteristics and the host country’s economic and institutional factors.

• There are studies finding evidence of negative, neutral and positive impact of immigration on native wages

• UK – Rowthorn (2015): competition from immigrants may result in lower wages for low skilled local workers, including previous immigrants.

• Italy – Brücker, Fachin and Venturini (2011): presence of foreign workers discourages internal labour mobility

• Overall European experience: small wage and employment impact on native workers (Peri, 2014)

• Wage and employment assimilation: recognition of educational degrees, language skills, poor networks, etc.

22

Fiscal impact

• The fiscal impact of migrants as assessed in the literature depends on what is included in the analysis

• Are migrants net contributors or net beneficiaries?

- Welfare dependency depends on age, employment status and duration of stay

- OECD countries: fewer contributions to taxes and not by higher dependence on benefits (Liebig and Mo, 2013)

• Migrants make a greater fiscal contribution the younger and better integrated into the labour market they are.

23

Impact on output

• Immigration has a large effect on income per capita and productivity (Ortega and Peri 2014, Alesina et al. 2016)

• Portes et. al (2016) estimates a fall in UK GDP ranging from 0.63 to 1.19 percent as a result of Brexit-related reductions in immigration

• Advanced economies: Jaumotte et al. (2016) find a positive effect in per capita income levels in host economies – one p.p increase in share of migrants in the adult population can raise GDP per capita by up to 2% in the long run.

• The economic impact on receiving countries is largely influenced by the composition of migrant flows. Migrants who come for work reasons or for the short-term are associated with better economic outcomes for receiving countries.

24

The case of refugees

• The IMF estimates the fiscal cost of asylum seekers in 2014-2016 to be around 0.19% of total EU GDP

• OECD: National fiscal costs 0.5% of GDP in Germany annually from 2016-2017, 0.3% in Austria and 0.9% in Sweden for 2016

• Impact of the labour markets: cumulative impact of asylum seekers inflow by end-2016 accounts for 0.4% of EEA labour force

• Germany: less than 1% of total labour force

• Role of national institutions in integrating migrants

25

Integration of immigrants

26

Sweden & UK: good labour market integration record; Belgium & Italy: bad

Country Native-born

Second

generation of

migrants

First

generation of

migrants

Sweden 83% 78% 76%

United

Kingdom79% 76% 75%

Belgium 68% 59% 65%

Italy 63% 48% 70%27

Labour market participation by migrant status,

selected countries, 2014 - total population

Labour market integration: Much better outcomes for tertiary educated people

Country Native-born

Second

generation of

migrants

First

generation of

migrants

Sweden 93% 90% 87%

United

Kingdom88% 89% 83%

Belgium 87% 83% 79%

Italy 82% 72% 78%28

Labour market participation by migrant status,

selected countries, 2014 - tertiary educated population

More low-qualified among non-EU born

29

0

5

10

15

20

25

30

35

40

45

50

Less thanprimary, primary

and lowersecondaryeducation

Upper secondaryand post-

secondary non-tertiary education

Tertiary education

Native-born

Other EU-born

Non-EU-born

Population (15-64) by educational attainment level

and country of birth, 2016

Migrants feel to be over-qualified relative to natives

30

• … especially in Italy,

Greece, Austria,

Germany, Belgium,

Malta

0

10

20

30

40

50

60

70

ES

SK

CY

PO

PT

UK

MT

FR

CZ

SE FI

LT IT SI

EE

GR

LV

AT

HR

LU

BE

HU

DE

Natives First and second generation of migrants

Self-declared over-qualified employees

as a share of total employees, 2014,

Tertiary educated workers

School drop out rates are much higher for migrants than for natives, with the exception of the UK

31

Share of early leavers from education

or training aged 18-24

0

5

10

15

20

25

30

35

40

ES UK BE FR DE NL GR

Reporting country

EU-28 countries except reporting country

Non-EU countries

Student performance by family origin, 2015

32

• Even 2nd

generation

migrants tend to

underperform

relative to natives,

with the exception

of the UK, Portugal,

Hungary, Canada

• Especially poor

results: Belgium,

Austria, Iceland,

Slovakia

• Denmark and

France not good

either

350

400

450

500

550

Fin

lan

dC

an

ad

aG

erm

any

Ire

lan

dE

sto

nia

No

rwa

yN

ew

Ze

ala

nd

Sw

ed

en

Be

lgiu

mS

love

nia

Ne

the

rla

nd

sF

ran

ce

Sw

itze

rla

nd

De

nm

ark

US

UK

Austr

alia

Lu

xe

mb

ou

rgS

pain

Po

rtu

ga

lO

EC

D a

ve

rag

eA

ustr

iaIta

lyC

zech

R.

La

tvia

Ice

lan

dIs

rae

lG

ree

ce

Hu

ng

ary

Ch

ileS

lova

kia

Native

Second-Generation with an immigrant background

First-Generation students with an immigrant background

Reading literacy

Financial Inclusion of Refugees

33

From arrival to integration, refugees have very different financial needs

• Arrival: survival cash for immediate food and housing needs;

• Initial displacement: savings, remittances and paying for immediate service needs such as school fees or furniture;

• Stable/protracted displacement: broader options for savings beyond a bank deposit, micro-consumer credit, small business loans, health insurance, etc.;

• Permanent settlement: financial services needs start to resemble those of the host population, such as access to credit, pension schemes, business loans, remittance and payment accounts, etc.

34

Contradictory forces at work in relation to financial regulation and financial inclusion

• The continuing tightening of financial regulation and oversight of the financial sector (which is important in the fight against money-laundering and terrorist financing) works against the economic integration of refugees.

