'Mind the gap'

Als we willen dat de werkgelegenheid in de Europese Unie in 2050 minstens op hetzelfde niveau ligt als in 2005 (194 miljoen personen) zullen we een tekort moeten zien weg te werken van meer dan 30 miljoen personen.

Dit concludeert SEO Economisch Onderzoek op basis van een in opdracht van Randstad Holding uitgevoerd onderzoek naar de effecten van vergrijzing en migratie op de toekomstige arbeidsmarkt in de Europese Unie. De belangrijkste oorzaak voor de toekomstige tekorten aan werknemers is de vergrijzing van de bevolking. Doordat het ouder worden van de babyboom generatie daalt het aantal mensen in de leeftijd 15-64; meer ouderen verlaten de arbeidsmarkt dan dat er jongeren bijkomen. Een tweede oorzaak zijn de relatief lage geboortecijfers; in bijna alle landen wordt een daling van de omvang van de eigen bevolking verwacht. Het zogenoemde ‘werkgelegenheidsgat’ dat door deze beide effecten ontstaat kan echter voor een groot deel opgevuld worden met behulp van werknemers uit andere landen. Zonder migratie van arbeid zou het werknemerstekort bijna 55 miljoen personen bedragen.

Although age distributions differ between countries, the ageing challenge is apparent everywhere. In the next forty years, the average age will increase all over Europe. What will be the impact of this on the future labour markets? Which countries will suffer most? These are the questions discussed in Chapter 3.1 using the Eurostat population projection mentioned above.

Ageing decreases the labour supply: as the effect of ageing alone in 2050 the EU-25 employment level will have decreased by 31 million persons if the employment rate would remain at its current 63.3%. This is called the ’employment gap’ caused by ageing. It is calculated by applying the age structure of 2050 to the total population size of 2005 and comparing that with the actual 2005 population. To keep the employment level constant at its current 195 million persons, the employment rate will have to rise above the Lisbon target, to 75.5%. But even if the EU succeeds in closing the employment gap, the balance between the working-age population and the elderly population will be different in 2050; the same number of employed persons will have to finance a larger number of elderly people. Increasing demand (for health care, leisure goods and services, etc.) might also add to the employment gap but its exact impact is much harder to assess for long-term horizons. Knowing that demand will rise, our calculations can therefore be seen as minimum employment gaps. The implicit assumption of constant labour productivity is discussed below.

Besides by ageing, the employment gap will widen even further because of declining (and often negative) population growth. This negative growth is projected to be small on average (-1% for the EU-25) but quite large in Germany and Eastern & Southern Europe (even as large as -13% in the Czech Republic). The separate impacts of both the ageing effect and the population decline effect are presented in the graph below. The black circle indicates the present employment rate, the red dot the employment rate needed in 2050 to offset the ageing effect. For example, in the Czech Republic the ageing of the population causes the employment rate to rise from 65% to 81%. Though different in magnitude, the ageing effect is clearly present in all countries. But on top of that, total population will decline (in most countries), causing a further widening of the employment gap. To bridge the population decline effect as well, employment rates will have to reach the level indicated by the end of the bars. For the Czech Republic, this means a further increase of the employment rate to an unrealistic 94%. On the other hand, in Luxemburg the population effect is positive because of the estimated population growth of 43% (mainly due to large net migration). Therefore, employment levels can be held constant without the need to increase the employment rate.

Productivity increase. An efficient and realistic option in the manufacturing and the agricultural sector. However, such is harder to achieve in labour-intensive service sectors; here, constant productivity seems a realistic assumption.

Sectoral shifts of labour. As labour is scarce it might move from the lower-paying sectors to the higher-paying sectors. This of course will not bridge the overall employment gap, but merely shift the problem from one sector to another.

Extra labour migration. If arranged so as to be beneficial to both the host country and the immigrant, it is an economically sensible option. However, it can be useful only if immigrants supply the skills the labour markets need. Temporary migration should also be considered.

As discussed above, some countries might mitigate the ageing and population effects somewhat through net migration, or even offset the ageing effect completely (Luxembourg, Ireland & Sweden). To get an idea of the impact of immigration: if no net migration is allowed, the overall EU-25 employment gap in 2050 will be 55 million persons rather than 32 million persons. To keep employment at the current level, the employment rate will have to reach over 88% on average. In some countries the importance of migration is even higher (see the ‘no migration’ scenarios in Appendix A).

Contrary to many beliefs, immigrants are over-represented among both the low-skilled and the high-skilled; two different types of immigrant appear to exist. On average they have higher unemployment and temporary work rates. Currently, net migration is generally less than 1% of total population per year, but with large differences between individual EU countries. In Austria, Italy, Ireland & Spain migration has doubled recently, while in the Netherlands net migration has decreased dramatically and has been negative since 2004. Historical overviews of net migration by country are included in Appendix C.

Summarizing, we conclude that disallowing migration will definitely not help; immigrant labour has to be made beneficial to both the immigrant and the host country. Another conclusion is that migration has many different faces. It is not only low-skilled labour that immigrates and high-skilled labour that emigrates, as some people want us to believe. In most countries at least two different migrant groups can be distinguished, that is, one that is relatively high skilled and one that is relatively low skilled. Even when looking only at immigrants from non-Western countries, they turn out to be on average high skilled in the one country and on average low skilled in the other; a lot seems to depend on institutional differences between countries, such as current and historical immigration policies, cultural and colonial links, and the structure and wage structure of the economy.