Download Lyberaki_Seminar_2006

Antigone Lyberaki
Professor of economics,
Panteion University
Greece after the 1990s
immigration wave:
A difficult adaptation to an economic
windfall
LSE, March 2006
Retrospect and Prospect
•
Evaluation of the 1990-2000 episode
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Historical watershed – unlikely to be repeated soon
Has altered Greece decisively
Will shape perceptions and reaction in future
Hence two items in the papers agenda
1.
Digest what happened –
•
Give a narrative and derive stylised facts
2. Bring out tensions likely to be met in future
Work in progress with Prof. Dertilis of the EHESS, Paris
3 crucial reversals in the 1990s
• Greece was transformed from a country of
emigration into one of immigration
• Greece shifted from being a net receiver of
private foreign direct investment (FDI) into
a net exporter of capital
• The Greek economy switched from a
diverging economic performance vis a vis
the EU into vigorous convergence.
Migration: a facet of globalization?
• Free movement of goods, services, capital,
people?
• Is movement of goods and capital substitute or
complement to movement of people?
• Substitute: if goods can move then factors of production
need not move.
• Complement: non-traded goods and services (childcare),
imperfections (non-equalisation of prices, mainly wages),
part of value chain.
• Short-term effects of globalization: turmoil,
societies under duress, increasing outflow of
people
Not unprecedented…
• 1815-1914: approximately 10% of world
population moved
• Over the last 15 years: 3% of world population.
• So, international migration is the “great
absentee” of Millennial globalisation.
• Qualitative new elements:
1. Different subjects
2. Different destinations
So, Countries find themselves in unaccustomed roles
– From migrant source to destination.
– From developing world poverty to 1st world riches.
European experience since 1985
• The number of migrants increased by 50%
While 30% come from other EU countries
65% (or 3,4% of population) come from other
countries
Over half of population increase in Europe (64%)
is due to migration
The process of ageing cannot be cancelled even if
there were a doubling of migrants in the years to
come.
Positive?
Crucial questions towards evaluation
• Do migrants contribute to growth?
• Do they “hijack” jobs from the domestic
working class?
• Do they “freeze” wages?
• Do they create an underclass of socially
excluded groups?
• What is to be done?
Economic Literature : positive
aspects prevail for the host
Depending on:
• First: the characteristics of migrants
themselves (skills and adaptability)
• Second: the characteristics of the receiving
(host) economy. Migration tool for what?
(low cost vs. quality-related competitive strength)
Implications for economy of
origin (sender)
• Alleviation of unemployment pressure
• Inflow of remittances
• Family strategy: empowerment and
guarding against risks and abrupt
fluctuations of incomes
However: brain drain and deprivation from
the more dynamic elements (age and risk)
Depends on whether, when and how they return
Gains for would-be migrants
•
•
•
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Life free of danger
… And corruption
Better chances for children
BUT mainly immense boost to earning potential
(Jim Smith of Rand calculated that recent
immigrants getting a green card gain on average
$20.000 per year or $300.000 over a life-time in
net present value terms).
Migrants in Greece: How Many?
• Legalisation process:
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–
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600 thousands submitted application in 1997
Plus 150 thousand Greek Pontians
Plus Northern Epirotes Plus non-applicants
Total at least 750 thousands
• Census:
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Estimated population 2000 10,5 million
«Closed population» 10,2 million
Registered in census 11 million.
Total around 800 thousand plus those not counted in
census
• SO: Population between 850 th. and 1 million (7%8.5% of total).. 10-12% of the labour force.
Migrants in Greece: Who?
• Legalisation applications
– 65% from Albania
– 18% Bulgaria, Romania, Serbia, Georgia, Russia
• Even if we include Pontians in migrants, then still
over 50% of the total are Albanians
• Majority from Southern Albania (where
commercial and investment links concentrated).
– Radically different from rest of Europe
• Bulk of arrivals until 1998 (after pyramid scheme
collapse).
– In comparison arrivals since are a trickle
• Very large and very abrupt change.
Thessaloniki Research Findings (2000)
1. Educational backwardness?
Education
(economically
population)
level
active
Greece
total (%)
Albanian
migrants
Higher
17.0%
15.2%
Upper Secondary
Lower Secondary
29.4%
8.9%
39.4%
21.8%
Primary
Less than primary -
37.2%
7.5%
11.9%
11.7%
Relatively well educated
2. Financial situation
• Family income 3,24 million GDR.
