Monday, 22 January 2018

The economic mistake of importing migrants from non-Western countries.


The population of western Europe was falling because of an alarmingly low birth rate.
The working population as a percentage of the total population was declining even faster, as people were living longer after retirement.
A declining number of wage earners was working to support a growing number of people (mainly old people) who did not work.
A recipe for economic disaster.

The first major measure taken to combat this problem was the encouraging of women, especially those with (young) children, to join the labour market.
For example, in the 1990s many children's day care centres were built in the Netherlands and the building and operational costs were subsidized.
Unfortunately, the influx of more women into the labour market did not have enough of the desired positive effect.

The second measure taken was the raising of the retirement age. A logical step: More people working and paying taxes, and less people living off the paid taxes.
However, raising the retirement age is politically speaking a very sensitive issue. Therefore, it will only be raised gradually and the (limited) positive effects will only be felt in the distant future.

The aforementioned measures were piecemeal.
There was one simple solution, or so people thought. Import younger migrants, especially from countries with a high birthrate.

Germany was the country that needed younger migrants the most.
The Bertelsmann Institute warned in a report in 2015 that within the next 15 years, half of all German workers will become pensioners.
Furthermore, without migrants, Germany’s labour pool is likely to shrink from its current 45 million people to 29 million by 2050.
According to the Bertelsmann Institute, Germany needs 500,000 migrants a year until 2050.

Three economic cheers for the refugee crisis then?
Unfortunately no.
The main presumptions of the advantages of importing young labourers, are that they have the skills the economy needs and that they will enter the labour market. This was the case with the “guest workers” of the 1950s and 1960s.
However, these workers did not need any special skills and they had to work or they would be sent back to the countries they came from.

Many of the non-Western migrants who have entered Europe in recent years do not have the skills the current economy needs, and their continuing residence in western Europe is not dependent on having a job.
In fact, the welfare society in western Europe gives little incentive for choosing to work in low paid jobs, instead of living from benefits.
Recent statistics from the Dutch economy highlight the problem.
First and second generation migrants in the Netherlands with a "non-Western" background make up 12.7% of the population. Yet they receive 49.9% of all social assistance benefits.

The solution of importing non-Western migrants to solve the economic problem of a low birth rate and an ageing population has backfired.
The lack of labour participation by these migrants has exacerbated the economic problems.

1 comment:

  1. Somehow reason and common sense didn't make it into the decision-making process in Europe. No one wants to be seen as an un-PC monster...

    ReplyDelete