The warnings were apocalyptic, painting pictures of rising xenophobia, “social dumping” and “fragmentation” of local labour markets. Your correspondent was attending a hearing of the European Economic and Social Committee (EESC), a civil society consultative body, in Brussels, the headquarters of the European Union. The issue at stake was a proposed European Commission (EC) directive to facilitate the entry into the EU of a tiny group of high-skilled workers called intra-corporate transferees (ICTs).
A complex set of multiple crises besets Europe as it scrambles to imagine and create a new role for itself in the twenty-first century’s shifting geopolitical landscape. Short-term emergencies like cobbling together bail-out packages for fiscally troubled economies intersect with worrying long-term trends of a relative loss of clout in a world of more populous and dynamic emerging powers.
But for policy makers across the democracies of the EU the most befuddling challenge is how to respond when the solution to a crisis is seen by the majority of the people as the problem. A case in point is the demographic “time bomb” ticking away in an aging Europe where hard-won privileges for citizens have ossified into entitlements.
In 1900 Europeans accounted for 24 per cent of world population; by 2000 that figure had more than halved and it is expected to halve again by 2050. According to EC figures, from 2013 the working age population of the EU will shrink by 50 million people over the next 50 years. The point to note is that this figure takes into account an influx of 58 million immigrants during the same period.
EC data reveals that already many EU countries face a massive skills shortage. In 2008, there were 64,000 unfilled job vacancies for engineers in Germany alone, causing an estimated loss of 6.6 billion euros to the country’s economy. Other studies predict a shortfall of 20 million skilled and unskilled workers by 2030. The EU is beset with worries about competitiveness, but highly-qualified foreign workers make up only 1.7 per cent of the employed population within the EU. The equivalent figure for Australia is nearly 10 per cent and 3.2 per cent in the US.
Policies to encourage immigration, in particular, though not necessarily limited to, highly skilled workers should prima facie be a no-brainer for the region. Instead, widespread popular hostility to immigration has in many cases led to governments legislating precisely the opposite. The United Kingdom for example, imposed a cap last year on non-EU economic migrants, a category of immigrants most likely to benefit the UK’s economy.
Ironically, Europe’s anti-immigration stance is at odds with the self-perception of many Europeans, who see themselves as tolerant and egalitarian. In a poll conducted by the UK’s Guardian newspaper last week, a quarter of citizens in Britain, France, Spain, Germany and Portugal listed non-EU migration as the leading or second threat to Europe’s future, while the majority also reported that they believed in “European” values of openness and liberalism. In the UK, some 47 per cent of those polled said they were against non-EU immigrants, while only 20 per cent were in favour.
At the EESC hearing in Brussels, speaker after speaker raised concerns about how the ICT directive could lead to a tsunami of low-paid IT workers from India crashing through Europe’s doors, thereby destabilising the comfortable conditions enjoyed by European workers today. Other arguments against the proposal included concern for the human rights of the foreign workers, so that a desire to protect them from exploitation by MNCs became the crux of one argument that would deny ICTs easier access to Europe.
ICTs are in fact a tiny group of highly-paid workers. The EC estimates that at present they number a mere 16,000 in the entire EU. One representative from business finally raised his voice, asking whether any of the other speakers had actually met with an ICT. “These are usually a privileged elite,” he said, better paid than most Europeans.
An expert from the Swedish administration went on to share the experience of Sweden with labour migration. In 2008 the Swedish government undertook a radical reform of the immigration system, abolishing all quotas on migration. Instead they allowed employers to assess their own needs and freely recruit from outside Sweden, and outside the EU if necessary, to meet their requirements.
The reasons for the move were the demographic situation in Sweden, she said, as a result of which the country lacked not only sufficient doctors and engineers but welders, technicians and electricians. But despite its liberalism only 30,000 work permits to migrants have in fact been issued over the last two years, with currently some 10,000 outsiders actually working in Sweden. Given that the Swedish labour market has 4.9 million people, the impact of the opening has hardly been substantial.
Ultimately the twin problematics of migration and demographics will be crucial to Europe’s future. Current popular sentiments indicate that these will not only be the Achilles heel of the EU’s economic prospects, but will also hurt the region's ability to play its desired “leading” role in geopolitical affairs.
The latter has been in evidence with the EU scrambling to devise an appropriate response to the popular revolts in North Africa. Despite all the rhetoric supporting democracy, much of the reaction to events in Tunisia, Egypt and now Libya has been framed as an immigration issue. Italy’s foreign minister has been warning of “an exodus of Biblical proportions” from these countries to Italy.
Many argue that the best way for Europe to help the nascent democracies in North Africa would be to open the region’s markets and borders for freer movement of goods and people. The chances of this transpiring are however, scant. Far more likely is increased hand-wringing in Brussels as the EU and its member states continue to bemoan their relative loss of global prowess.
