29/6/18: Can, Foot, Road: EU 'Agreement' on Migration Crisis

The EU27 have a new 'deal'. This time, on revamping the block's migration strategies in the face of continued relentless wave of refugees fleeing to Europe from Syria and North Africa, propelled or aided to take desperate actions by the regime change doctrine of Washington. Migration numbers are down roughly 90 percent from their peak in 2015, and fell 45 percent y/y in the first half of 2018. But, voter revolt against the system that is perceived as "open borders" is still fuelling rise in political opportunism and extremism across Europe. The latest catalysts for the negotiations have been: (1) the rise of anti-immigrant parties in Germany that now threatens the uneasy governing coalition in Berlin, and (2) the arrival to power of the new, anti-immigration coalition in Italy. To be more precise, Italian Government has been asking for the EU to take "concrete steps" to share burden of accepting refugees with Italy for some time now. Other  catalysts have been governments of Hungary and the Czech Republic, where current political leadership has been opposing the EU policy of imposing automatic quotas for accepting migrants.

Earlier today, following almost nine hours of negotiations, the EU27 finally hammered out a compromise deal, immediately labeled in the media as 'political fudge' - something the EU has been very skilled at achieving for a good part of the last 20 years.

To prevent Italy from exercising a veto on the deal, the EU agreed to redistribute arriving migrants away from the country of their original landing to "control centres" spread across the EU. Centres locations are to be specified later. "Control centres", funded out of unspecified funds, but presumably payable by the joint resources of the EU, will de facto trade 'local jobs and euros' for communities accepting large scale migrants detention centres. This model works well with military bases and jails, and can be attractive to some poorer Eastern European countries, as well as countries like Greece and Italy. The key to this is that the detention centres will only be located in countries that volunteer to accept them. In simple terms, immigration policy is now a part of fiscal redistribution scheme, just what Italy wanted.

"Control centres" will function as a triage point, with “rapid and secure processing” separating economic migrants from those with a potentially legitimate claim to the asylum. Thereafter, successfully pre-screened asylum seekers will be distributed under the principle of solidarity (quotas), although, in a bow to Czech and Hungarian governments, solidarity principle will apparently be voluntary too. In other words, "rapid" processing will likely end up being a 'lengthy detention' in "control centres", as many Governments will simply refuse to take in asylum seekers, while other Governments will end up being swamped with applicants.

To restrict the numbers of those reaching the EU borders in the first place, the EU meeting agreed to provide more funds for Turkey and Morocco to act as buffers for refugees. Algeria, Egypt, Libya, Morocco, Niger and Tunisia are to get funding for setting up 'processing centres'. Or, put differently, the EU will be paying more to warehouse migrants offshore, something that is likely to lead to lengthy detention in questionable conditions.

As a support for embattled Angela Merkel, the agreement also states that the nation states can “take all necessary internal legislative and administrative measures” to stop refugees and migrants crossing Europe’s internal borders. Whatever this means for the Schengen agreement and borderless travel, time will tell.


My view: The migration agreement is nothing more than another kick to the proverbial can that was stuck in the cracks on the proverbial road toward addressing the migration crisis. It fails to address actual modalities of asylum process, the key being the length of the process, lack of alternatives to highly costly and questionable (in ethical and even international law terms) deportations of failed seekers, and the lack of clarity of rules and resources for allocating successful asylum seekers. It also failed in effectively dealing with migrants inflows: a 'buffer zone' on the southern shores of the Mediterranean simply increases costs of making the crossing, and thus increases the risk of crossing to migrants. It does not remove the incentives for making the journey. In the case of Libya and Egypt, there are questions about these states' capacity actually control their borders, primarily arising from the nature of the Government regimes in both countries. In case of Syria, ability to seal off inflows of refugees from the country hinges on stabilisation of the Assad regime, as no other participant in the Syrian civil war has any interest in controlling Syria's Mediterranean coast. In effect, the EU agreement does not tackle the main issue at hand: how to reduce the inflows of both economic migrants and refugees into Europe. Likewise, the EU agreement does not even touch upon the need to structure effective measures (legal and institutional) to improve integration of the successful migrants into the European societies.

In short, we will be back to this issue soon. Mark my words.

29/8/15: Migration & Natural Changes in Irish Population: Migration by Nationality

Having looked in the previous post at top level data for population changes in Ireland reported by CSO, now let's take a look at composition of migrants flows by nationality. This is going to be charts-heavy.

