Governments are scared of tackling the immigration dilemma
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Think about the traditional political economy of Switzerland, and self-destructive nativism is probably not the first description that comes to mind. Yet next week the Swiss, following a campaign by the right-wing Swiss People’s Party, will vote in a referendum to cap the national population at 10mn. The move is fiercely opposed by business leaders and, given the country’s falling birth rate, will worsen labour shortages in the future.
The vast majority of Swiss immigrants are from rich European countries, particularly Italy and Germany. Blocking economically productive and culturally similar incomers underlines the contradictions between the economic imperative of admitting migrants and the political exigency of resisting them.
Global birth rates are falling and life expectancies have extended. Traditional net exporters of workers such as Poland have become net importers. Over the past 15 years, for European countries in particular, immigrants have held up GDP growth by cancelling out the reduction in labour supply from native workers.
As the consultancy Oxford Economics argues in a simulation of all global migration falling to zero, economic growth in countries with a high proportion of working-age immigrants — Italy, Spain, Germany and the UK — would suffer. There’s a global competition for working-age and high-skilled migrants, but public opinion in rich countries often forces their governments to sit it out.
To be clear: it’s been known for decades that more immigration alone cannot compensate for longer life expectancies and fewer babies. Higher productivity and/or increased labour supply through higher employment rates and later retirement ages will have to do the bulk of the work. But a simulation of zero migration in France shows that eliminating immigration also means reducing overall productivity. Immigration doesn’t fix everything, but it’s hard to imagine a credible solution to an ageing population without having an economically hard-headed approach to migrants as part of the policy package.
One apparent escape hatch from the dilemma is temporary immigrants rotating in and out on medium-term contracts. This is a subject deserving of longer treatment, but few migration experts think it tenable. Hein de Haas, professor of sociology at the University of Amsterdam, calls it the “guest-worker illusion”, referring to postwar Germany where supposedly temporary workers from Turkey and elsewhere ended up permanent residents. He says: “In a civilised country it is very hard to undertake mass enforced return.”
The remaining options for governments are honesty, explaining how immigrants are needed, or sleight of hand, performative harshness towards a small category of immigrants as cover for admitting large numbers of workers. Some have attempted the former, but many are still following the latter. In one case in particular — the UK — it’s failing horribly.
De Haas notes that the closest to the honest (and courageous) route is Pedro Sánchez, the Spanish prime minister, who has celebrated the economic contribution of migrants and is planning to grant half a million undocumented immigrants (out of a population of almost 50mn) legal status. Sánchez may well lose power in next year’s general election, but that seems more to do with allegations of corruption in his Socialist Party than a huge revolt against immigration. To be fair, Spain has an easier task than most, drawing from a large pool of migrants from Latin American countries with linguistic and historical affinity to their destination country.
At the other end of the spectrum, inept political and economic strategy has left the UK in a horrendous situation. I wrote two years ago that the longstanding misdirection strategy seemed to be running out of road, and so it has proved. Sir Keir Starmer’s government has inherited the issue of migrants crossing the Channel in small boats and elevated it out of all proportion.
British public opinion stands proudly defiant of reality. The numbers of small-boat migrants have fallen this year but voters remain hostile to immigration. The government has welcomed a fall in overall immigration after rules about care workers and skilled migrants were sharply tightened, but this simply increases future pressure on public spending and taxation and the functioning of care homes.
Other European countries have managed the balancing act a little better. Germany has made a targeted effort to attract Indian immigrants to work in high-tech sectors via a bilateral mobility agreement that does not involve large-scale compulsory return. So far it seems to be working, though it’s only a partial solution. Giorgia Meloni in Italy continues for now to get away with her strategy of hardline treatment of refugees crossing the Mediterranean Sea as political cover for issuing nearly half a million non-EU work visas by 2028, but its sustainability is unclear.
Each year the demographic immigration dilemma becomes sharper, but few governments have found sustainable solutions. It’s hard to imagine the political fallout being anything but poisonous, yet a general antidote remains a remote prospect.
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