EU Migration Policy: Accelerate Labour Market Integration
High Barriers Impede the Entry of Migrants Into the Workforce
The current geopolitical situation has put migration at the forefront of Europe’s political agenda. Public attention has often focused on the potential risks of migration, such as negative fiscal effects on the welfare system. But migration can also important for maintaining the solvency of social programmes. In addition, Europe is facing a shortage of skilled workers that threatens to lower economic output. The rate of job vacancies in the EU has fallen in recent years, but the 2.3 per cent vacancy rate witnessed in the third quarter of 2024 was still almost twice as high as the corresponding figure ten years ago. In Germany, around 68 per cent of companies have reported a shortage of skilled workers.
Combining migration policy and the welfare state
It is often argued that if the unemployment benefits granted to immigrants are too generous, they will have less incentive to take up work. After all, economic studies have generally found that countries with greater economic redistribution are more likely to attract low-skilled migrants. But recent findings also show that the effects of economic redistribution are not strong enough to trigger significant waves of migration. This means that a less restrictive migration policy may not necessarily be in conflict with the welfare system, as is often assumed. Instead of seeking to avoid either the one or the other, EU Member States should thus focus on ensuring the rapid integration of migrants in the labour market.
Labour market integration: Eliminating barriers, harnessing potential
To reduce the potential negative fiscal effects of migration and maximise its benefits, government should remove barriers to rapid labour market integration. Recent studies have found that, compared with EU citizens, migrants in Europe more frequently perform lower-quality jobs with higher rates of term-limited employment, less favourable working conditions, and lower wages. Institutional barriers, particularly when it comes to the recognition of professional qualifications from abroad, can contribute to lower employment rates and to a higher likelihood of overqualification for migrants. Approximately 20 per cent of migrants questioned in an EU-wide workforce survey reported experiencing institutional barriers of various kinds that prevented them from finding employment. Among those surveyed, the asylum seekers were the worst off in this respect: an average of almost 50 per cent said that they had faced obstacles (WeLaR, 2024). Research has also shown that temporary bans on work for refugees reduce the likelihood of long-term participation in the labour market.
Recommendations
Coordinated Strategy Needed at the EU Level
Create a coordinated EU strategy for labour market integration
The evidence is clear: migration demands a coordinated EU strategy. This is particularly true given the importance of the topic for the EU as a whole. While the EU’s Pact on Migration and Asylum is a step in the right direction, it gives too little attention to labour market integration. A more important development in this regard is the European Commission’s action plan to address shortages in labour and skills. It sets out clear measures for addressing key issues in the labour market integration of migrants – namely, the activation of underrepresented groups in the labour market; skills development, general education, and professional training; the improvement of working conditions in certain sectors; fair policies giving workers and trainees more geographic mobility in Europe; and the recruitment of skilled workers from third countries. To meet today’s labour challenges, Member States should effectively implement the action plan and develop it further at the EU level.
Simplify the process for recognising professional qualifications from abroad
The EU needs a simple, standardised process for recognising professional qualifications from abroad. Such a process will ensure faster labour market integration and remove institutional barriers to employment, especially for asylum seekers. The German government should permit asylum seekers to work while their applications are being processed. (Currently, asylum seekers are prohibited from working for the first three months after arriving in Germany.) The government should also cut waiting times for long-term work permits. Before March 2020, Germany barred asylum seekers from entering the labour market. At the time, officials explained the ban by pointing to unemployment rates – which were higher than today’s – and the perception that refugees were taking jobs from local workers. However, in view of the current shortage of skilled workers and the high demand for labour, that justification no longer holds up.
Invest across the EU in integration infrastructure and skilled labour recruitment
Attracting skilled workers from outside the EU and rapidly integrating them into the labour market will require investment in infrastructure and the creation of a well-designed regulatory framework. Accordingly, infrastructure deficits throughout the EU should be addressed with targeted investments. A key example is the need to expand childcare services, which – in addition to being crucial for families – facilitate integration. Studies in Germany have shown that refugee families – especially mothers – become better integrated into society when children have access to daycare centres from an early age. Daycare strengthens both social and professional integration and increases the attractiveness of specific locations for skilled workers. Germany’s federal government should therefore work to expand such services.
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