The millions of refugees pouring into Europe should prove a boon to its slow growing economies. However, with unemployment so high in austerity burdened Mediterranean states, German eagerness to fill jobs with Syrians and other refugees is an indictment of the EU’s dysfunctional economy and cultural rigidities.
Numerous economic studies show immigrants boost growth when native workers are in short supply or they provide skills complementary to the indigenous work force. California agriculture would not be possible without migrant labor, and America’s home builders would be hard pressed to get along without Central American masons and carpenters.
In the 1950s, Turkish and Caribbean immigrants boosted economic growth in the U.K. and Germany and more recently, arrivals from Central and Eastern Europe have helped the U.K. economy outperform a German economy saddled with an aging population and labor shortages.
Many refugees pressing through Hungary to reach Germany and other prosperous northern economies, like those fleeing Soviet tyranny in Eastern Europe for America in the 1960s, bring significant skills.
The EU is hardly starved for labor or university graduates. Youth unemployment averages more than 40 percent in Spain, Portugal, Italy and Greece, and EU rules permit the easy migration of citizens to states offering more opportunities. However, German employers in manufacturing, information technology and other industries appear more eager to open apprenticeships and training programs to refugees than to recruit southern European youth.
Simply, refugees have already relocated to Germany and have a much stronger incentive to succeed than native Europeans. They can’t as easily qualify for European social programs that even France’s socialist prime minister concedes “sponsor unemployment” and discourage work.
Portuguese textiles and pottery manufacturers located in rural areas complain they can’t find enough workers, despite the country’s high unemployment. Now, those businesses are pressing their government to relocate refugees to their communities.
It seems Portuguese youth most want to live in Lisbon, take government benefits and complain about the absence of opportunities.
Primary and secondary schooling in southern Europe is not comparable to northern Europe in quite the same way education is similar in middle class Mississippi communities and suburban New York. And few southern European children effectively learn German or other northern European languages, other than perhaps English.
Consequently, young people in southern Europe don’t have the same incentives, but face similar integration problems, as Syrians and other refugees to exploit employment opportunities in Germany and most other northern European economies.
Popular resistance to massive waves of immigrants may appear irrational but much of it is not. Whether in Germany, Portugal or the United States, immigrants do make the economic pie bigger but when they compete for the same jobs as native workers, they can also drive down wages in those occupations.
It would be costly for German businesses or even rural Portuguese textile and pottery manufacturers to actively recruit in Lisbon, so instead they seek refugees and avoid offering relocation assistance and higher wages. In the United States, firms like Disney abuse the H1-B visa program to replace highly skilled, well paid American workers with immigrants—fueling nativism and pandering by some presidential contenders.
More importantly, most European states were founded on the basis of ethnicity. Many may be effective at integrating immigrants into their work forces but are not particularly adept at assimilating them culturally.
In contrast, the United States was founded on a system of easily embraced egalitarian principles and has successfully absorbed, albeit with some political indigestion, wave after wave of ethnically diverse newcomers.
America can handle its immigrants culturally, as well as economically, because from the beginning it was designed, perhaps inadvertently, to be an assimilation machine. Whereas Europe, thanks to overly generous social programs, Balkanized educational systems and national cultural silos, can’t even figure out how to move unemployed youth from Portugal to opportunities in Germany.
Peter Morici served as Chief Economist at the U.S. International Trade Commission from 1993 to 1995. He is an economist and professor at the Smith School of Business, University of Maryland, and a widely published columnist. He is the five time winner of the MarketWatch best forecaster award. Follow him on Twitter @PMorici1.