Immigration and the economic crisis in Western Europe

Emilio ReyneriUniversity of Milan Bicocca

emilio.reyneri@unimib.it

VI Conference on migrations in SpainA Coruna, September 17th-19th, 2009

1

At present, the main problem for migration studies

Many research centers are focusing on it:• Oecd devoted its 2009 Sopemi report• Policy network (a British think-thank) started a

series of seminars• Migration Policy Institute published some papers

on US and EU (by Papademetriou)

• A group of distinguished scholars in migration studies (leaded by Castles) set up a blog

• ILO Migration program published a paper (by Awad)2

The status of knowledge• Very poor till now, because of two time-lags- between the economic downturn and the impact

on employment (at least 6-9 months) and migratory flows (even longer)

- between events and statistical information• Thus, we are forced to found a tentative analysis

on- very few real data,- anecdotal evidence,- the lesson of the past crises,- speculations based on what we know about the

immigration in Europe. 3

How large the European immigration is

• 43 million of authorised international immigrants in EU27 = 8.5% of total population- 14 million from other member states- plus seasonal and temporary immigration

(about 600,000 workers admitted annually)

• Foreign born % to population in EU15: from 15% in Austria & Ireland to 4% of Finland

4

Five problems• The impact of economic downturn on

unemployment of immigrants (compared with natives)

• The impact on returns• The reactions by governments of

receiving countries• The impact on new migratory inflows• The reactions by receiving societies

5

A sharp turning point in employment and unemployment

• Till 2007 a decade of sustained employment growth caused a sharp drop of unemployment rate in EU15: from 11% to less than 7%

• contribution of immigrants to employment growth was important: at least 40% in Austria, Denmark, Italy and Spain, over 70% in the UK

• Since mid-2008 employment started to decrease and unemployment to increase dramatically

• Forecasts for 2009 and 2010 are even worse 6

Immigrants’ unemployment increases dramatically

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Fig. 1. Unemployment rate for non EU15 citizens

  2006Q02 2006Q03 2006Q04 2007Q01 2007Q02 2007Q03 2007Q04 2008Q01 2008Q02 2008Q03 2008Q04 2009Q01 2009Q02

AT 11,2 10,5 11,9 12,3 10,4 10,2 10,1 10,3 8,1 7,8 9,4 12,1 10,4

BE 30,3 32,3 33,7 30,3 27,1 23,5 24,3 26,7 19,7 25,1 24,8 26,1 21,5

DE 22,1 21,0 22,4 21,1 19,2 18,4 19,1 17,5 17,2 16,1 16,2 17,8 17,6

DK 5,9 11,4 10,0 10,4 11,8 11,3 11,2 10,1 10,9 7,6 11,1 13,1 14,0

ES 12,1 11,0 12,2 13,0 12,1 12,0 12,7 15,1 17,0 17,9 22,0 29,5 28,9

EU15 14,7 13,9 14,7 15,1 13,5 12,7 13,4 13,6 13,6 13,1 15,0 18,4 18,2

FI 24,0 21,2 18,6 23,9 21,0 15,3 15,9 19,1 20,3 17,0 17,0 17,3 22,2

FR 22,3 21,6 23,6 24,2 21,9 21,3 20,8 19,0 18,3 17,7 19,7 24,0 22,3

GR 7,3 6,7 8,2 9,2 8,0 6,2 6,6 7,3 6,2 5,6 7,4 10,4 9,8

IT 8,8 8,2 8,5 9,8 7,8 6,7 9,6 9,5 9,1 7,2 9,0 10,7 11,3

NL 12,0 10,9 12,6 11,7 10,0 7,6 7,2 8,5 7,3 5,1 9,1 8,1 10,4

PT 10,3 10,4 11,3 13,7 14,7 11,8 10,0 12,8 10,2 9,7 12,9 17,4 18,3

SE 22,7 18,1 16,7 18,7 19,5 19,3 18,7 18,7 22,1 18,9 21,9 21,7 25,9

UK 8,9 8,9 8,6 9,4 8,2 7,8 7,6 7,6 7,2 7,0 7,5 8,2 9,5

But their penalization relative to nationals increases much less

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Fig. 2. Gap between the unemployment rate for non EU15 and the unemployment rate for nationals.

