There is a common misconception about Europe – that immigration is the single greatest threat to the economies of EU member states. However, evidence suggests that Europe is on the brink of a far greater crisis, for which immigration provides the only economically-effective solution.
As the world emerges from its blissfully long summer of global economic growth, seismic demographic shifts are underway, and few governments are prepared for the impending fallout. Anxiety about the world’s “mushrooming” population has been replaced by concerns about the sudden drop in global birthrates.
A population replaces itself at a rate of 2.1 births per couple, and any drops below that figure are watched closely by demographers. Considering that the United Nations has set a birthrate of 1.5 as their crisis point, the current figure of 1.3 in southern and eastern Europe spells disaster for the once thriving economies of these countries. The population of southern and eastern Europe is expected to half within 45 years if the birthrate of 1.3 continues, intensifying the pension crisis, making it harder for governments to meet the costs of basic healthcare and starving key industries of a diverse labor market.
Demographic Shifts
According to a new report by Eurostat, deaths will outnumber births in the EU by 2015. Germany will be particularly hard hit by this trend, losing 14% of its population by 2060. The affect on Germany’s economy has been on the political agenda for years as the country prepares to lose its title as the EU’s largest state within the next 50 years.
As Germany contracts, France is set to prosper but at great expense to its economy. The French government has introduced a series of incentives including generous social security payments, free state crèche facilities and subsidized travel.
Spain has taken an altogether different approach. The fact that only a miserly 0.7% of Spain’s GDP is allocated to helping families makes it unsurprising that the country sports one of Europe’s lowest birthrates. Yet, Spain’s population is flourishing, largely due to its newly introduced immigration policies. In 2005, the Spanish authorities gave work permits to around 700,000 illegal immigrants, and the economy has since enjoyed this new stream of taxation.
Finding a Solution
European countries with dwindling birthrates need to take action now – and in one way or another, it is going to cost them. Inaction could lead to an eventual economic collapse in the long-term where there are too few people to support the aging population. Eurostat predicts that the percentage of Europeans aged over 65 will rise sharply from 17% today to 30% in 2060.
Countries could follow the example set by France and introduce a whole raft of expensive incentives to encourage larger families. Protecting the economy against the looming population crunch today could offset tomorrow’s expenses, protect key industries in the long-term and reduce the impact of the pension crisis. France has certainly recognized the devastating potential of a population crunch and has made some bold moves to preempt it. Although expensive, France has retained its sovereignty.
The same cannot be said for Spain, however. The liberalization of its immigration laws has prompted concerns about both Spanish and EU sovereignty. How can Spanish culture survive if its borders are opened to immigration as the Spanish population dwindles? Perhaps Spain is more open to Europe’s new-found multiculturalism, promoted by the freedom of movement within the EU.
Offsetting the ever-widening hole in Europe’s dwindling workforce with a renewed enthusiasm for immigration may be the only way for some European countries to stave off the population crunch – and the resulting loss of sovereignty may be a necessary evil. Perhaps immigration is not the EU’s greatest economic threat but, rather, its savior.
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