CAN MIGRATION WORK FOR ALL IN EUROPE CAN MIGRATION WORK FOR ALL IN EUROPE? BRUEGEL / IMF CONFERENCE 9 JANUARY 2017 – BRUSSELS Stefano Scarpetta Director for Employment, Labour and Social Affairs OECD

The global picture: Sharp increase of permanent migration flows to OECD countries in 2015 – but refugees are only a part of the picture Evolution of permanent migration inflows to OECD countries Source International Migration Outlook, (OECD, 2016) Distribution of permanent flows to OECD countries by category in 2014 Source: International Migration Outlook (OECD, 2016)

Permanent migration as a share of population ranges from 4 to 40 per thousand Permanent migration to OECD countries by category as a percentage of the population, 2014 Source International Migration Outlook, (OECD, 2016) Zone UE: flows from outside the Union as a share of total population of the zone. Permanent migration from third countries to the EU is comparable to that of the US

Temporary (labour) migration is increasing fast as well Temporary labour migration flows, 2014   Thousands (2014) Evolution % (2013-2014) No countries included Seasonal workers 643 +27% 16 Intra-corporate transfers 141 +17% 10 Posted workers 1 436 +9% 24 Trainees 127 8 Working holiday makers 483 +5% Source International Migration Outlook, (OECD, 2016)

An unprecedented number of asylum applications in 2015 & persisting high levels in 2016 Evolution of the number of new asylum seekers, 1980-2016 2015 2016 Source: UNHCR, Eurostat, OECD calculations.

Multiple unsettled crises Several conflicts/crises in parallel in countries – close to Europe – with little prospect for improvement in the near future => Persisting and looming geopolitical crises Strong concentration of asylum seekers in just a handful of entry points and destination countries which raises the issue of burden sharing; Large unmet needs for supporting refugees globally => A solidarity and coordination crisis Increasing tensions at EU external borders with active smuggling networks and migrants taking increasing risks; possible intrusions of terrorists => A security crisis Key building blocks of the European migration & asylum framework are challenged (e.g. Schengen, Dublin) => Risks of an institutional crisis Part of the public opinion in several European countries is hostile to further migration flows, including refugees => A trust crisis Welcoming and integration systems are under strong pressure and concerns regarding the integration of refugees and their children are at the highest => A forthcoming integration crisis?

The economic contribution of migrants and refugees

Migration made a key contribution to employment growth in the past 10 years Immigrants represented 47/70% of the increase in the labour force in the US and EU, and 21/14%, respectively, of the increase in the highly-educated labour force. New immigrants represented 15% of entries into strongly growing occupations in Europe and 22% in the United States … … but they also account for about 25% of entries into strongly declining occupations. Demographic components of net occupational change by occupation growth quintile, 2000-2010 Source: « Renewing the skills of ageing workforces: the role of migration», OECD International Migration Outlook (2012) http://dx.doi.org/10.1787/migr_outlook-2012-en

Persisting large unemployment gaps in Europe Unemployment rates by place of birth in the EU and the USA, 2008-2014 Quarterly unemployment rate evolution by place of birth, EU28 and United States, 2008-2015 6.3pp 4.9pp 4.4pp Notes: Unemployment rates for Europe are the weighted averages of the national rates for all European countries but Switzerland for which some data are missing.

Persisting gaps in terms of employment notably for the tertiary educated in Europe Employment rates by place of birth and educational attainment, 2015 Percentage of population 25-64 Sources: United States: Current Population Surveys; other countries: Labour Force Surveys.

The estimated overall impact of migration on the budget is around zero on average Estimated net fiscal impact of immigrants, average over 27 OECD countries Employment is the main driver of the fiscal impact, and raising immigrant employment levels to those of the native-born can create large fiscal benefits of +0.5% of GDP or more in countries like Belgium, France and Sweden. But immigrants have a lower net fiscal contribution – which is driven by lower taxes and not by higher benefit take-up. Refugees tend to have less favourable impact than other groups. Source: OECD International Migration Outlook (2013), The fiscal impact of immigration in OECD countries http://10.1787/migr_outlook-2013-en

The change in direct fiscal impact, 2006/2008 to 2010/2012 This is the change in direct fiscal impact between 2006/2008 and 2010/2012. All numbers have been adjusted to a 2010 base year and for PPP. Pensions have been excluded. The high native-born position for Iceland is largely due to fluctuations in the exchange rate and in PPP. In Iceland, taxes for the native-born have risen by 6000 € while VAT has risen by 3000 €; this has also been complemented by higher old age benefits and education costs. The improvement in Portugal for the foreign-born (especially when compared to the native-born) is due to the interaction of higher tax rates and the crisis not affecting migrants as poorly (a drop of 73% to 68.1% in employment for the foreign-born; 67.5% to 63.4% for the native-born – note, the absolute drop is worse for the foreign-born, so it is the INTERACTION between the two that matters). Indeed, the foreign-born in Portugal pay 1000 € more in tax in 2010/2012 than in 2006/2008, while the native-born have paid no more in taxes, while employers pay 1600 € more in social security in 2010/2012 for the foreign-born than they did in 2006/2012. In Switzerland, taxes on native-born households have fallen by over 1200 € over this timeframe. In Italy, the social security paid for by employers has risen by 1000 € for the foreign-born over this period. The foreign-born in France receive fewer benefits in 2010/2012 than in 2006/2008: altogether, they receive roughly 625 € less in certain benefits and 200 € more in other benefits. They also contribute over 1200 € more in taxes per household.

Key challenges for migration and social cohesion in Europe

Rebuilding public confidence on migration issues Concerns about immigration Source: Transatlantic Trends: Mobility, Migration and Integration 2014 Increasing gap between perception and the reality Concerns about local effects of migration (infrastructure, employment and public finance) Increasing inflows of asylum seekers and lack of coordination fuels anxiety

Fostering the integration of migrants and their children Employment rate by immigrant categories and duration of stay European OECD countries, 2014 Source : EU-OECD (2016), How are refugees faring on the labour market in Europe? A first evaluation based on the 2014 EU labour force survey ad hoc module, DG EMPL Working Paper 1/2016. Act soon after arrival Adapt programmes to the needs Ensure a fair access to support services throughout the country

Making better use of migrants’ skills Over-qualification rates for tertiary-educated immigrants compared with native-born; by origin of qualifications Source : A. Damas de Matos and T. Liebig, The qualifications of immigrants and their value in the labour market: A comparison of Europe and the United States in (OECD-EU 2014 ) Matching economic migration with labour market needs Obstacles to the international transferability of skills, including within the EU Recruitment difficulties in SMEs and at intermediate skill levels Promote EU-language proficiency

Improving the educational performance of children of immigrants Mean PISA reading scores of 15-year-old students by migration background, 2012 Source: OECD/European Union (2015), Indicators of Immigrant Integration 2015 Rocky school to work transition Intergenerational persistence of disadvantages Substantial long-term social and economic costs

Stefano.scarpetta@oecd.org www.oecd.org/migration Thank you Stefano.scarpetta@oecd.org www.oecd.org/migration