2006Q02 2006Q03 2006Q04 2007Q01 2007Q02 2007Q03 2007Q04 2008Q01 2008Q02 2008Q03 2008Q04 2009Q01 2009Q02

AT 7,1 6,8 8,1 8,4 6,6 6,2 6,6 6,7 5,1 4,5 6,0 8,2 6,3

BE 22,8 25,1 26,6 23,2 20,3 16,9 18,0 20,3 14,0 18,1 18,7 18,9 14,8

DE 12,8 12,1 13,6 12,5 11,4 10,8 11,8 10,0 10,2 9,7 10,0 10,6 10,6

DK 2,0 7,9 6,6 6,2 8,5 7,6 8,4 7,3 8,1 4,3 7,9 8,2 8,3

ES 4,1 3,3 4,5 5,2 4,8 4,6 4,7 6,4 7,7 7,7 9,5 14,3 12,9

EU15 7,5 6,9 7,7 8,1 7,1 6,3 7,0 7,0 7,2 6,6 8,0 10,3 10,0

FI 15,3 14,6 12,0 16,5 13,5 9,4 9,9 12,6 13,2 11,7 11,2 9,8 12,9

FR 14,2 13,2 15,5 16,0 14,7 14,0 13,7 12,0 11,7 10,9 12,2 15,6 14,0

GR -1,5 -1,7 -0,6 0,1 -0,1 -1,8 -1,6 -1,0 -1,1 -1,7 -0,6 1,2 1,0

IT 2,4 2,2 1,7 3,6 2,2 1,1 3,2 2,6 2,5 1,2 2,1 3,0 4,3

NL 8,3 7,5 9,2 8,0 7,0 4,8 4,5 5,5 4,6 2,7 6,7 5,1 7,3

PT 3,1 3,0 3,2 5,5 7,1 4,1 2,3 5,4 3,0 2,1 5,3 8,9 9,6

SE 15,0 12,1 10,9 12,2 12,9 14,1 13,5 12,7 15,7 13,6 16,2 14,2 17,2

UK 3,8 3,4 3,5 4,2 3,2 2,5 2,8 2,7 2,2 1,0 1,4 1,2 2,0

Two countries where penalisation increased substantially

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Two countries where penalisation remained almost steady

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Fig. 3. The immigrants' unemployment rate and its gap to natives' unemployment rate: The pathways over time

