Patrick Smyth: Migrants least welcome in European countries that need them the most

There is a pervasive, unpleasant narrative to the migration debate that is hard to resist. The idea – the myth – that migrants are a terrible burden, that, yes, although a humanitarian disaster calling on our better nature to respond generously, they are alien and threatening. Even “parasites” – the subtext of those who deliberately blur the distinction between “mere” economic migrants and the “more worthy” refugees fleeing war.

Most striking are the contrasting attitudes of Germany and Hungary and to varying degrees other EU capitals. Veiled and not-so-veiled racism and Islamophobism are manifested, reflecting the contrast between the long experience of migration and of racially/culturally mixed communities in "old" Europe and the racial homogeneity of the former.

But German official attitudes also owe a good deal to enlightened self-interest, a largely unstated other reality – that economically and demographically, however uncomfortable the integration, Germany needs young skilled migrants to fill looming skills and demographic gaps. And that the influx of refugees contributes positively to economic growth. Indeed, is essential to ageing societies.

A new report from the World Bank/IMF (The Global Monitoring Report 2015/2016) argues that understanding this demographic reality is crucial.

The share of global population that is working age has peaked at 66 per cent and is now on the decline. The share of the elderly is anticipated to almost double to 16 per cent by 2050, while the global count of children is stabilising at 2 billion.

“Half of the world’s population will be in countries that will experience slowdowns in population growth with rising shares of the elderly over the coming decades. The other half will live in countries with relatively young populations, whose high fertility is driving global population growth, ” the report argues. The alarming rise in the dependency ratio in many developed countries, a costly demographic timebomb, can, however, be countered, it argues by migration from countries which have young populations and few jobs.

Increasingly, those living in the developing world are seeing opportunity in places such as Europe and the US. While that might create a short-term burden for many rich countries, it also provides a long-term economic opportunity.

Maurice Obstfeld, the IMF’s chief economist, says the humanitarian crisis is likely to strain budgets in countries like Germany. Integrating new arrivals into the labour force would also pose a challenge. “That will take time but eventually be positive for growth in Europe,” he says.

World Bank Group President Jim Yong Kim insists that "If countries with aging populations can create a path for refugees and migrants to participate in the economy, everyone benefits, Most of the evidence suggests that migrants will work hard and contribute more in taxes than they consume in social services."

That dynamic is already at play. Swiss bank Credit Suisse predicts that five million net immigrants to the euro area in the next five years will add 0.2 per cent to the economy’s annual growth rate. HSBC economists agree, noting that “Potential GDP by 2025 could be €300 billion higher than it would have otherwise been.”

Deutsche Bank has lifted its 2016 German growth forecast to 1.9 percent from 1.7 per cent. In reality Germany needs about 700,000 in net immigration over the next 10 years just to keep its population stable while it will need an extra 1.8 million qualified workers by 2020.

Political controversy in Britain over EU migration polices has been stirred up by wild claims about the net costs of migrants to the economy. Yet a 2014 study (The Fiscal Effects of Immigration to the UK – Christian Dustmann and Tommaso Frattini) estimates that, on the contrary, the net contribution – taxes paid minus state benefits– of all migrants who arrived between 2001 and 2011 totalled more than £25 billion ( £5 billion from the resented 10 EU accession states).

The hostility to the Syrian migrants in Eastern Europe is particularly ironic given their demographic challenges. Severe labour shortages in construction, manufacturing, and tech firms will be exacerbated in the years ahead by their ageing and emigrating populations. In Hungary and Poland (Germany, and Sweden too ) 40 per cent plus of businesses report difficulties in filling jobs.

In 2014 Poland needed 50,000 more IT workers than it had. It has acute shortages of health workers and is meeting the demand for agricultural and construction labour by bringing in thousands seasonally from the Ukraine. “Poland is not likely to catch up with the West without opening up to foreign workers”, argues Marcin Piatkowski of the World Bank.

Hungary and Poland will see their populations decline by 8 and 6 per cent respectively by 2035, a reality exacerbated economically by rising dependency ratios. Hungary, according to its Economy Ministry, already has shortages of engineers, health personnel, carpenters shop assistants , gardeners , bakers....

And yet it is Hungary which is building a massive fence ....