• Poverty line for I person 1,3 m GDR in 1999.
• Pay rates comparable to Greeks
– Concentration around the minimum wage
• Labour law not irrelevant
• Expenditure low – large savings
– Family expenditure 1,9 million GDR
• Improvement through time
– As the stay is extended and
– Through legalisation
3. Position improves with time
• Jobs improve with time
• Normalisation of labour situation
• 65% have health insurance
• Less avoidance of minimum wage
• Comparison with other studies: clear
improvement
• Only 18% «without papers»
• Consumption standard also improving
• 76% have telephone
• 98% TV. 46% VCR
• 16% car
The 2003 Athens Survey:
Key facts
• Interviews in Athens 9/2003-11/2003
• Snowball sampling – informal networks
– Only way to approach illegals. Otherwise bias.
– Original sample frame not directly related to employment (orthogonal)
•
500 structured interviews answered by household head and Conducted by private
survey agency. (Kapa research).
– 60 separate surveys conducted as a control by the researchers.
•
Data cleaned and first tabulations focus on perceptions and social factors
• Fuller analysis to follow, focussing more on economic factors
• Separate survey has companies as the sampling frame (130 in total)
conducted, but will not be reported on today.
Employment findings
• Very high participation rate (though bias expected)
– 96,1% for men; 65% for women.
– Note gender gap (30 per cent). Similar to native gap
• 88% pay social insurance contributions regularly.
• Sectoral mix of sample (men):
– Construction
(41%), Mfg and services (30%).
– Self-employed and business owners (25%).
• Women (as % of population)
– Domestic services 34%, 12% mfg and restaurants
– 20% self-employment. 34% inactive
• Job turnover very small
– 75% has not changed employment over last 3 years.
Income adequacy
• Sample relatively well off (monthly hh income).
– 30% Have income less than 900 EUR
– 24% have more than 1500 EUR per month
– (ECHP poverty line for 4 member household 840 EUR 2002)
• Savings high but remittances over time show downward
trend.
• Mobility and improvement of housing conditions over
time.
– No ghettoes
• One in three owns a car.
• 74% have bank accounts.
Conclusions
• Community on an upward trajectory
• Appears to resemble the indigenous in a number
of respects
– Resemblance grows over time: prone to selfemployment
• Individual success combined with lack of trust to
all non-relatives, regardless of nationality.
– Similar findings for Greeks – lack of social capital.
• Situation is still fluid and attitudes
ambivalent. How things will turn out depends
on future policy and integration initiatives
Overall comparison between
Greeks and foreign-born
• EU-SILC (2003): sample of 11.274.
– 500 foreign-born
• Confirms general picture: Though not in the top
gear, immigrants are better off than groups such
as women
• Younger with more children and less elderly members,
• less likely to receive state benefits (7,7% vs 14% of hh)
• More likely to participate in the labour market if male (71,5%
vs 66%) but less likely if female (by 5 percentage points)
• Less likely to do supervisory work (3% vs 15%)
• Less likely to hold a part-time job than women
• Wages of Greek males are 18,5% higher than Greek females´,
and 19,8% higher than foreign-born wages.
• The largest wage differential is between women: Greek earn
33,7% more
The Greek economy: from
stagnation (1980-95) to growth
• Impressive growth performance in the 1960-74
period (8,0), slowing down up to 1979 (3,2).
• Very poor performance in 1980-87 (-0.05) and
1988-95 (1,85) periods:divergence.
• New growth phase since the mid-1990s and
convergence with EU.
• Substantial transfer of resources from the EU
throughout the last 25 years (from 1,5-3,6% of
GDP annually).
• Growth (despite public finance problems)
continues post 2004
Annual rate of increase in GDP
5
4
3
2
1
0
-1
-2
European Union
Greece
How did the labour market
absorb these immigrants?
• Fast growth and high unemployment:
– Two speed Labour market?
