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Saturday, March 9, 2013

Free Movement within the EU

"The United States of Europe" is a work in progress.  Critics abound.  There are some who say that what is being created is nothing more than a huge, anti-democratic, opaque bureaucracy.  Almost every day I hear complaints about those "technocrats in Bruxelles."  There is some truth in that criticism.  But personally I am awed by the sheer scope of the project and how ambitious it is.  It's worth recalling that within living memory Europe was a world of sanguinary conflict with her countries at odds with each other to an extent that is inconceivable today.   This is progress and if anyone out there thinks otherwise, I would be highly interested in knowing why.

Is it perfect?  Of course not.  "Out of the crooked timber of humanity no straight thing was ever made." Are Europeans better off because of this project?  On the balance, I would say "yes" though the benefits are not spread equally among the people here.  If you are older, mono-lingual and not blessed with useful (marketable) training or good diplomas, then chances are good that you feel a bit left behind and that is a serious problem.  But if you are young and talented and mobile then Europe has a great deal to offer.

For those who believe in open borders, Europe is the place to look since it is something of a laboratory  for seeing what really happens when countries within a zone drop the barriers to migration.  Free movement is at the heart of the European project.  Where adjacent countries have interesting opportunities and fewer bureaucratic hurdles to overcome in establishing residency, one would think that Europeans would take advantage of that.  Today I would argue that EU citizenship is probably one of the most valuable citizenships to possess since it facilitates access to a huge market where opportunities abound. And for someone from the UK or France or Italy or Eastern Europe, it's still close enough so that going "home" is a simple matter of a few hours of travel via train or plane.

But as we watch this grand experiment unfold, there are issues.  There are the low-skilled that I mentioned above but there are also questions about other impacts of this migration on the different countries.  What does this increased mobility means for social welfare programs, for example?  Or taxation?  Or the defense of local culture and language?  Assessing that impact is important in order to mitigate some of the less desirable consequences of increased regional mobility.

This month the Migration Policy Institute published a very interesting report called How free is free movement? Dynamics and drivers of mobility within the European Union.  It's not long (about 25 pages) and is a lovely synthesis of the major trends in inter-EU mobility, the impact of the financial crisis on that mobility, the major drivers behind EU migration, and the impacts on the receiving and sending countries (and how public services are affected).  There is also a fine list at the end of the report to other articles and reports that might be of interest.

A few things of note in the analysis.

Trends:  In the section on Trends in Intra-EU mobility, the report said that in spite of facilitated access for EU nationals, Third-Country National (non-EU) migration is still more important than regional European migration.  What?
While 4.1 percent of EU residents are from outside the European Union (‘third-country nationals’), only 2.5 percent are EU nationals living in another Member State (see Table 1).  Most foreign nationals reside in the ‘old’ European Union, the so-called EU-15. 
Some of this, they say, may be because EU citizens may work in other countries temporarily but don't necessarily bother to establish residency.  I still found these numbers to be surprising because it seems to fly in the face of the principle that most migration tends to be regional.

The figures for France were very interesting.  Using data from the Labor Force Survey (LFS) they say that in 2011 France had only 3% of the mobile EU-12 nationals (about 117,000 people).  This is very low compared to other Western European countries like Germany which had 667,000.   Looking at the table on page 3,  the total number of foreign nationals in France in the same year was 5.9% of the population of which only 2.1% were EU and 3.8% were third-country nationals.
A possible explanation for this is that France applied ‘transitional provisions’ (restrictions on the free movement of EU-8 workers) until 2008, which was relatively late compared to other major EU destinations. It also has a relatively rigid labour market, thus dampening demand for labour migration. In addition, France’s deportations of Roma communities to Bulgaria and Romania may have made it appear a hostile destination to Eastern Europeans.
Public Services:  The impact on public services in different EU countries is unclear.  The big question concerning migrants (be they EU or third-country nationals) is whether or not they are a drain on the public welfare systems. Anecdotal stories abound in my host country of how migrants are responsible for the public healthcare system deficit.  What is the reality?  Hard to know because it depends on the country, the age of the migrants, and other factors.  Where migrants are young, mobile and have yet to start families, the impact seems to be minimal (in fact these migrants tend to be net contributors - they put in more than they get out of these systems).  
In the United Kingdom (which has the largest evidence base on this question), studies have found that EU-8 migrants who have resided in the country long enough to become eligible for benefits are net contributors to the public purse and low users of public services. Evidence also points to a parsimonious use of health care among EU citizens, in part because many of them are young, single, and move frequently.
The picture is very different however in areas that welcome many retirement migrants.  In general, older people use more healthcare and this can be a big problem where there is also an exodus of the young who are no longer paying into these systems.  But it is difficult to measure this impact precisely.  On one hand retirement migrants with national pensions (Americans on Social Security or Brits on a state pension) living in the south of France are bringing money into that country and spending it locally. In general countries tend to welcome this kind of migration.  However, where some retirement migrants do not ever register as permanent residents, the host countries are unsure how much funding is needed to cover them in case of a medical emergency.  Some  retirement migrants even maintain nominal residency in the home country in order to access home country benefits if needed.  
In fact, the practice of making fraudulent claims for benefits in the sending country is so common that it has been given a name:  ‘grey abuse.’ In the United Kingdom, fraudulent claims for pension credits are thought to exceed the cost of fraud committed by people working while claiming unemployment benefits.
The Future:   What does the future hold for European mobility?  The report is direct and honest in saying that they really have no idea where this is going but it would be a good idea if someone was looking into it.

The authors of the report concluded (and I think they are safe in saying this) that the migration of the young and highly-skilled is likely to continue but it's also equally likely that the flows from Eastern Europe will drop even more as their populations age and the local economies improve.

(It should be noted as well that this is also an issue for the United States.  The major sending countries to the US are also undergoing demographic change and will probably not have the surplus population to send in the near future.  This puts an interesting spin on the immigration debate in the US.  Are US lawmakers actually taking this into account?  I very much doubt it.)

A good report overall with a lot of useful information.  Some might find its refusal to say too much about the future to be disappointing.  I personally found it rather refreshing and I was satisfied by the areas of research they recommended.

The questions that I would have at this point are:  Why is there not more mobility in Europe today given the relatively open borders?  What is stopping the movement?  Most discussions around immigration/emigration tend to revolve around the laws and procedures and whether they should be easier or harder.  Well, here is case where things were made much easier (closest thing we have right now to an open border experiment) and mass migration did not happen as a result.  Why is that?  The reports cites very briefly language and family ties as the most important barriers to mobility but this is based on public opinion surveys.  Is this true or are there other factors?  And does the EU have an interest in addressing them and making mobility within Europe more of a reality or is everyone content with the status quo?

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