Migration and the EU: Challenges, opportunities, the role of EIB

from European Investment Bank
Published on 31 Mar 2016 View Original

Executive Summary

Migratory flows to Europe: new dimensions to deep-rooted patterns

  • In 2015 more than 1.2 million people have applied for asylum in the EU. While this exceptional flow has been one of the drivers for the growing interest and concern about migration, the fact is that migratory movements to Europe are not new and are likely to remain strong in the future. In addition to political and other man-made conflicts, demographic pressures and poverty in some of Europe’s neighbouring regions will keep on feeding migratory flows. Similarly, the increasing number and magnitude of natural disasters resulting from climate change could be another push factor for migration.

  • Migration impacts on many different aspects of society, both in the countries of origin and destination. Economists typically view migration as a flow from regions of lower labour productivity to higher labour productivity regions. As such, migration leads to economic gains, although its distribution can be uneven. Furthermore, migration has a cultural and social impact that goes well beyond its economic dimension. This paper focuses on the economic aspects of migration.

Migration and Europe: low short-term costs for a long-term economic opportunity

  • Refugee and overall migrant flows have a relatively limited fiscal impact, even in the short term. The current refugee crisis takes place against the background of significant economic challenges across the EU. However, recent studies by the European Commission and the IMF show that fiscal costs are limited, temporary and could be easily outweighed by the benefits of integration in the medium term. The IMF estimates the fiscal costs to be 0.1% of European GDP per year between 2015 and 2017, but with EU GDP increasing by 0.13% above the baseline by 2017. In the medium term, the growth impact can be more sizeable (especially for the countries registering higher inflows), depending on the pace of labour market integration, as well as migrants’ skills and age structure. In other words total GDP is expected to increase, but the shift of GDP per capita will depend crucially on the contribution of migrants to the economy of the hosting countries.

  • Job and wage losses of native born are small and concentrated on the low-skilled.
    Furthermore, migrants can help reduce skills shortages and mismatches across the Union, compensating for still insufficient intra EU-mobility
    . The arrival of new migrants is typically perceived as a threat to pre-existing workers, particularly among the low skilled. Current economic conditions, particularly unemployment in some EU countries, make this a serious concern and in fact, studies indicate that low-skilled workers and pre-existing immigrants do tend to lose out. That said, labour market development in the EU reveals a remarkable paradox: high unemployment rates go hand in hand with serious skills shortages and mismatches in several regions, sectors, occupations and Member States. Migration can thus play a role in tackling these issues and thereby partially compensate for insufficient intra-EU mobility.

  • Migrants can help the EU mitigate its ageing challenge. To help sustain economic growth in line with historic trends under current demographic projections, Europe would need to attract a significant additional number of migrants. However, the demographic imbalance is so great, that migration alone will not be sufficient to address it. For this reason, Europe needs to increase its competitiveness and productivity through better and more flexible use of human capital in responding to rapid shifts of labour market needs in the future.

Unlocking the benefits of migration demands the right policies

  • In the short run, much remains to be done to facilitate and speed up the integration of migrants in local labour markets; this would also be an important step towards the social integration of newcomers to Europe.

  • In the medium term, key policy advances would be the establishment of a shared and coordinated definition of what an optimal migration flow is, as well as agreement on the mechanics and the principles for entry and internal movements.

** The EIB supports EU policy and emergency response, long-term economic development and integration and resilience of distressed neighbouring regions **

  • The EIB is helping the emergency response in the areas of infrastructure and equipment, and financing projects aimed at providing housing, education, healthcare and shelter for refugees, both in Europe and in its North African, Middle Eastern neighbourhood, including Turkey.

  • The EIB can act, as the EU bank and according to its mandate, by supporting integration in Europe and by being an active agent for the medium to long term development of the neighbouring regions.

  • The EIB has a lead role in addressing the development challenges of those countries which are ultimately the root causes of migration flows. In this regard, the EIB is prioritising projects that lead to job creation, economic resilience and poverty reduction in line with the European Union’s external policies.