Refugee Crisis in Europe

As reported by The Guardian, European leaders are fighting each other over the refugee crisis. “More than 1.8 million people have entered Europe irregularly since 2014 and Italy is currently sheltering 170,000 asylum seekers.”

There is undoubtedly a crisis, yet 1.8m people in a continent of 500m should be easy to accommodate. To put it in context, Turkey has received 4m refugees and Crimea 1.8m. There is no solidarity among European states to share the responsibility of accepting refugees, nor there are common structures and practices dealing with it.

As reported by Human Rights Watch: “Member states less affected by direct arrivals remained reluctant to share responsibility for asylum seekers. The two-year binding plan to relocate almost 100,000 asylum seekers out of Greece and Italy officially ended in September, with only 29,401 people actually transferred, less than one-third of the final target. Some countries continued to relocate, however, and over 2,000 more had been relocated by mid-November. In June, the European Commission initiated infringement proceedings against Hungary, Poland, and the Czech Republic for failure to comply with the plan. In September, the EU Court of Justice (CJEU) dismissed the case against the relocation plan brought by Hungary and Slovakia. … EU countries continued to return asylum seekers to Italy, and resumed returns to Greece, under the Dublin Regulation, which requires the first EU country of entry to take responsibility for asylum claims in most cases.” Read the rest of the HRW report which includes a short analysis of the situation in each country.

(The UNHCR’s report has the number of relocations at 34,690, nowhere near the agreed 100,000)

According to the UNHCR report for April 2018:

“In April, nearly 7,300 refugees and migrants entered Europe via Italy, Greece and Spain, bringing the number of refugees and migrants who have arrived by land and sea routes to these three countries to nearly 24,300 in the first four months of 2018. This marks a significant decrease of 49% compared to the first four months of 2017, a period in which just over 48,000 refugees and migrants entered Europe via these three countries. The decrease so far this year is largely due to fewer people crossing from Libya to Italy.”

 

 

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Freedom of Movement, Wages, and Posted Workers

In an attempt to mask xenophobia as a legitimate concern for workers’ low pay, many on the left have attacked Freedom of Movement (FoM) within the EU.

The research shows that immigration does not affect wages and that the fall in wages is due to a multiplicity of factors, see here.

EU legislation on temporary workers (‘posted workers’) seeks to ensure fair competition so that workers are not ‘undercut’ by temporary mobile workers. Posting affects less than 1% of the EU labour force.

EU rules establish that, even though workers posted to another Member State are still employed by the sending company and therefore subject to the law of that Member State, they are entitled by law to a set of core rights in force in the host Member State.

This set of rights consists of:

  •    minimum rates of pay;
  •    maximum work periods and minimum rest periods;
  •    minimum paid annual leave;
  •    the conditions of hiring out workers through temporary work agencies;
  •    health, safety and hygiene at work;
  •   equal treatment between men and women.

However, there is nothing to stop the employer applying working conditions which are more favourable to workers than those of the sending Member State.

As reported by Euroactiv, the most recent “text adopted by the European Parliament settles a certain number of problems, such as the length of time that employees can be posted. France initially wanted to limit this time to 12 months. The final agreement provides for a period of 12 months that can be extended to 18.

“To ensure a real parity in wages between posted and local workers, the new text also stipulates that employers will now have to bear the travel, accommodation and catering expenses for the workers.

“Another important chapter in the text concerns implementation of the text to the international road haulage industry. The new rules will soon apply to the sector, where competition between East and West is particularly sharp. But these rules will only apply once specific legislation has been adopted within the framework of the mobility package.”

As explained by Batsaikhan of Bruegel, “A common fear is that workers moving from a low-wage country to high-wage country could result in “social dumping”, which entails a deterioration in social conditions in the host country due to increased competition with countries with lower social conditions.

However, “only a third of postings are from low- to high-wage countries, while one-third is between high-wage countries”

“According to Sapir (2015) there are three competition channels through which “social dumping” could theoretically occur:

1) imports of goods from a low-wage country

2) imports of services involving posted workers

3) offshoring of production to low-wage countries

“The issue of posted workers draws the most attention due to the fact that these workers are more visible and immigration is in general viewed ever more unfavorably. Yet, of the three channels the posting of workers is the least important channel for competition between low-wage and high-wage countries, compared to goods imports and offshoring of production. (see Darvas (2017)). […]

Posted workers are not a major risk factor for social dumping. […]  owing to the specific conditions under which posted workers are employed in the host country, their relatively small number, and the limited duration of the posting period, the labour market impact and/or local displacement effects are likely to be very small.”