SPAIN 2006Q02 2006Q03 2006Q04 2007Q01 2007Q02 2007Q03 2007Q04 2008Q01 2008Q02 2008Q03 2008Q04 2009Q01 2009Q02

Gap 4,1 3,3 4,5 5,2 4,8 4,6 4,7 6,4 7,7 7,7 9,5 14,3 12,9

non EU15 12,1 11,0 12,2 13,0 12,1 12,0 12,7 15,1 17,0 17,9 22,0 29,5 28,9

ITALY 2006Q02 2006Q03 2006Q04 2007Q01 2007Q02 2007Q03 2007Q04 2008Q01 2008Q02 2008Q03 2008Q04 2009Q01 2009Q02

Gap 2,4 2,2 1,7 3,6 2,2 1,1 3,2 2,6 2,5 1,2 2,1 3,0 4,3

non EU15 8,8 8,2 8,5 9,8 7,8 6,7 9,6 9,5 9,1 7,2 9,0 10,7 11,3

GERMANY 2006Q02 2006Q03 2006Q04 2007Q01 2007Q02 2007Q03 2007Q04 2008Q01 2008Q02 2008Q03 2008Q04 2009Q01 2009Q02

Gap 12,8 12,1 13,6 12,5 11,4 10,8 11,8 10,0 10,2 9,7 10,0 10,6 10,6

non EU15 22,1 21,0 22,4 21,1 19,2 18,4 19,1 17,5 17,2 16,1 16,2 17,8 17,6

UK 2006Q02 2006Q03 2006Q04 2007Q01 2007Q02 2007Q03 2007Q04 2008Q01 2008Q02 2008Q03 2008Q04 2009Q01 2009Q02

Gap 3,8 3,4 3,5 4,2 3,2 2,5 2,8 2,7 2,2 1,0 1,4 1,2 2,0

non EU15 8,9 8,9 8,6 9,4 8,2 7,8 7,6 7,6 7,2 7,0 7,5 8,2 9,5

FRANCE 2006Q02 2006Q03 2006Q04 2007Q01 2007Q02 2007Q03 2007Q04 2008Q01 2008Q02 2008Q03 2008Q04 2009Q01 2009Q02

Gap 14,2 13,2 15,5 16,0 14,7 14,0 13,7 12,0 11,7 10,9 12,2 15,6 14,0

non EU15 22,3 21,6 23,6 24,2 21,9 21,3 20,8 19,0 18,3 17,7 19,7 24,0 22,3

Why immigrants are hit by unemployment more than natives,

but less than expected?immigrant workers are over represented in more strongly cyclical occupations:- by industry: construction, hotels and catering, low tech manufacturing- by size of firm: small firms- by skill level: low skilled manual jobs- by status: fixed term jobs / irregular jobs

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Some counter-balancing factorsImmigrants are over-represented

also in non-cyclical occupations:

• agriculture, health care, elderly care giving, housekeeping

• the last three sectors are entered mainly by female immigrants

→ worsening of labour market hits female much less than male immigrants

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Unemployment increases less for female than for male immigrants

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Fig. 4. Unemployment rate of women minus Unemployment rate of men, non EU15 citizens

  2006Q02 2006Q03 2006Q04 2007Q01 2007Q02 2007Q03 2007Q04 2008Q01 2008Q02 2008Q03 2008Q04 2009Q01 2009Q02

AT 1,2 1,3 1,6 -0,6 2,0 4,1 2,1 -1,4 1,5 1,4 -0,7 -5,6 -4,6

DE 0,2 -1,0 -1,6 -2,6 -0,3 -0,1 -0,5 -0,8 1,3 1,3 -0,4 -1,3 -3,1

ES 4,5 5,9 7,4 5,0 4,0 5,1 2,4 3,7 0,8 -2,2 -2,3 -7,1 -7,8

EU15 3,2 3,5 4,0 3,1 3,6 3,7 3,2 3,1 2,2 1,6 1,1 -1,0 -2,0

FR 6,0 8,6 5,5 3,5 6,9 7,8 6,3 3,8 1,5 6,1 2,3 1,7 -1,5

GR 8,8 9,1 9,7 11,5 10,5 6,8 8,2 8,2 7,6 5,5 5,7 4,3 2,7

IT 8,7 7,4 9,4 9,0 7,7 5,7 8,2 7,9 7,2 5,1 5,0 3,4 3,9

NL -3,5 -2,9 0,0 2,4 1,1 3,8 4,0 4,4 1,4 3,6 0,7 0,1

PT 0,9 1,4 4,6 9,1 8,4 -0,7 3,3 7,5 1,0 -0,8 0,2 2,2 3,4

SE -2,4 -3,1 -3,3 -2,9 3,1 2,5 0,1 1,1 3,9 2,5 3,4 -2,2 -1,5

UK 1,8 1,4 2,5 3,0 3,1 3,5 3,2 2,0 0,3 2,5 1,8 1,1 0,5

Also penalisation as for unemployment increases less for female immigrants

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Fig. 5. Unemployment gap for non EU15 women minus Unemployment gap for non EU15 men

