Tuesday, February 01, 2011

"Vamonos - Voting with their feet in Spain?"

Co-blogger Claus Vistesen has, at his blog Alpha Sources, a post up taking a look at migration in post-crash Spain. It's a well-known fact that Spain, a massive net exporter of population in the 20th century, became in the first decade of the 21st century a famously important destination for immigrants. Claus' conclusion? Despite a disastrous economy, Spain needs to keep its immigrant population.

With the unemployment rate almost surely on the wrong side of 20% you could be excused for arguing what exactly the problem is here [with immigrants leaving.] Surely with this kind of excess capacity in the labour market the last thing Spain needs is for the migrants to stay competing for already incredibly scarce jobs. Indeed, the Spanish government has tried to create incentives for unemployed migrants to leave in order to free up the mismatch between supply and demand for labour.

This approach however does not hold up to basic economic intuition even if it is an understandable move from a political point of view. First of all, there is likely to be a low value added skill bias in the kind of jobs migrants are taking. This is then an often misunderstood point in the context of western societies' attempt to cherry pick the brightest graduates and lure highly skilled foreign labour to the country with lucrative tax breaks. As such, low value added labour (relative to the average level of value added in the receiving country) can provide a crucial labour input to the labour market in the form of filling up vacancies that domestic labor seekers would otherwise shy away from.

Now, you might again protest that in a severe crisis and as desperation among job seekers kick in, the matching for vacancies become subject to a general process of trading down as people accept jobs they are not qualified for simply in order to make ends meet. This is undoubtedly true but this is also the difference between a win-win and lose-lose situation then.

Migrants are ultimately attracted by work opportunities and the sharp decline in migration rates in Spain can be seen as migrants voting with their feet. In this sense, net outward migration of relatively low value added labour only to let domestic workers compete for these same jobs is not a sign of virtue let alone a recovery. I would hold this to be one of the most important structural issues to look out even if the long run effect of an economic crisis on migration is difficult to predict. In addition, and this is evident in Eastern Europe, there may be a strong (and worrying) me too effect from foreign immigrants leaving as it migh even incite Spanish young people to contemplate leaving as well especially as the labour market continues to look dire.

And indeed, the German and Spanish governments recently announced a plan to ease Spanish unemployment by recruiting Spanish professionals to work in Germany, so as to ease labour shortages. Is Spain on its way to becoming a country exporting gastarbeiter?

ARCHITECTS, engineers and other specialist technically-qualified young people from Spain have been clogging up websites offering jobs in Germany with applications ever since chancellor Angela Merkel announced that the country was seeking unemployed Spaniards.

With Spain's unemployment rate at 20.33 per cent--rising to 40 per cent among the under-35s--Merkel is now actively seeking highly-qualified jobseekers from Spain to mop up the deficit in professionals in Germany's employment market.

She intended to make this public at the Spanish-German summit meeting in Madrid on February 3, but already, thousands of jobseekers from Spain are making plans to migrate north.

Preferred industries are engineering, healthcare, education, tourism, and hotel and catering, and applicants must have at least an intermediate level of written and spoken German.

If immigrants to Spain leave in large numbers, and if Spanish citizens with professional skills start leaving in large numbers, given the rapid aging of the Spanish population it's difficult to imagine good things coming about from this. To put it mildly.

Go, read Claus' post.


CV said...

Thanks Randy,

I was just about to do the cross post, but this is much better.

I think it is very difficult for Spain. Clearly, you can make all kinds of arguments as to why Spain would want the immigrants to LEAVE now, but in the long run, if they stay, it would be a testament to Spain's economic recovery, but this is far off at this point.


Randy McDonald said...

I'm sorry I preempted you! That was far from my mind, certainly.

Ultimately, if we're seeing the replication of the core/periphery relations of the post-war era, with central Europe (Slovenia, Czech Republic, Poland) gaining and Mediterranean Europe declining ...