For more read Batsaikhan’s article EU Posted Workers. Separating Fact from Fiction, on Bruegel.

 

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Does foreign-aid deter migration?

A policy paper from the Center for Global Development suggests that foreign-aid increases the likelihood of migration from developing countries. Aid agencies can play a vital role in shaping migration by making it beneficial for all involved.

Economic development in low-income countries typically raises migration.

Evidence suggests that greater youth employment may deter migration in the short term for countries that remain poor. But such deterrence is overwhelmed when sustained overall development shapes income, education, aspirations, and demographic structure in ways that encourage emigration.

Emigration tends to slow and then fall as countries develop past middle-income. But most of today’s low-income countries will not approach that point for several decades at any plausible rate of growth.

Aid has an important role in positively shaping how migration happens. 

Aid agencies need to maximize the potential benefits of migration for everyone involved. They need to cooperate with migrant-origin countries to develop safe, lawful, and mutually beneficial channels for lower-skill labor mobility.

 

(From: Michael A. Clemens and Hannah M. Postel. 2018. “Deterring Emigration with Foreign Aid: An Overview of Evidence from Low-Income Countries.” CGD Policy Paper. Washington, DC: Center for Global Development. https://www.cgdev.org/publication/deterring-emigration-foreign-aid-overviewevidence-low-income-countries)

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Immigration and wages in UK

Much has been made of the research by Sir Stephen Nickell on the impact of immigration on wages, in which he suggested that there was “a small negative impact on average British wages.” That was specifically for semi/unskilled workers.

The impact is, however, infinitesimally small! As Portes showed, the 1% fall in the wages of low-skilled workers due to immigration was spread over a period of eight years.

There was no negative impact found from immigration on the wages of skilled workers and professionals.

Wages have fallen because of various factors, including, extreme pay inequality, lower bargaining power of workers/employees, public sector’s pay freeze, the financialisation of the economy, occupational changes, NOT immigration.

For some reading, here is the Resolution Foundation’s report; and the following economists:

Blanchflower & Machin – ‘Falling real wages’

Mazzuccato – ‘Definancialising the real economy’

Pessoa & Van Reenen – ‘Wage growth and productivity growth’

Machin & Costa – ‘Real wages and living standards in the UK’

Costa & Machin – ‘What’s happening with real wages and living standards in the UK?’

Bell & Van Reenen – ‘Extreme pay inequality’

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Net Migration to UK Falls

Net migration to the UK was estimated to be 248,000 in 2016, a fall of 84,000 from 2015. This is mostly to do with an increase of 40,000 EU citizens leaving the country.

The net migration change was driven by a statistically significant increase in emigration up 40,000 from 2015, mainly EU citizens (117,000, up 31,000 from 2015) and a decrease of 43,000 in immigration (not statistically significant).

Net migration is the difference between people coming to the UK for more than a year, and the number of people leaving the UK for a year or more.

Immigration from EU8 states – the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia – was down by 25,000 to 48,000, while those leaving the country increased by 16,000 in 2015, to 43,000 last year.

These resulted in the smallest net migration estimate of 5,000 for this group of nations since they joined the EU in 2004.

Here is the report of the Office of National Statistics.

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The true effect of migration: growth, higher wages, lower taxes

Closing borders does NOT reduce migration: Closing borders, as also shown in a report by the UK Home Office, would have the effect of diminishing circular EU migration. EU migrants, now able to go to another country, go back to their country of origin and back again to another country, would not be able to do so anymore. This is likely to lead EU migrants to become permanent rather than go back to their country of origins.

This is also evidenced by research in the DEMIG (Determinants of International Migration) project at Oxford University, showing that “immigration restrictions bring down return migration by roughly the same extent as immigration, making the effect of restrictions on net migration very small or insignificant. In order words, borders restrictions have the tendency to push migrants into permanent settlement.”

