Tue. Apr 23rd, 2019

The EU faces the economic challenges of a decade of great internal migration

The EU faces the economic challenges of a decade of great internal migration



The Economy and Finance ministers of the European Union discussed this Saturday for the first time the economic challenges posed by migration between countries of the community club, which has multiplied in ten years, ranging from the reduction of tax revenue to the flight of brains.

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The issue has been put on the table of an informal meeting organized this Saturday in Bucharest by Romania, which this semester holds the presidency of the EU and is the most affected by the phenomenon: in 2017 one in five workers had left the country to go to another point of the continent.

"The mobility of workers abroad contributes to the GDP of their country, but it can also have negative effects, such as when it is selective, leading to a brain drain and undermining growth," said the Romanian Finance Minister. Eugen Teodorovici, at a press conference at the end of the meeting.

The percentage of Europeans residing in another EU state has increased by 50% since 2007, to 3.8% in 2017, but between countries the differences range from 1% in Germany to 20% in Romania.

Romania and Poland (7.3%) are, in absolute terms, the countries with the highest number of emigrants, while the main destinations are Italy and Spain for the former and the United Kingdom and Germany for the latter. Germany is, in general, the largest recipient of intra-community immigrants.

Mobility increased following the entry into the EU of the countries of Eastern Europe, in 2004 and 2007, many of whose inhabitants moved to the Western States taking advantage of the freedom of movement that allows them to reside and practice in any EU country.

The financial crisis then caused the displacement, to a much lesser extent, of workers from the countries of the south - Spain, Italy, Greece and, above all, Portugal - to the north.

This internal mobility, motivated by the gap in wages or living conditions, has positive effects on the growth of the recipient countries and even on the issuers by remittances, according to the reports of the European Center for Political Studies (CEPS) and the "think tank "Bruegel, on which the ministerial debate was based.

However, on a large scale and in the long term, it can also have negative impacts. On the one hand, it reduces the tax base of the issuing countries, which can harm public finances, especially if the debt is high.

On the other, it can cause a brain drain, the exit of the most qualified people, which in the case of the EU has occurred only in the countries of the South, where this factor also contributes to the aging of the population.

If the emigration is massive, the difficulty to cover certain positions can lead to an increase in salaries and loss of competitiveness.

For the European Commission, the solution is to reduce the economic and quality of life disparities between countries, which implies both national structural reforms and support of European structural and cohesion funds, explained the institution's vice-president, Valdis Dombrovskis.

Another way of acting is the tax, where the Commission asks the States to reduce the tax burden on labor and move it to other areas.

Romania, for its part, insists that a Community mechanism must be adopted to act at EU level.

His finance minister, who chaired the meeting, admitted to being "unhappy" with the results of the meeting because there is no progress towards "concrete solutions."

Teodorovici announced that he will work with other sending states in a "very aggressive package" to get the return of his nationals, but insisted that the problem affects everyone.

The Spanish Minister of Economy, Nadia Calviño, said that Spain, as a receiving and issuing country at the same time, notes both the benefits and the challenges of this mobility, in particular the brain drain, hence the Government has launched a return plan.

In his opinion, it is "absolutely indispensable" that the conditions of the labor markets in the EU be harmonized and that the so-called European Social Pillar be advanced. One element that can contribute to it, he said, would be the creation of European unemployment insurance that complements national systems in the face of unemployment.

Spain, he announced, will present a proposal of a technical nature to try to promote this mechanism within the debates on the future budget for the eurozone.

1.6% of Spanish workers reside in another EU country, most of which have a qualification above the national average, according to CEPS data.

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