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Global Trends and Politics

Europe needs more labour migration

Freedom of movement within the European Union must remain unrestricted. The movement of workers across national boundaries is a prerequisite for the proper functioning of the internal market and ultimately benefits everyone.

14.02.2014

The debate on freedom of movement in the European Union needs to be turned on its head. The more people who are prepared to move to a different EU state in search of work the better. For a long time now, German companies have been recruiting trainees from Spain to meet their future requirements for qualified junior managers. This is a good opportunity for young people from Spain to start a promising career, given the high rate of youth unemployment in their own country. At the same time, Germany benefits from the trend because, were it not for immigrant employees, German companies would by now have had serious problems filling vacancies. Most recently, the immigrant share of the total number of jobs in Germany was already very high at 2.3 percent, compared to the rest of Europe.   Labour migration is a sign that the Single European Market is working well. According to statistics from the EU Commission, around 14 million EU citizens live in a different EU member state. Almost 80 percent of them are of working age, and at 68 percent, their participation in the labour market is higher than that of domestic workers. There are no borders in the EU for goods, services or capital.

© Munich Re
A restriction in the movement of people would leave the European bull limping along on just three legs instead of standing firmly on all four feet.
Michael Menhart
Head of Economic Research

A restriction in the movement of people would leave the European bull limping along on just three legs instead of standing firmly on all four feet.   Labour mobility is also important for the smooth operation of a currency union. In the USA in 2012, almost 2.3 percent of the population moved to live in a different federal state. In the EU, in contrast, migration between the different member states was only 0.3 percent. We will only achieve a optimal currency zone if we have adequate factor mobility – also labour mobility – to cushion asymmetric shocks. This finding by Robert Mundell, the Nobel Prize-winning economist, is still valid today.   Another factor is that demographic change is more or less forcing countries like Germany to open up to immigration if they want to protect their social security systems from collapse. Rather than posing a risk to the German social system, immigration actually protects it. Firstly, because immigrants fill vacant positions in social professions such as nursing. Also because they help compensate for the shortage of specialist and highly qualified workers. And most of all, through their contributions to the pay-as-you-go social systems, which the ageing German population would otherwise be unable to finance.   Freedom of movement in the EU should therefore not be stopped or restricted. Quite the opposite, in fact.

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