Let's start with immigration flows. Chart below shows Immigration into Ireland over the recent years:

Several interesting aspects of this jump out:

1. There has been a significant increase of inflows of people from the 'Rest of the World' (ex-EU). Numbers of those coming into Ireland from outside the EU are up at 30,400 in 2015 from 25,500 in 2014. Pre-2015, average annual inflows of immigrants from outside the EU was 15,722, so last year things were pretty much ahead of the average for the third year in a row. Much of this is probably driven by big hiring numbers from multinationals which are increasingly moving their EMEA and MENA operations into Ireland. 
2. There has been a small uptick in the number of new comers from the Accession States (EU12), the numbers of which rose to 12,800 in 2015 compared to 10,000 in 2014. This is the second highest inflow rate since the start of the crisis. 2006-2014 average for these inflows (29,078) is still significantly above 2015 figure. Again, I would suspect that much of this increase is accounted for by MNCs and also by demand for particular skills. Note: I will blogging on skills matters subsequently in a separate post.
3. There has been virtually no change in inflows of people from the UK over the last 3 years, so nothing worth spotting here in terms of trends. Rest of EU-15 immigration flows also were relatively static, up to 8,900 in 2015 compared to 8,700 in 2014. Nonetheless, this has been the busiest year for EU15 migration inflows (ex-UK and Ireland) for some time - since 2009.
4. Number of Irish nationals returning rose from 11,600 in 2014 to 12,100 in 2015. Which, kind of directly flies in the face of a number of media reports about 'returning migrants'. Apparently, the migrants are not quite returning, as current rate of immigration in Ireland by Irish nationals was the second slowest on record and much closer to the lowest year (2014) than to the third lowest (2013).

Now, consider emigration figures:

Again, few things worth a closer look:

1. Irish emigration continued to decline in 2015 for the second year in a row. 2014 emigration of Irish nationals stood at 35,300 down from 40,700 in 2014 and down substantially on crisis period peak of 50,900 in 2013. The rate of emigration is now closer to 2006-2014 average of 29,444 that before, but it is still substantially above that number. Crucially, in more normal times, emigration by Irish nationals stood at around 13,700, which is well below current levels.
2. Emigration by UK nationals out of Ireland remained pretty much stable and on-trend. Historical pre-2015 average is for annual outflow of 3,467 and in 2015 the number was 3,800. Emigration by the nationals of the EU15 states (ex-UK and Ireland) was up in 2015 at 15,600 compared to 14,000 in 2014. The rate is rising now for two years and is well ahead of 9,078 average for 2006-2014 period. This is interesting, as it reflects some shift in MNCs employment: in the past, MNCs were focusing much of their hiring on old EU markets, demanding language skills from these countries. Now, it seems the momentum is shifting toward ex-EU15 markets. Notably, pre-crisis average emigration by EU15 nationals stood at 6,667 per annum, very substantially below the 2015 figure.
3. In contrast to EU15 pattern, emigration by the Accession EU12 nationals fell significantly in 2015 to 8,500 from 10,100 in 2014. This is the slowest rate of outflow for any year from 2007 on and significantly below the 2006-2014 average annual rate of outflow of 15,478.
4. Rest of the World (ex-EU) emigration picked up, rising to 17,700 in 2015 compared to 14,100 in 2014 and against the 2006-2014 average of 9,9833. The reason for this, most likely, is the turnover of MNCs-employed tech workers and specialists who tend to stay in Ireland for 2-3 years and subsequently leave. 

So last remaking bit of analysis will have to cover net immigration / emigration:

As consistent with the number discussed above:

1. Rate of net immigration from the 'Rest of the World' (ex-EU) picked up somewhat in 2015, rising to 12,700 from 11,200 in 2014. This is the highest rate of net increase in ex-EU population in Ireland for any year between 2006 and 2015.
2. Second noticeable change in 2015 was positive contribution of EU12 (Accession states) nationals, with their net immigration at 4,300 in 2015 marking the first positive net result since 2008.
3. EU15 (ex-UK and Ireland) net emigration remained significant and increased, with 6,700 more nationals of EU15 (ex-UK and Ireland) leaving Ireland than coming into Ireland in 2015, up on 5,300 in 2014. This marks the third year of rising net emigration by EU15 nationals out of Ireland and 6th consecutive year of negative net immigration by this group of residents.
4. Irish nationals net emigration from Ireland remained very substantial in 2015 at 23,200. The number is lower than 29,200 net emigrations recorded in 2014 and the lowest reading in 4 years, but it is still well above the crisis period average. In simple terms, things are getting worse slower in this metric, they are not getting better.