  2006Q02 2006Q03 2006Q04 2007Q01 2007Q02 2007Q03 2007Q04 2008Q01 2008Q02 2008Q03 2008Q04 2009Q01 2009Q02

AT 0,1 0,0 0,3 -1,4 0,9 2,8 1,1 -1,7 0,9 0,8 -1,8 -5,4 -4,6

DE 0,5 -1,4 -2,3 -2,4 -0,9 -0,7 -1,2 -0,6 1,0 0,5 -0,5 -0,6 -2,3

ES -0,7 0,9 2,4 0,0 -0,5 1,0 -2,0 -0,4 -2,6 -5,2 -5,1 -9,3 -9,8

EU15 1,8 1,9 2,6 1,8 2,1 2,3 1,7 2,1 1,1 0,5 0,3 -1,2 -2,1

FR 4,6 6,6 4,6 2,4 5,7 6,9 5,2 3,2 0,3 5,0 1,0 0,9 -2,4

GR 1,1 1,3 1,8 3,6 3,0 -0,6 1,2 1,6 1,5 -0,6 -0,7 -2,1 -3,8

IT 5,7 4,5 6,5 6,7 5,2 2,9 5,2 5,0 4,1 2,3 2,7 0,8 1,5

NL -4,4 -3,7 -1,1 1,4 0,2 3,1 3,4 4,1 0,8 3,3 0,6 0,0

PT -1,0 -1,3 2,1 6,5 5,7 -3,5 -0,1 5,2 -1,2 -3,5 -1,9 0,7 2,7

SE -3,2 -3,8 -3,2 -2,9 2,1 1,8 -0,7 0,4 3,3 1,6 3,1 -1,9 -1,0

UK 2,8 2,2 3,3 4,0 4,0 4,2 3,9 3,0 1,3 3,8 3,4 3,2 3,1

Some counter-balancing factorsDisplaced immigrant workers are much more prone than natives to fill whichever job vacancyThey have a stronger pressure to work as: - making money as much as possible is the main goal of their migratory project,- they are ineligible or less eligible for welfare benefits in many countries and anyway cannot rely on family’s support.

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Immigrants (especially recent) are more able to adjust themselves to worsening of labour

market conditions• Immigrants are more prone - to geographical mobility looking for a job- to take “any” job even at very low wages

and at very poor working conditions.→ In countries where low-skilled segment of

labour market is important (like Spain and Italy), a “race to the bottom” can start, also expanding the irregular employment

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Will displaced natives compete with immigrants in that race to the bottom?

• Anecdotal evidence (Spaniards are lining up to pick olives; Italian women are looking for job in elderly caring).

• But the lesson of past high unemployment years should suggest that they will not, as- youths are highly educated (even more now)- they can always rely on long-term family’s support

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Do returns prevent immigrants’ unemployment from increasing more?

• The “buffer theory”: temporary migration narrows the cyclical variations of unemployment in receiving countries, as economic crises drive unemployed immigrants to return home en masse.

• But what occurred during the past crises in Europe and Asia clashes sharply with that theory

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The European oil crisis in mid-1970s• Centre-North European countries halted the

program of recruitment (guestworkers)• But even immigrant workers holding a short-

term contract were not forced to depart and most did not, because also their countries of origin were suffering economic recessions.

• Processes of family reunion and permanent settlement started and the formation of ethnic minorities began.

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The 1997 Asian financial crisis• No large impact on economic migration- The crisis did not affect segments of the

labour market in which most immigrants were employed.

- Some displaced immigrants moved to informal economy under more exploitative working conditions.

- Many national were unwilling to take on “migrant jobs”.

