4. Reducing labour and skills shortages through migration
In addition to the activation of underrepresented groups such as women, older workers and young people, targeted migration policy could help to reduce labour shortages and boost economic activity. This section uses the European Commission’s LMM to simulate the impact of a hypothetical scenario in which half of the excess labour shortages compared to 2011 levels would be addressed by targeted migration policies in six Member States (Austria, France, Germany, Poland, Spain and Sweden). (370) 2011 was selected as a benchmark because labour shortages have been trending upward in Europe since then, according to both the BCS and job vacancy rates published by Eurostat (see Box 3.10 for methodological details). At EU level, the job vacancy rate increased from 1.4% in 2011 to 2.9% in 2022 (averages of the first three quarters, as data are not yet available for Q4 2022).
In a potential scenario in which half of the excess labour shortages compared to 2011 would be filled by legal labour migration, a considerable number of migrants would have to be attracted from their countries of origin. (371) The number of migrants to be attracted would range from 0.11% of the current population in Poland (about 41 000 people) to 0.66% of the population in Austria (59 000 people). (372) Overall, about half of the unfilled job vacancies require medium-level (secondary) education, and about one-third of the vacancies are for highly educated people, while approximately one-sixth of the jobs require lower levels of education. While targeted migration could contribute to easing labour shortages, it is highly unlikely that this alone would be sufficient to address the issue, without also implementing other measures outlined in this report.
Targeted migration policy can enhance economic growth. The additional migrant workforce arriving in these countries creates added value, while increased production also requires more capital, triggering investment. Overall, the resulting GDP increase is proportional to the size of the labour migration inflow, but the distribution of migrants by education level also influences the economic impact: more educated immigrants are more productive and have a greater impact on GDP. The simulated labour migration policy would result in an increase of GDP of between 0.15% (Poland) and 0.91% (Austria). The capital stock, number of employees, and consumption would also increase proportionally to GDP. Average wages are not affected, but the wage distribution is influenced by the distribution of education levels of the newly arrived migrants. These results can also be interpreted as the opportunity cost of unaddressed labour shortage.
Table 3.6
Targeted labour migration has a positive impact on the economy
Halving excess labour shortages compared to 2011 levels through targeted labour migration policy
|
|
DE |
AT |
PL |
ES |
FR |
SE |
|---|---|---|---|---|---|---|
|
No. of immigrants (thousands) |
395 |
59 |
41 |
1 |
208 |
37 |
|
- low-educated |
76 |
10 |
2 |
0 |
31 |
5 |
|
- medium-educated |
212 |
30 |
24 |
1 |
85 |
16 |
|
- high-educated |
107 |
19 |
15 |
0 |
92 |
17 |
|
Immigrants as a % of the population |
0.48 |
0.66 |
0.11 |
0.00 |
0.31 |
0.36 |
|
- low-educated |
0.68 |
0.64 |
0.06 |
0.00 |
0.18 |
0.29 |
|
- medium-educated |
0.44 |
0.54 |
0.10 |
0.01 |
0.29 |
0.33 |
|
- high-educated |
0.45 |
1.06 |
0.16 |
0.00 |
0.42 |
0.43 |
|
GDP |
0.62 |
0.91 |
0.15 |
0.00 |
0.50 |
0.45 |
|
Capital stock |
0.64 |
1.03 |
0.18 |
0.00 |
0.53 |
0.50 |
|
Employment |
0.65 |
1.00 |
0.17 |
0.00 |
0.49 |
0.52 |
|
- low-educated |
0.78 |
0.90 |
0.11 |
0.00 |
0.32 |
0.48 |
|
- medium-educated |
0.62 |
0.95 |
0.16 |
0.01 |
0.50 |
0.51 |
|
- high-educated |
0.66 |
1.20 |
0.21 |
0.01 |
0.58 |
0.55 |
|
Wage |
0.00 |
-0.01 |
0.00 |
0.00 |
0.01 |
-0.04 |
|
- low-educated |
-0.09 |
0.05 |
0.04 |
0.00 |
0.12 |
-0.03 |
|
- medium-educated |
0.02 |
0.06 |
0.02 |
0.00 |
0.02 |
-0.02 |
|
- high-educated |
-0.02 |
-0.23 |
-0.06 |
0.00 |
-0.08 |
-0.08 |
|
Consumption |
0.63 |
0.85 |
0.15 |
0.00 |
0.54 |
0.42 |
Source: DG EMPL simulations, based on the LMM
Box 3.10: Method for assessing the impact of reducing labour shortages to 2011 level through targeted immigration policy
The analysis first calculated the number of additional people required to fill half of all additional vacancies in each of the six Member States and in each sector, based on job vacancy rates observed in 2011. As vacancy rates are available by sector/occupation for Hungary only, a simplifying assumption took the relative shares of vacancies in various occupations for each sector, based on the Hungarian data. As a next step, the distribution of the highest level of education required to fill a job vacancy in a given country, sector and occupation was taken from Eurostat’s micro EU-LFS, based on observed employment shares. This gave the number of people (in this case, migrants), by education level, required to fill the desired number of vacancies for each country. Those numbers were then plugged into the LMM as a shock to the population. The results of the simulation are shown in Table 3.6.