Combined 2008-2015 net movements of people by nationality are shown in the chart below. Since 2008 through April 2015, there are 5,200 more UK nationals residing in Ireland, while the number of EU12 migrants rose 11,100. By far, the largest net emigration on a cumulative basis relates to outflow of Irish nationals: between 2008 and 2015, 132,400 more Irish nationals left the country than came back into the country - annual average rate of net emigration of 16,600 and in 2015 annual net emigration for Irish nationals was 6,700 above that.

23/9/2013: Sunday Times 08/09/2013: Irish Demographic Dividend Reversal

This is an unedited version of my Sunday Times article from September 8, 2013.


Back in the heady days of the Celtic Tiger, Irish economics commentariat and banks experts were extolling the virtues of Ireland's 'demographic dividend'.  A confluence of high birth rates, declining mortality and robust inward migration was propelling Ireland toward perpetually rising population counts. With these, the argument went, Ireland faced the ever-lasting expansion of domestic demand and labour supply.

Less than a decade later, the dividend has all but vanished in the maelstrom of rampant emigration. More ominously, as the latest trends suggest emigration is now reaching well beyond the traditionally at-risk sub-categories of the recent newcomers to Ireland and the long-term unemployed. Instead, outflows of professionals and middle-class families are now also on the rise.


Cutting across this nirvana of consensus permeating the Irish society around 2004-2006, few dared to suggest that something major was amiss in the aforementioned theory. Yet, the risks to Ireland's 'demographic dividend' were visible even at the time of the boom. At the peak of the Celtic Tiger and since the beginning of the Great Recession, I wrote about them in Irish media, including in these very pages. The first threat to our long-term population trends even in 2004-2006 period related to the risk of a structural economic slowdown. The second one came from the demographic ageing of the core European states and the resulting inevitable rise in wages premium for younger workers in these economies.

With the onset of the Great Recession, increased job markets uncertainty and declining disposable incomes have acted to boost Ireland’s birth rates, seemingly supporting the argument of some analysts that the demographic dividend was still alive and well then. In 1995-2007, there were 56,423 annual births on average in the Republic. In 2008-2009 average annual number of births stood at 74,183. Changes in the incentives for having children offered by the Great Recession were clearly the factor pushing fertility up. Alas, the latest data covering the twelve months through April 2013 shows that this process is now exhausted with 2013 births counts down 8.7 percent on 2010 peak.

Offsetting the initial rise in births, the Great Recession pushed Ireland back into becoming a net emigration nation once again, for the first time since 1995. Data published by the CSO last week shows that in 12 months through April 2013, total of 89,000 people have left the country. This is the highest number since the records started in 1987. There was a small increase in immigration driven primarily by importation of specialist foreign workers by the booming ICT and IFSC sectors, plus the return of students working on 1 and 2-year visas abroad. Despite this, 2013 marks the fourth consecutive year of net emigration.

Current rates of emigration are running ahead of the 1987-1995 period average. Back then, net emigration from Ireland averaged 14,811 per annum. Over the last four years, the average net outflow of people from this country stood at 30,600 annually.

The twin squeeze of declining birth rates and strong net emigration has resulted in 2013 posting the weakest overall population changes in 23 years. In 12 months through April 2013, Irish population grew estimated 7,700 - one seventh of the annual average for the 1991-2007 period. This brings us dangerously close to a rerun of the 1980s-styled demographic collapse when Irish population actually declined in three years through 1990.

Truth be told, we are probably caught in this 'back to the future' demographic warp already.

Our official statistics show inflow of 29,400 immigrants, excluding the returning Irish nationals and the immigrants from the Accession states, in the 12 months through April 2013. Majority of these are likely to be foreign workers brought into the country temporarily by the MNCs. Moreover, the current CSO estimates are based on PPS numbers, foreign visas issuance, as well as household surveys. These methods are potentially underestimating the numbers of those Irish nationals who have left the country, but still have close family remaining here. Last, but not least, our data is probably also underestimating outflows of the EU12 Accession states’ nationals.

