Can Europe Make It?

Vicious circle: will ageing populations lock the EU into immigrant exclusion?

There is an urgent need for Europe to engage with the self-defeating politics of ageing.

Gregor Noll
26 Jan 2021 - 11:51am
Lega leader Matteo Salvini on the tv show Porta a Porta with a photo of migrants as the backdrop, Rome, October 7, 2020
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Insidefoto/PA. All rights reserved.

The EU is currently experiencing the coincidence of two phenomena: the demise of its decades-old economic model, based on the successive enlargement of the EU, and the ageing of European populations, leading to a slow-down of the economy.

Since the 1950s, the Union has operated a regulatory model on migration whose sole point was the promotion of growth by facilitating mobility amongst member states. Now, the EU is approaching the end of the road as far as admitting new members is concerned. At the same time, it is becoming increasingly costly and difficult to engage EU neighbours in effective border control cooperation, with the most dire consequences for migrants and refugees.

But, most importantly, EU demographics today are radically different from those of earlier decades. While the EU regulatory model on migration and asylum is clearly outdated, there are reasons to doubt that it will be possible to negotiate a successor model.  Paradoxically, the ageing of populations will block this important policy process, pushing the EU, its member states and its peoples into a vicious circle. 

Ageing

Here is why. Improved health means that EU populations will live longer, while birth rates are dropping. Researchers are in agreement that growth abates in the resulting demographics of ageing populations as each worker will need to support an increasing number of non-working persons. Slowing growth, in turn, makes redistribution harder, preserving or exacerbating income inequality.

This has consequences for the political landscape. Stagnating regions and older voters tend to prefer nationalist parties with anti-immigrant programmes, as recent studies indicate. With increasing support for nationalist parties, immigration laws are likely to become ever more restrictive. But this denies EU member states the most important short-term remedy for the demographics of ageing populations, namely immigration. We are entering a vicious circle where the political effects of increasingly older populations, sluggish growth and growing inequality reinforce each other. 

Stagnating regions and older voters tend to prefer nationalist parties with anti-immigrant programmes.

Internal mobility

Economic analysis confirms that labour mobility within the EU promotes growth. However, it produces inequality as well: the gains of one region are the losses of others. This inequality is toxic: a 2020 MIDEM study has shown that regions affected by depopulation tend to vote for populist parties.

The effects of the EU’s internal mobility model thus reinforce populism, and populist anti-immigration policies. Yet we know that, at the national level, the human capital of migrants has a positive impact on GDP per capita, and that a permanent increase in immigration leads to a positive impact on GDP per worker – a factor direly needed to offset the negative GDP effects of ageing populations.

These effects do not require a sophisticated credit point system to select the ‘right’ migrants. Quite the opposite is the case: a 2016 study on OECD countries by Boubtane and others found that selective immigration policies generally do not increase GDP per worker, and that positive effects on growth can be achieved by non-selective policies. Read jointly with other research underscoring the importance of diverse societies for the growth factor of innovation, this suggests that the non-selective admission of refugees contributes to growth on a collective level over time. 

The non-selective admission of refugees contributes to growth on a collective level over time. 

Stiff competition

Today’s political climate in Europe is obsessed with curbing general immigration, with only a narrow elite being welcome. Brexit provided perhaps the most radical example of the potential self-harm which this attitude may produce. Little time is left to start thinking and acting differently.

China is heading towards its own demographic crisis, with the heritage of its one-child policy reinforcing the effects of better health care and dropping fertility. It is reasonable to assume that China’s crisis will provoke immigration flows above replacement levels. Put otherwise, many ageing nation-states may soon realise that they have good reasons to compete over immigrants on a global market in the future. Any future ‘migrant shopping’ by EU member states might meet stiff competition by first-mover economies beyond Europe.

Due to its authoritarian system, China is unconstrained by populist exploitation of democracy, and might act on replacement immigration without being held back by a populist vicious circle. 

If Europe wishes to address inequality by ensuring growth, it has got its recipe all wrong at the moment.

Opportunity narrows

Up to now, the EU and its member states have discussed its internal labour mobility in one silo, and migration from outside the EU in another silo. Neither of these discussions have been impressed by the massive demographic changes the world is facing, including its ripple effects in politics and economics. If Europe wishes to address inequality by ensuring growth, it has got its recipe all wrong at the moment. Without fundamentally rethinking the role of migration in European societies at an early point in time, Europe is all set to move deeper into populist dependency.

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