Europe Still Needs the Migrants.

Giles Merritt, the founder and chairman of the Friends of

Europe think tank... Project Syndicate

Giles Merritt, the founder and chairman of the Friends of Europe think tank and its policy journal
Europe’s World, and the author of Slippery Slope: Europe's Troubled Future.

BRUSSELS – Last week’s terrorist attacks in Paris are likely to compound Europe’s deep divisions
over how to respond to its refugee and migrant crisis, particularly given reports that one of the
perpetrators arrived amid the ongoing influx. But calls for the reintroduction of border controls
and a new “Fortress Europe” risk giving Europe’s demagogues the lead and making it harder than
ever to convince people of the need to integrate more newcomers into the European Union’s
workforce.

The climate of fear that the attacks have created threatens to obscure a key statistic: unless EU
countries open their doors wider to immigration, the current ratio of four working-age people for
every pensioner will fall to 2:1 by mid-century, if not earlier. Pension and social security systems
are already under severe strain.

Nobody denies that this year’s wave of migration is overwhelming some EU countries, and that
solidarity among them is crumbling. But the truth is that the European economy badly needs the
young people pouring across its frontiers from the greater Middle East and Africa.

Judging by the cultural difficulties encountered when immigration was only a trickle, integration of
this year’s estimated 1.5 million migrants and refugees will be a mammoth undertaking. The face
and character of Europe will be changed, unleashing dangerous new political tensions.

Nonetheless, despite old and new fears, there is an overriding case for welcoming the newcomers,
as well as the millions more expected to arrive in the coming years. This is particularly well
understood in Germany, despite the backlash against Chancellor Angela Merkel’s open-door policy;
on current trends, the country’s population of 82 million will fall to 65 million by 2060. As Marcel
Fratzscher, who heads Germany’s Institute for Economic Research (DIW), has put it, “In the long
run, the refugees are an incredible opportunity for Germany,” with the benefits outweighing the
costs “within the next 5-10 years.”

This is not a new story. Five years ago, a “wise men’s” group headed by former Spanish prime
minister Felipe González reported that 100 million migrants will be needed by mid-century to
maintain Europe’s active labor force at current levels. Other studies indicate that if immigration
returns to pre-crisis levels, today’s labor force of 240 million will drop to 207 million. And if
immigration were to be severely reduced, aging would cut the workforce to around 169 million.

Removing some 70 million jobs, and therefore taxpayers, from the European economy would
clearly be disastrous. Leading economists like Germany’s Klaus Regling, who heads the European
Stability Mechanism, the eurozone’s bailout fund, calculated a decade ago that the EU’s shrinking
workforce is set to impose severe limits on economic growth. He forecast that labor shortages are
creating a ceiling that restricts annual GDP growth to 1.8% in the years up to 2030, and a mere
1.3% from then to 2050.

Comparatively few Europeans seem to contest the moral obligation to accept asylum-seeking
refugees fleeing from Syria’s civil war or political oppression elsewhere. Whether or not public
sentiment changes in the wake of the Paris attacks, economic migrants are viewed more negatively.
The newcomers, it is said, will place a burden on EU countries’ benefit systems, either because they
are scroungers or because they cannot find suitable employment. And if they do find jobs, it will be
because they compete unfairly with unemployed young Europeans.

These objections don’t stand up to scrutiny. A European Commission analysis of national statistics
has found that the economic contribution of migrants is greater than their cost to EU governments.
There are currently 34 million non-citizens living in the EU, with 69% classified as “economically
active” (in some countries, the figure rises to 80%).

Almost four-fifths of these people are of working age, with 15% still at school and only 7% older
than 64. The OECD notes that those immigrants who find it hardest to get a job are the most highly
qualified, a correlation that largely reflects the red tape surrounding recognition of credentials.

So what of the risk that Europe’s youth unemployment problem – the “lost generation” created by
the years of economic crisis and austerity – will be exacerbated? It is a potent argument in terms of
shaping public opinion, but it has little substance. The OECD’s Employment Outlook for 2015
laments the rise in long-term unemployment, with well over a third of Europe’s 25 million jobless
out of work for a year or more, but situates the youth unemployment problem firmly in Greece,
Italy, and Spain – countries where many migrants arrive but from which most move on.

Labor shortages, on the other hand, are on the rise. In a survey of 41,700 hiring managers in 2015
by the employment agency Manpower, around a third of those interviewed in Poland and France
complained of recruitment difficulties, while almost half did in Germany and Greece. The most
serious skills shortages appear to be in engineering and information technologies, areas where
migrant labor poses little threat.

But policymakers have no magic wand to wave over the refugee crisis. The pressures on
government agencies and local authorities in northern Europe are already proving unsustainable,
and free movement of people on the continent is in peril. So it is in Europeans’ common interest to
recognize the positive side of the crisis.

Introducing fresh blood into the EU economy has short-term as well as longer-term benefits. The
immediate spending needed to address the crisis – an estimated €10 billion ($10.1 billion) this year
in Germany alone – will help boost growth once the construction of new housing, schools, and
hospitals begins to stimulate jobs and consumption.

These effects won’t be straightforward, of course, as some eurozone governments may have to
abandon austerity and take on more debt. But when the time comes to look back on the migration
crisis, one hopes that, despite the uncertainties and strains, we will be looking back on the
economic stagnation of an aging Europe as well.