Apr 3, 2012 | 12:42 GMT

6 mins read

Emigration in the Eurozone's Periphery

Spanish student protesters in Madrid on March 29
DANI POZO/AFP/Getty Images

Since the onset of the European financial crisis in 2007, emigration in the eurozone's periphery — Portugal, Italy, Ireland, Greece and Spain — has occurred in two distinct phases. In the first phase, foreign nationals who had been drawn to Western Europe by economic opportunity returned to their home countries in places like Latin America, Eastern Europe and North Africa. Most of these emigrants were low-skilled laborers who lost their jobs in construction, the service industry and other similar sectors.

But as the financial crisis worsened and unemployment grew, more European nationals began to emigrate from their home countries. While hard data is difficult to obtain on the educational background of these emigrants, anecdotal evidence suggests many of them are skilled, college-educated workers who are fluent in more than one language, usually including English. Emigrants with such a pedigree can insert themselves seamlessly into the workforces of their destination countries, but doing so ultimately will compound the financial problems of their home countries. 

Of all the countries in the eurozone periphery, Ireland most exemplifies the exodus of European nationals. A longtime country of emigration, Ireland became a net immigration country in the mid-1990s. In fact, immigration was the largest contributor to Ireland's population expansion between 1999 and 2008. During this time, the country's population rose by 18 percent — more than any other EU country. Most foreigners who moved to Ireland came from EU countries and generally were highly educated (about one-third of all Western European immigrants to Ireland had received higher education). These highly educated workers rapidly found employment in Ireland's "knowledge economy," which focuses on services and high-tech industries.

When the financial crisis took hold of Ireland, economic activity slowed and unemployment increased, effectively reversing the immigration trend of the previous decade. In 2007, roughly 10 percent of emigrants from Ireland were Irish nationals; by the beginning of 2011, this figure had risen to 40 percent. Preliminary data suggests that by the end of 2011, Irish nationals accounted for 50 percent of all emigrants from Ireland.

Migratory flows in Spain are similar to those in Ireland. From the mid-1980s to the mid-2000s, Spain housed huge amounts of immigrants, largely from its former Latin American colonies and, to a lesser extent, from Morocco and Eastern Europe. Not coincidentally, Spain's economy grew by 3.1 percent annually during this time, making it the fastest growing economy in Western Europe.

When the financial crisis left a quarter of Spain's population without a job, many former immigrants sought work in other countries. So far, most emigrants are low-skilled foreign workers; unemployment is almost twice as high among foreign workers with only a primary education (or less) than among foreign workers with university degrees. However, two out of every 10 emigrants from Spain are Spanish nationals. Reports suggest that most of the Spanish emigrants are college-educated, with many making below 1,000 euros ($1,300) per month.

Portugal also has become a net emigration country after having been an immigration destination since its accession to the European Union in the mid-1980s. Emigration and immigration flows were stable leading up to the financial crisis, but data released in a March 2011 Portuguese media report suggests that more people are leaving Portugal than at any point since 1970, when the country was ruled by a military dictatorship.

Portuguese emigrants generally are low-skilled laborers who leave the country for work elsewhere in the construction or agricultural sectors. But recent research from the Organization for Economic Co-operation and Development indicates that skilled workers constitute a higher percentage of emigrants than the skilled workforces of all the European countries except for Ireland. According to the research, around 18 percent of Portugal's skilled workforce emigrated in 2008 alone.

In Greece, immigration is still high in spite of the crisis, though immigration and emigration rates are relatively balanced. Many immigrants see Greece as a key point of entry into the European Union, and due to the Schengen Agreement, immigrants from the Balkan states and Turkey can move freely throughout the bloc once inside Greece. Also contributing to high immigration is that other traditional entry points, such as Spain and Italy, are placing tighter controls on illegal immigration, making more and more illegal immigrants choose Greece as the country of entry to the European Union. But many immigrants lack the resources to continue moving once inside Greece. This has led to tensions as Greeks and foreigners compete in a contracting labor market.

Greece technically became a net emigration country in 2010. Although it is extremely difficult to get accurate data on the profile of Greek emigrants, researchers working in Greece suggest that the emigrants are mainly young men and women with university degrees who are fluent in English.

So far, the financial crisis has affected Italy's migratory flows minimally. This is likely explained by the fact that Italy was the last of the eurozone periphery countries to implement austerity measures. Moreover, despite little economic growth over the past decade, Italy's unemployment rate is below 10 percent. Most of the country's immigrants are low-skilled laborers who work in low-wage sectors, the service industry or domestic care — all areas where demand has remained high in spite of the financial crisis.

While emigration among nationals is lower than in other periphery countries, the composition of those emigrants is identical. An investigation by the Italian Confederation of Labor and the Italian Federation of Emigration and Immigration has found that Italian emigrants are mostly university graduates or highly skilled workers. Young Italians commonly enroll in graduate or postgraduate studies abroad, typically in Europe, and look for a job in that country.

Economic Impact

In the short term, emigration offers some relief to social tensions generated by rising unemployment. As unemployed workers leave the country, labor supply decreases. Moreover, the emigration of unemployed people reduces short-term government spending on social programs.

But emigration can strain a country's economy. Indeed, high rates of emigration create at least two problems for these countries. First, there is the danger of a "brain drain," since these countries risk losing a significant portion of their highly skilled workforce. Second, increasing emigration could further deteriorate the already existing demographic problems in Europe — especially at a time when Europe shows low birth rates and an aging population. The waves of immigration from the late 1990s to the mid-2000s (young workers, sometimes bringing their families with them) mitigated this problem somewhat, but the current emigration of young people (foreign and domestic) will compound it.

The combination of high emigration, low immigration and population aging will mean fewer workers paying taxes and more retirees collecting pensions and using social services, which will make the budget-cutting plans currently undertaken by these countries even more difficult.

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