Controlling for the above factors, it is highly likely that we are already experiencing a reversal of the ‘demographic dividend’ and the onset of the zero-to-negative population growth in Ireland since 2011. This has meant that our population today is some 436,000 below where it would have been if the trend established between 2000 and 2007 were to continue.


Ireland's emigration flows and population changes by age and nationality are retracing the structural collapse of our economy: the story of our paralysed and polarised society burdened by debts, taxes, unemployment, lack of opportunities for career advancement and fear for the future.

From 2010 through 2013, the numbers of Irish nationals opting to leave the country net of those returning from abroad have been rising steadily. The net outflow of Irish nationals more than tripled between 2010 and 2013. If between 2006 and 2008, some 32,100 more Irish people returned home than left Ireland, over the subsequent 5 years, 90,700 more Irish people emigrated from the island than moved here.

In addition to the above, there are some new undertones that are emerging in the data over the last two years.

Official data on population breakdown by age groups shows that the bulk of population declines over the crisis in Ireland took place in the 15-29 year olds cohorts. However, since 2011, the 30-39 year olds cohort is also posting declining numbers. These age-related trends are now pushing us toward twin age dependency scenario where the numbers of old age-dependent residents and young age-dependents peak at the same time. Top productivity cohorts - ages 34-54 - grew by 124,000 since 2007, while old and young age dependents cohorts are up 203,600 over the same period of time. Working age cohorts (20 years of age through 64 years of age) accounted for 62.4 percent of Irish population in 2007. This year the ratio is 59.7 percent.

Compared against the age distribution of the unemployment, the latest trends suggest that jobs losses are no longer the sole drivers of emigration. Instead, it appears that emigration is increasingly afflicting those groups of population that are generally more secure in their jobs. The potential reasons for this are household debt overhang and lack of promotional opportunities open to the younger workers here.

While the numbers of emigrants between 15 and 24 years of age remained basically unchanged over 2011-2013 period, the numbers of emigrants between 25 and 44 years of age rose by a third. With this, there was a corresponding rise in families relocating abroad.

With banks starting to move more aggressively against distressed borrowers, these sub-trends are likely to strengthen over time.

Economic and social losses arising from debt crisis are also likely to increase as migrants due to debt and/or career considerations are more likely to carry with them above average skills, productivity and earning potential. In addition, these migrants are less likely to return to Ireland, especially if the debt they leave behind remains on the record against their names.


The impact of the current wave of emigration on our society and economy is likely to be more long lasting than that of the previous emigration waves. This conjecture is supported by a number of considerations.

Today’s emigrants are conditioned by their education, past employment experiences and social values systems to accept the mobile nature of their future careers. In other words, having left Ireland they are unlikely to look back at their homeland as a natural home. Increasingly, Irish emigrants are setting their sights on geographies that are more remote from Ireland than the UK and continental Europe. This puts more stress on their ties to Ireland. The latest data showing that emigrants to countries like Australia, New Zealand and Canada tend to show lower returns in recent years. In addition, debt legacy will hold many of them back from returning to Ireland in the future. Age-related considerations with further reinforce this effect, with many emigrants in their mid-30s and 40s today facing a prospect of never again being able to secure a mortgage in Ireland were they to attempt a comeback. Lastly, a major factor in today’s emigration from Ireland is that it involves greater proportion of emigrants who enter their host destinations legally, thus increasing their chances at future naturalisation.

Overall, CSO data confirms the above observations, as fewer and fewer Irish nationals are today returning back home.


Far from being a solution to our economic woes or a temporary safety valve for the economy saddled with high levels of unemployment, current wave of emigration from Ireland is undermining the prospects of economic recovery here. More crucially, by removing more politically and socially disenchanted and activist younger people and families, the emigration is acting to mute the voices of dissent here. With them, the raison d’etre for the robust political, social and economic changes is slipping away too.

BOX-OUT:

Markit-Investec Purchasing Manager Indices for Irish Manufacturing and Services have both posted significant gains in August, compared to July. August PMI for Manufacturing came in at 52.0, showing the fastest pace of economic activity growth for the sector since November 2012. Meanwhile, Services PMI reading of 61.6 was the highest since February 2007. Both indices are subject to significant distortions from the multinational companies based here. However, Services PMI is subject to more severe skews due to the tax arbitrage activities by companies operating in international financial services, ICT services and auxiliary business support services. Nonetheless, caveats aside, the latest data strongly suggests that Ireland has moved out of the triple-dip recession in Q3 2013 and will post growth in GDP for the three months through September. Aside from this, however, the PMIs continue to signal relative weakness in the domestic sectors compared to exports and employment growth signals have weakened in both sectors of the economy. Finally, additional good news were signaled by the improved profit margins in Services, now third month running and marking the first sustained upward momentum in profits in five years. This, however, was not the case in Manufacturing, where input costs rose against basically unchanged output prices.