• Know your customer regulations (KYC): customer due diligence process that financial institutions have to do before they provide financial services

35

Bruegel survey on banks’ attitudes towards financial integration of refugees

• 14 responses from 9 countries: Austria, Cyprus, Estonia, Germany, Greece, Italy, Luxembourg, Spain and Sweden.

1. Regulatory environment

2. Refugees as clients

3. New initiatives to foster financial inclusion

36

Has your national regulatory/supervisory authority issued guidelines regarding the offering of financial services to refugees in recent years?

37

Country Guideline issued

Austria Yes

Cyprus Yes

Estonia No

Germany Yes

Greece Yes/No

Italy No

Luxembourg Yes

Spain No

Sweden No

Note: the two Greek banks surveyed by us gave opposite answers.

• Only about half

of the countries

issued

guidelines to

help banks

accommodate

refugees

Restrictiveness of the ‘know your customer’ (KYC) regulations (percent of responses)

38

% responses

In your opinion, or that of your institution, do the ‘know your customer’ (KYC) regulations of your

country strike the right balance between the need for offering financial services to refugees and the

anti-money-laundering (AML) / counter-terrorist financing (CFT) goals?

0%

10%

20%

30%

40%

50%

60%

All banks

Banks withrefugee clients

Banks withoutrefugee clients

• No bank assess

rules too loose

• Banks with

refugee clients

assess rule

more restrictive

than banks

without refugee

clients

Refugees as potential clients for financial instituions (percent of responses)

39

% responses

On a scale from 1 to 5, how interesting is the offering of financial services to refugees as a business

prospect for your institution?

• Moderate

business

interest in

offering

financial

services to

refugees

• Somewhat

larger by banks

that actually

have refugee

clients

0%

10%

20%

30%

40%

50%

All banks



Does your institution have specific financial products for refugees?

40

% responses

0%

25%

50%

75%

100%

Yes No

All banks

Banks withrefugeeclients

Bankswithoutrefugeeclients

Did your institution make active steps to approach refugee clients (for instance, visiting refugee settlement centres, printing flyers and brochures)?

41

% responses

0%

25%

50%

75%

100%

Yes No

All banks



New initiatives to foster financial inclusion 1

42

• Private sector initiatives

• Offer micro-credit and other specific products that refugees need to be able to get started, to support self-employed persons, to contribute job creation and to facilitate social integration

• Employ refugees short-term, thereby helping them to obtain their first work experience in the host country. Financial institutions could take the lead.

• Access to communications (mobile phone and internet access)

• Foster the private sector’s commitment to prevent the risk of exploitation at work

New initiatives to foster financial inclusion 2

43

• Public sector initiatives• Set-up of a national central registry of refugees

• Create a pan-European registry linked to national registries

• European ID issued to each refugee

• Public-private partnerships• Hold consultations between banks and regulators on how to tackle the

challenges faced by refugees and foster their financial inclusion.

• Common regulation on how to address refugee clients

• Provide trainings by private/public schools or professional training organisations, including language schools and financial literacy education

• Promote social inclusion via working activities, vocational training and cultural exchange by public-private partnerships, with the help of social cooperatives, social enterprises and associations

Policy recommendations

44

Policy recommendations, 1-3

1. Address anti-immigrant attitudes: public understanding of immigration is often far from reality, making it important to disseminate accurate information about various aspects of immigration.

2. Protect the EU’s borders and fight illegal immigration: while various measures have been introduced, 85-90 percent of the EU population would like to see additional measures.

3. Continue to build partnerships with neighbourhood countries, which can help to contain refugee and immigration inflows into the EU, facilitate the successful and safe return of ineligible migrants and provide information about eligible migrants.

45


4. Provide additional funding for border protection, neighbourhood partnerships and immigrant integration: a small percent of the EU budget is spent on these areas, which we find insufficient given that immigration is a priority concern of citizens.

5. Ensure the consistent implementation of the EU’s asylum rules: the widely different rates of acceptance of asylum seekers in different EU countries suggest different implementation of the EU’s asylum rules. Clear guidelines are needed for the evaluation of asylum applications and their consistent implementation.

6. Address the very uneven distribution of refugees among EU countries: relocation of refugees from, and financial support to, heavily impacted countries is essential. Countries that resist accepting refugees for political and ideological reasons should make large enough financial contributions instead of being forced to accept refugees.

46


7. Improve identification of refugees by issuing a European ID to each refugee and creating of a pan-European registry of refugees, linked to national central registries: such instruments, established with European financing, would greatly facilitate the identification and integration of refugees.

8. Learn from the best integration practices: only a few European countries can be regarded as successful in terms of integration of immigrants. Cooperation with the private sector and social partners should also play a role in improving integration systems.

9. Combat educational and spatial segregation: early childhood education, language and professional training for recently arrived immigrants, and better access to higher education for young and second-generation migrants, are essential for their integration and to limit spatial segregation.

47


10. Ensure the EU strategy for integration is well articulated with national governments and other institutions: the EU’s 2016 action plan on the integration of third country nationals includes several useful initiatives which should be better implemented by member states;

11. Review financial regulation to promote the financial inclusion of refugees: regulation should strike a balance between the fight against money-laundering/financing of terrorism and the economic integration of refugees. At the minimum, all supervisory authorities should issue guidelines on financial inclusion of refugees.

12. Address labour shortages in EU member states by fostering labour force participation, increasing the pool of labour for the private sector through reduced public-sector employment, education and specific training programmes and overhauling the tax/social security contribution system to promote higher net wages, while keeping gross wage costs and fiscal revenues unchanged.

48

Documents

People on the move: impact and integration of migrants in ...bruegel.org/wp-content/uploads/2017/12/Presentation-by-Zsolt-Darva… · Note: Net immigration (non-adjusted) indicates