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What really matters concerning returns• Returns are frequents (20-50% within 5 yrs) → stock of immigrants = f (high turnover)

- more frequent among recent immigrants (less settled, no ties – house, children‘s school)

• often are driven by personal and family reasons (the migratory chain) - migrants are human beings , no connection with labour market trend

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What really matters concerning returns• Returns are more frequents when:

- the journey is cheap, - the right to “come and go” is secure- social entitlements are portable That is the case of circular migration from EU new member states

By contrastunauthorized immigrants face difficulties

even to leave the country27

What really matters concerning returnsReturns can be caused both by failures

and successes → impact of host labour market conditions cannot be forecastedIts worsening can cause at the same time both an increase of failures (→ more returns) and a decrease of successes (→ less returns)

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Economic, social and political situation in origin countries

• opportunities for good and well-paid jobs in origin countries are the main reason affecting returns

• The recent case of Polish migrants large outflows from UK and Ireland from 2007

to mid-2008 when Poland was booming, then they stopped when Polish economy fell down. 29

In most sending countries unemployment is rising again

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Fig. 6. Unemployment rate in new East European member states

  2006Q02 2006Q03 2006Q04 2007Q01 2007Q02 2007Q03 2007Q04 2008Q01 2008Q02 2008Q03 2008Q04 2009Q01 2009Q02

CZ 7,1 7,0 6,5 6,0 5,3 5,1 4,9 4,7 4,2 4,3 4,4 5,8 6,3

EE 5,3 4,9 3,9 4,4 4,4 3,5 3,3 3,5 3,2 5,3 6,1 10,1 11,6

HU 7,2 7,5 7,5 7,5 7,0 7,2 7,8 8,0 7,6 7,7 8,0 9,7 9,6

LT 5,6 5,7 4,9 5,0 4,0 3,9 4,2 4,9 4,5 6,0 7,9 11,9 13,5

LV 7,2 6,1 6,2 6,8 6,1 5,9 5,3 6,6 6,2 7,2 10,0 13,9 16,5

PL 14,1 13,1 12,2 11,3 9,6 9,0 8,5 8,1 7,1 6,6 6,7 8,2 7,9

RO 7,0 7,1 7,2 7,0 6,5 6,0 6,1 6,3 5,6 5,4 5,8 6,9 6,3

SI 5,9 5,5 5,5 5,6 4,5 4,4 4,6 5,0 4,0 4,1 4,3 5,2 5,5

SK 13,5 12,9 12,1 11,7 11,2 11,3 10,4 10,5 10,0 8,9 8,7 10,4 11,3

In most sending countries unemployment is rising again

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Fig. 7. Unemployment rate in selected non European sending countries

Chlle Colombia Ecuador Peru Moldova Russia Ukraine Turkey2007-1 6,4 12,9 9,0 9,0 7,1 11,0