5/9/2013: OECD Migration report 2013: Ireland's blues

Last week, OECD published its International Migration Outlook 2013. I wrote about this in the box-out section of my Sunday Times column which is available here in an unedited version: http://trueeconomics.blogspot.ie/2013/09/592013-sunday-times-september-1.html

Couple of charts to illustrate the actual findings from the OECD:

These show pretty severe adverse impact of immigration on Irish exchequer finances, driven primarily by (in descending order of importance):

1. The extent of the current crisis
2. The impact of immigration flows composition on transmitting the shocks of unemployment to exchequer balance sheet (exceptionally rapid replacement of previously jobs-linked immigration inflows prior to 2004 with post-2004 opportunistic immigration from the EU Accession states, primarily going to short-term jobs in construction and domestic services sectors)
3. The impact of the Government policies since 2000-2001 that raised significantly spending on social welfare

The problem, of course, is that the latest Government policies, acting to limit access to Irish labour market for non-EU nationals continues to reinforce the second point above. We are increasingly trading on the assumption that Accession states' nationals regardless of their skills can act as a substitute for highly skilled and perfectly selected into jobs candidates from the rest of the world. Not exactly a smart policy, folks…

In 2006 I wrote about this effect on selection bias in Irish immigration policies post-2004 for the Romanian Journal of European Studies: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1100952 Seems like my warnings came to the front in the OECD data.

The unravelling of the core?

The latest report (here) from Switzerland is claiming that the Swiss are considering imposition of limits on the admission of the migrants from the EU15 + Malta & Cyprus. First, background, then conclusion:

Per EUObserver report, "under bilateral accords signed with the EU, the Swiss government is entitled to limit the number of workers entering the country" from the original EU15 states, plus Cyprus and Malta, whenever Swiss unemployment rises above a certain threshold.The threshold is not an absolute level of unemployment, but a rate of increase in jobless of more than 10% in a year "compared to the average rate in the previous three years". The latest data shows that Swiss unemployment reached a new three-year high of 3.5% in April - a 35.5% increase y-o-y. EU27 is now forecast to reach 9.7% unemployment in 2009 and 10.9% in 2010.

Currently there are no restrictions on the number of EU15+2 workers that can take jobs in Switzerland. "If the clause is activated", says EUObserver, "immigration from the EU15, plus Cyprus and Malta, will be limited to the average migration rate of the previous year plus five per cent for a maximum of two years.

So what is my analysis of this development? Access to the Swiss market - within a broader EEA community - is a legitimising point for EU in so far as it shows that European Union has attraction as a trading, capital and migration partner for countries which, unlike Eastern Europe, cannot be either bought or bullied into submission. Norway, Iceland, Lichtenstein (EEA members) and Switzerland are, at this point in time, the only countries that can claim such a status, although in the past the EU tried to 'compel' all of these states in relation to various aspects of their internal regulations.

Should Switzerland put in place even symbolic restrictions on the EU citizens' ability to gain work there, one of the three legs of this pillar will be gone. The questions to be asked in this context are:

1. Should Swiss authorities limit inward migration from the EU15+2, will this trigger a push within the EU15 to further restrict access to their own labour markets for the EU12 Accession states?
2. Should the Swiss elect to enact the restrictions clause, what signal on the integrity of EEA+ does this send out in the context of the future EU enlargement? Are we risking losing Switzerland as an investment and jobs market partner in order to gain Turkey? Albania? and so on?
3. Will Swiss-imposed restrictions signal an alternative 'Third' way for countries currently finding themselves in a difficulty within the harmonized EU monetary and FX policies - e.g. Austria - for distancing themselves from the full EU membership into an Association-style treaty Swiss-style?

In an opposite, but widely anticipated move, Iceland is now swinging in favour of full EU membership - a dubious win for Brussels, considering the state of general economic collapse in that country.

A disclaimer: applicable to anything I write on the EU - I do not advocate any of the above measures. This post is simply about presenting an argument as to what might be possible.