Economy

Demographic Challenges and Economic Pressures: Migration in Europe

Davor Dijanović July 3, 2024 6 min
Izvor: pixabay.com

The Impact of Migration on the Labor Market and Welfare State

Migration from Africa and Asia to Europe is often explained by economic reasons, such as a labor shortage. European economies indeed lack labor, partly due to an unfavorable demographic situation. This challenge has a significant impact on Europe’s future. Instead of focusing policies on encouraging Europeans to increase birth rates, some proposals from Brussels emphasize importing labor, especially from Asia and Africa. It is estimated that Africa’s population will rise to 4 billion by the end of the century, and a large number of young people express a desire to emigrate.

Previous experiences show that some migrants to Europe do not come solely for employment but also to take advantage of the social welfare system. The possibility of receiving social benefits is one of the factors attracting migrants to Europe. For many immigrants, especially from developing countries, the child benefits provided by European states are significantly higher than what they could earn in their home countries.

Challenges to the Sustainability of the European Social Model

Jakob Augstein, a commentator for the German weekly Der Spiegel, raised a question in a 2018 comment: “In the short term, immigrants are expensive. The welfare state takes care of them. But the more immigrants that come, the greater the pressure on the welfare state. What will happen when there are so many immigrants that it becomes impossible to give them everything required by current standards?” Augstein believes that, in the long run, the social safety net will collapse.

Even the red-green-yellow German government became aware of this, and in 2022, it decided to reduce social benefits for asylum applicants and introduce a so-called card for food, goods, and essentials. Full social assistance will only be paid after 36 months instead of after 18 months of residence. For refugees who are fed in state institutions, the amount of money paid out will be reduced. The goal of these measures, as stated, is to reduce Germany’s attractiveness to refugees. Finance Minister Christian Lindner (FDP) pointed out that this will reduce Germany’s appeal as a welfare state. He sees social benefits as the main reason why refugees, despite entering the European Union through another country, overwhelmingly insist on applying for asylum in Germany. Clearly, many migrants have not come to Germany to work but to exploit the social safety net.

We see similar examples in many other European countries. A study by University College London analyzed data from 1995 to 2011 and showed that non-European Economic Area migrants in the UK had a negative financial impact of £117.9 billion. This refers to a period when public spending on migrants, including healthcare, social assistance, and education, exceeded their tax contributions. Migrants from countries like India, Pakistan, and African Commonwealth states contributed less due to larger families and lower employment rates.

To reduce migration pressure on the UK, the conservative government announced it would raise the minimum wage foreign qualified workers must earn to £38,700 (about €45,100) annually, a significant increase from the previous £26,200 (€30,536). Surcharges for migrants using healthcare services were also raised by 66%.

In 2021, Denmark decided that some migrants must work 37 hours a week to receive social benefits. The decision particularly applies to those migrants who have been receiving social benefits for three to four years (unemployed) and have not sufficiently mastered the Danish language.

In France, however, the Constitutional Court ruled that much of the new migration law was unconstitutional, particularly measures restricting migrants’ access to social assistance. The idea of reducing social benefits is supported by right-wing and sovereigntist options.

Many other countries are also considering stricter conditions for migrants to stay and reducing social assistance that many have exploited to avoid working. Authorities in European countries were convinced that guest workers would be a temporary phenomenon and that they would return to their home countries when they stopped working. However, this did not happen, which is gradually changing the identity of many European countries.

Although it seems that bringing in young immigrants can temporarily alleviate the problem of an aging population, it does not offer a long-term solution, as those immigrants will also age over time and have and expect the same rights as all other citizens. In the end, this approach may lead to the need for a continuous influx of more and more immigrants to maintain existing standards and systems, which only creates new challenges instead of providing a permanent solution.

Many migrants do not possess the skills required for highly qualified jobs. The question arises: why import low-skilled labor when there are already many such people in Europe?

If there is a labor shortage, it is also worth considering raising the retirement age. Of course, there will always be those who will complain about having to work in their sixties. But perhaps for some, working longer in a society they know may be more acceptable than dying in a society where they feel like strangers.

Europe must fundamentally change its approach to labor migration. These migrations are more numerous than illegal ones and even more strongly change the identity of the Old Continent, which has already been completely transformed in many areas.


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