2007-2 6,7 11,9 9,5 9,5 7,2 11,4

2007-3 6,8 11,4 9,8 9,8 6,8 7,4 10,4

2007-4 6,7 11,2 9,0 9,0 6,4 9,8

2007-5 6,9 11,3 8,5 8,5 5,9 8,9

2007-6 7,0 11,0 8,3 8,3 5,8 6,6 8,8

2007-7 7,6 10,9 7,9 7,9 5,7 8,8

2007-8 7,7 10,5 7,1 7,9 7,9 5,6 9,2

2007-9 7,7 10,1 8,2 8,2 5,6 6,2 9,3

2007-10 7,3 9,8 7,9 7,9 5,6 9,7

2007-11 7,2 10,8 6,1 7,9 7,9 5,7 10,1

2007-12 7,2 11,7 7,5 7,5 6,1 6,4 10,6

2008-1 7,3 11,7 8,1 8,1 6,6 11,6

2008-2 7,6 12,1 6,9 9,0 9,0 7,1 11,9

2008-3 7,7 11,5 9,3 9,3 6,5 7,1 11,0

2008-4 8,0 11,1 9,0 9,0 6,0 9,9

2008-5 8,4 11,1 6,4 8,1 8,1 5,4 9,2

2008-6 8,4 11,4 7,9 7,9 5,6 6,2 9,4

2008-7 8,2 11,5 8,1 8,1 5,7 9,9

2008-8 7,8 11,4 7,1 8,4 8,4 5,8 10,3

2008-9 7,5 10,8 8,5 8,5 5,3 6,0 10,7

2008-10 7,5 10,6 7,9 7,9 6,1 11,2

2008-11 7,5 10,5 7,3 7,7 7,7 6,6 12,6

2008-12 8,0 11,9 7,8 7,8 7,7 6,4 14,0

2009-1 8,5 12,4 8,8 8,8 8,1 15,5

2009-2 9,2 12,9 8,6 9,3 9,3 8,5 9,5 16,1

2009-3 9,8 12,2   9,3 9,3 15,8

2009-4 10,2 11,9   14,9

2009-5 8,3

The failure of voluntary return programs / Spain

- unemployment benefits paid in advance to unemployed non-EU workers who return home and agree to do not enter the country for 3 yrs.

- nearly 90,000 were entitled, but only 4,000 applied for

• “I prefer to be poor in Spain rather than in Columbia”

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The failure of voluntary return programs / Czech Republic

• 2,000 bonuses (cost of journey + 500 euro) for non EU authorized, preferably Czech-speaking, immigrants (Vietnamese)

→ used by those who were leaving anyway rather than by most vulnerable immigrants

The forgotten lesson of mid-1970s French program

targeted to Algerians, it was used mainly by Spanish and Portuguese immigrants 35

Data and forecast• (where crisis started before)- US number of returning migrants to Mexico in

2008 = previous yrs (ILO)

- UK out-migration rose a bit, but for a limited period (Salt)

Circular migration within new EU member states → a small increase of returns

From other countries → no increase of returns, but settlement processes

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Other migratory policies adopted by receiving countries

More selective programs for admission of non-EU workers

- sharp reduction for new entries of non-seasonal workers (quota system)

- even no entry for low skilled occupations- reduction in shortage lists &

reinforcement of labour market tests for skilled positions

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Other migratory policies adopted by receiving countries

• Making the renew of temporary permits more difficult for unemployed immigrants→ to force them to return, but in practice to overstay as unauthorized immigrants

• More restrictions in family reunification• Enforcing controls on clandestine entries

(but the case of Italy, where a new regularization started, must be understood with political reasons)

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The short term impact on new authorized inflows

• sharp reduction for economic immigrants because of more selective policies of entry (UK & US already in 2008)

• but applications for family reunification are likely to increase substantially

→ Stock of authorized migrants shall decrease also because not few temporary migrants shall overstay

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Relationships between migratory inflows and labour shortages in receiving

countries • A very recent study by Hooghe et al. (IMR,

2008) on 21 Oecd European member countries from 1980 to 2004 shows that:

• unemployment in receiving countries gives the best prediction of authorized migration inflows if the time lag is 1 year

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An even more strict relationships for unauthorized flows

• That is the final hypothesis of the quoted study, which the authors were not able to check.

• But, border apprehensions data supports the conclusion that illegal immigration to US is correlated with the business cycle.

• Unauthorized migrants are well known to respond to signals from the informal labour market. 41

Some medium-long term changes?• Some types of immigrants might not come

in because of shifts in labour demand from declining to expanding occupations

• Break in cross-national chain of labour market information might delay a recovery of inflows (mainly for unauthorized ones)

• Policy makers might be hesitant to come back to an “open door” policy (like in Spain)

(Papademetriou et al., 2009)42

But structural factors shall push for a recovery of immigration

• In all the European countries demographic trends shall cause more and more serious shortages in young and adult people to face with the problems of ageing societies

• International competitiveness needs to attract new talents

• Established ethnic communities shall feed inflows not related to economic conditions

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The impact on receiving societies

• Perceived competition for jobs shall increase, although less in countries where the segmentation of labour market is deeper

• Anti-immigrant sentiment shall spread as immigrant workers may be seen as a threat to the economic livelihood of natives

• Those effects may be worsened if more immigrants overstay and enter irregular jobs

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