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The EU's need for elite migration

by Liz Trapichler

Executive Summary

How can aging societies, like Germany and most EU countries, cope with the necessary influx of migrant workers to make up for the loss of 'unborn children' in the workforce and how can these primarily well-educated migrants be made at home and be really integrated without generating such a disaffected and heterogeneous, infamous 'melting pot' as in the US or parallel societies as in South Africa?'

Basic Problem – Disruptive Scenario

Many Western societies are greying, and Europe is particularly affected by falling birth rates and lengthening life spans. According to many economists, the median age has risen dramatically, and around 2050 it is expected to be around 50. Stagnating working populations and exploding numbers of retirees exert an extreme burden on their economies and will certainly reduce the wellbeing of our future households.

Lengthened life spans without a corresponding increase in the average retirement age are often considered as one of the core economic problems due to aging. Additionally, household liabilities have increased due to real-estate appreciation in many markets, growing credit markets, and new generations of consumer societies who are more comfortable with debs. Two more chief issues are the exasperating cost increases of health-care costs (many experts think that by far the main health-care services consumption occurs during the final 5-10 years), the exploding costs for the caring of the elderly family members (be it through caring for them themselves and thus not being available for the job market or be it by means of having to hire external help), as well as the virtually bankrupt retirement schemes (be it on a public or on a corporate level).

Economists argue that at present, immigration adds only a modest increment to overall growth in household wealth, since immigrants tend to start with lower levels of household assets and as a consequence, they do not contribute significantly to accumulated savings. Savings are currently considered as one of the most efficient fiscal policies in the fight against economic problems due to aging. According to the McKinsey Global Institute Households’ Financial Wealth Model, if the above trends continue to prevail in Germany, for instance, households’ net wealth is expected to slowly grow until 2015 and then steadily decline in the following years. This could lead to overall stagnation. The results could be enormous. Some pension specialist even forecast distribution fights for the use of the national income, so called “generation wars” (Alterskriege) between the diminishing younger population and the elderly. Countries with a social-market economy, like Germany or Sweden, might be particularly prone to such conflicts, as they already use a high proportion of the national income for social services; exclusively for the elderly already in the form of growing public pension schemes.

Many projections picture an “Age of Diminished Expectations” as neither population trends, nor consumer behaviour or debts acquisition seem to be significantly changing in the next decades. At the same time, dramatic demographical trends are foreseen in many prognoses, linked with an economic slowdown that might easily end up in a vicious circle, a negative economic spiral which by its nature, is difficult to overcome. The sceptre of stagflation, as seen globally in the 1970ies or in the past decade or so in Japan might return, but in a different guise.

Change needed in Perspectives – Re-thinking Migration Policies

As the aging problem is much more than just an ad-hoc problem, drastic changes are needed at all possible levels. Raising financial assets, policies that try to positively influence households’ saving behaviour, policies concerning migration, immigration and birth rates, stepped-up further education, as well as re-integrating mothers and elderly workers into the productive workforce are all part of the solution. Moreover, the retention of well-educated German citizens (already a problem to some degree, for instance, in the medical world), will be an issue not to be neglected.
For the moment, the above described economic trends and conditions are not expected to be drastically changing, thus current economic policies are completely insufficient by themselves to solve the progressing problems due to aging, hence it is high time to turn or attention to other policies as well.

No matter which policy we consider, there are three basic principles. They have to be consistent, economically viable, and not least, they have to be feasible. Moreover, for the first time in German history, all levels of society will have to be a part of this immigration initiative.

Migration in Germany has been a contentious topic in the last decades. However, future discussions might become even more heated due to negative economic trends and the possibly growing and deepening cultural divide between the, in the future, potentially primarily overseas immigrants and the present population, which already has a significant share of people with a migration background.

We have to find sound answers to the following questions:

  • Where will these immigrants, probably primarily knowledge workers, to Germany be coming from in the next decades?
  • Which specializations and expertise will we need, when and in what numbers?
  • What migrants do we want to attract and how can we make the most of immigration?
  • How can these additional tasks be financed?

My hypothesis is that future migration trends will necessarily differ significantly from past patterns and therefore, appropriate and well-established migration and intercultural integration policies must accompany these changes. As underlined above, these policies must be economically viable as well as feasible.

There is a tremendous need to change the present perspectives of the general public, as well as of the political, entrepreneurial, and intellectual elites; moving from the obsolete, original concept of ‘guest-workers’ (Gastarbeiter) to integrated immigrants, whose children and grand-children will contribute to the German national wealth and feel at home and welcome in the future. Similarly, a shift in remittances will be focusing on moving from low-skilled to high-skilled/elite migration.

It is increasingly important that policies encompass pre-migration activities as well - including language and culture training for the immigrant worker and his family, financial and legal services, etc. - in order to facilitate a smoother process.

The general public will continue to play a vital role in deciding on the immigration policy, therefore it will be crucial to educate and involve it appropriately. McKinsey estimates that, for instance, the German ‘tolerance’ regarding immigrants is but 300,000 immigrants a year. This figure is far below Germany’s economic needs. The population needs to understand the economic necessities, impacts on economy and policies, the viability and the feasibility of all relating policies. Commitment and co-operation are key success factors.

A new kind of private-public partnerships involving different social strata and organizations will have to be redefined and spotted as well. EU goverments must finally stand up to the task of developing and implementing an economically viable and feasible ‘comprehensive integrated migration policy for its member states’, striving to bridge the growing gap between native and immigrant cultures.

© 2011 by Erzsebet Trapichler, 2 February, 2011.

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