Professor Hein de Haas from the International Migration Institute at the University of Oxford has a great post assessing the evidence of whether a possible ‘Brexit’ would lead do a decrease in the levels of migration. Here are some highlights:

“The recent increase in immigration to the UK is largely the result of a growth in labour immigration, which reflect increasing labour demand and falling unemployment in the UK. In general , levels of immigration are primarily driven by economic growth and labour demand rather than by immigration regulations – no matter how much politicians would like voters to believe that they are in control.”

See more on this here: Brexit unlikely to curb migration.

Migrants do not take jobs because there is not fixed number of jobs in the economy: The assumption that migration means fewer jobs for native workers is generally referred to as ‘the lump of labour fallacy’. Migrants spend money buying goods and services creating growth and new jobs. See evidence from Jonathan Portes and from the LSE. Also, Hollie McNish rapping based on research.

Skilled migrants raise productivity and wages: migrants to the UK are generally more skilled than the native population. This means that they raise productivity and wages. Here is the evidence. Also, recent work by the OECD finds that halving UK net immigration rates would reduce UK productivity growth by 0.32% per year.

Large increase in immigration has not significantly harmed the job and wage prospects of British workers. Here is the evidence from the Home Office. As researchers at the LSE explain wage stagnation is not due to migration.

“If we look at employment rates of the UK-born over the last four decades since the last EU referendum, there is little relationship with EU immigration. Although EU immigration rose during 2008-10 when employment rates fell, immigration also rose in the last five years when employment rates recovered. Similarly, although wage rates were falling in the period 2008-14 when immigration was rising, wages were still going up in the period 2004-08 as well as in the last year. The problem of falling wages was due to the financial crisis and austerity – not to immigration. … To see if prospects for less skilled UK nationals are associated with EU immigration, we looked at the changes in pay and job rates of the low educated. Our results are unchanged: EU immigration has not harmed local British workers.

Migrants pay more in taxes than they take in benefits. Researchers at Oxford have found that Eastern European immigrants paid in about £15 billion more than they took out in public spending and benefits in the decade up to 2011 (while UK nationals received more than they put in over the same period). Researchers at UCL show that migrants since 2000 have made a net contribution of £25bn.

 

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Europe sees rise in unaccompanied children seeking asylum

Pew Research Centre reports that there has been a rise in unaccompanied minors seeking asylum, with half of them coming from Afghanistan.

Unaccompanied child migrants seeking asylum in Europe
“Since 2008, about 198,500 unaccompanied minors have entered Europe seeking asylum, according to data from Eurostat, the EU’s statistical agency. The first significant jump came in 2014, when the number of unaccompanied minors seeking asylum almost doubled compared with 2013, from 13,800 to 23,200. A year later, in 2015, the total quadrupled to a record 96,000. The 2015 total alone accounts for nearly half (48%) of unaccompanied minors that have entered Europe since 2008. Nearly 7% of all first-time asylum applications in 2015 were from unaccompanied minors, the highest share since data on accompanied minors became available in 2008. …

Since 2008, about four-in-ten of Europe’s unaccompanied minors – 76,700, or 39% – have traveled from Afghanistan, about a 3,000-mile trip. That makes Afghanistan by far the single largest source country of unaccompanied minors in Europe since data became available. Unaccompanied minors also come from other far-flung places. Some 13,200 arrived from Somalia and another 11,600 have arrived from Eritrea since 2008. Travel from both countries requires navigating treacherous terrain and a perilous journey across the Mediterranean Sea. Other top countries of origin include places closer to Europe, including Syria (19,300 arrived since 2008) and Iraq (9,100), while some source countries are in continental Europe, including Albania (3,100) and Russia (2,700). …

Unaccompanied minors do not always apply for asylum in the first European country they enter. Many travel north through the continent. Between 2008 and 2015, almost a third (58,500) of all unaccompanied minors seeking asylum in the European Union, Norway or Switzerland have sought asylum in Sweden. Another 29,600 have applied for asylum in Germany (15%) and 17,800 (9%) have applied in the United Kingdom.

But the eight-year totals mask a change in destination countries among unaccompanied child migrants applying for asylum in Europe. In 2015, Sweden received more than a third (37%) of European unaccompanied minors, up from 11% in 2008. By contrast, the United Kingdom declined dramatically as a destination for unaccompanied child migrants. In 2008, 32% of unaccompanied minors sought asylum in the UK, a share that dropped to just 3% in 2015.”

Read the full article here.

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