– Resistance to labour market reform
• The Greek paradox is that unemployment does not
involve low-skill
– Co-existence of unemployment with demand for lowskilled and flexible labour
• The Greek economy finds itself “stuck in the
middle”
• Hence Low labour costs and flexibility provide a
breathing space
– Migrants exploit niche
Accelerating employment growth
Growth of Employment (thousand persons),
1999 - 2003
3875
3850
3825
3800
3775
3750
1999
2000
2001
Employed 20-64
2002
2003
Steady decline of unemployment
Total Unemployment (1,000 individuals),
1999-2003
550
12%
500
11%
450
10%
400
9%
350
300
8%
1999
2000
Unemployed
2001
2002
Unemployment Indicators
2003
Positive overall effect on the
Greek economy
5 Positive elements :
1. Creation of new jobs (mainly in services)
2. Growth speeded up
3. Defensive strengthening of sectors and regions
4. Alleviation of bottlenecks in labour market
5. Personal services allow women to enter the labour market
However, two potential counter-developmental temptations
1.
2.
Abundance of low wage labour.
Strengthening of grey economy.
Immigration key driver in the ‘Growth Spurt’ of the
Greek economy, starting mid-90s and still unwinding
New trends in immigration after
2000
• Immigration flows change. Three distinct
groups alter the simple picture:
– ‘Albanians’ (plus other Balkan and E. Europe)
• Informal networks with 1990s migrants
• Close links with Albania and source countries
• Post 2008 Bulgaria and Romania in EU
– ‘Third country’ migrants
• E.g. Pakistan, Africa
• Greater importance of trafficking
• Greater cultural distance
– Chinese migration
• Self employed and self-contained
• Part of international value chain of Chinese manufacturing.
The global picture is also positive:
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The potential gains from liberalising migration
are far more important compared to those from
removing barriers to world trade.
Dani Rodrik of Harvard : relaxing restrictions
on the international movement of workers
would yield benefits 25 times larger than those
that would be realised by liberalising goods and
capital flows.
Tito Boeri of Bocconi: migration of 3% of
Eastern Europeans to Western Europe would
increase the total EU GDP by up to 0.5%.
Economic logic thwarted by
political constraints
• A temporary visa scheme (3-5 years) amounting
to no more than 3% of rich countries’ labour
force would easily yield $200 billion annually for
the citizens of the developing nations (Rodrik)
– Relaxing restrictions to migration has a compelling
economic logic. But those gains can be made only at
great political cost.
• However, the same applies to trade, which is
being liberalised.
Explaining the immigration/ free
trade political paradox
• Is it public opinion?
– It is against both free trade AND immigration
equally.
• Rodrik:
– the beneficiaries from free trade have organised
successfully and become politically effective.
– By contrast, the beneficiaries of labour flows
are not easily identifiable, neither known ex
ante.
Migration as a mirror: societies
get what they deserve
• Evidence (and common sense) suggest that
positive attitudes to immigrants maximise
economic and social benefits from migration.
• Two main challenges for the rich world’s
governments:
1. How to manage the inflow of migrants
2. How to integrate those who are already there.
From the point of view of
Greece…
• All in the same neighborhood: differences in
current performance BUT common future…(in the
EU?)
• The economic argument is easier to win… but the
cultural terrain is less conducive
• Essentially it is about overcoming the “fear of
change” and building open societies.
• How to reap the economic windfall?
– How do economic and political actors respond?
– Some concluding remarks
The Civil Actors: Ambivalence
• The Church
– Tirana Anastasios vs. Thessalonika Anthimos
• Civil society
– ‘The Albanian flag carrier’ vs. ‘Gangs’
• The Unions
– Solidarity vs Prevention of labour flexibility
• The Employers
– ‘Short-termism’ vs. ‘Investing in people’
The political actors: Pusillanimity
• The politicians:
– Even when recognise positive role, afraid to say so.
– Ex-minister of Labour:
• ‘when confronted with an unemployed man, you cannot defend
being liberal in immigration’
• The Parties
– Rhetorical differences large esp after 2004
– In practise hesitant between treating as public order
issue or social policy
• The Government
– After legalisation in 1998, very few new initiatives
– Progressive outlook when confronted with EU
– Yet unclear whether much is done to counter ‘street
level’ discrimination by the State machinery
Conclusion
• The situation is becoming harder
– New immigrant groups harder to integrate
– Growth episode may peter out
• However, there are grounds for optimism
– Integration of first wave
– Balkan win-win
• How it will turn out depends largely on
political economy.