The Battle for Brains: Why is EU the Loser?

by Petar Cimentarov, 9 September 2014

High-skilled migrants are a scarce resource for which countries worldwide should be fighting. Here is why. They contribute not only to the GDP of the host country, but also to its budget by paying high taxes on their generally high salaries. In addition, bright and skilled migrants are a tool for useful knowledge diffusion in society and for putting competitive pressure on the local workforce. Last but not least, immigration raises the level of innovation in receiving countries. In other words, the beneficial social welfare effects of high-skilled migration for the host country are numerous and undisputed. So, how is the EU performing in attracting high-skilled workforce?

EU-Blue-Card

Source: Opulentus, 2013

“We should take more account of what statistics tell us: 85% of unskilled labour goes to the EU and only 5% to the USA, whereas 55% of skilled labour goes to the USA and only 5% to the EU. We have to reverse these figures with a new vision, and that calls for new tools. And we are starting to have those new tools.” (Franco Frattini)

The speech given by Mr Frattini, the European Commissioner for Justice, Freedom and Security 2004-2008, confirms the common perception that, when it comes to fighting for the world’s best and brightest, the EU is lagging behind the US. A change was expected to come with the adoption of a new tool designed to boost EU’s competitiveness in the battle for brains. All eyes were turned towards the EU Blue Card Directive. But has this instrument (which came into force in 2009) been sufficient to reverse the status quo?

The EU Blue Card as a(n) (unambitious) counterpart of the US Green Card

US image

Source: erepublik.com

As stated proudly on the cover page of the EU Blue Card website, “the EU Blue Card is Europe’s answer to the US Green Card”. There is a certain rivalry between the two schemes. The EU Blue Card has been profiled as the main instrument of the EU for becoming at least as attractive as other favourite migration destinations, such as the US, Australia or Canada. Commission President Barroso announced shortly after the publication of the Proposal that “with the European Blue Card, we send a clear signal: highly-skilled workers from all over the world are welcome in the European Union!”. This supposedly “clear signal” seems to have been lost in transmission. The EU Blue Card remains less ambitious than its US counterpart, the US Green Card, and is unlikely to help bridge the gap in attracting the world’s best and brightest.

There are at least three shortcomings of the EU Blue Card that are worth discussing. First, it provides Members States with the possibility to grant Blue Cards valid from one to four years (as compared to the 10 years offered by the US Green Card). This is (intentionally?) just one year short of the five years of legal and continuous residence required for obtaining permanent residency. Knowing beforehand that the security of permanent stay is not certain and given the recent fluctuations on the EU labour market, the potential migrant might be deterred from coming to the EU in the first place. Given that the prospect of permanent settlement is key in attracting migrants, this provision is likely to create an obstacle for high-skilled workers whose main aim is migration for the purpose of integrating in a country, rather than a temporary stay. Second, the Directive fails to provide the Blue Card holder with the right to move and reside freely in other Member States. Instead, it introduces an initial period of 18 months during which the migrant cannot take up job opportunities in other Member States. This is quite unfortunate as it removes a big incentive for potential high-skilled migrants – the benefit of a large unified market of 28 countries. Third, the opt-out of the UK, Denmark and Ireland seriously undermines the effectiveness of the EU Blue Card Directive. Given its salary levels, entrepreneurial environment, language and relatively lower taxes, the UK is arguably the most attractive European market for high-skilled migrants, and EU’s failure to have the UK on board is a serious blow to its ambitions.

The real reasons for losing the battle

So, would it be sufficient then for the EU to adopt a more effective tool in order to equalise the score in the match against the US? Not really. The real cause for Europe’s comparative unattractiveness to high-skilled migrants appears to be embedded deeply in the ideological, multi-level and linguistic design of the EU, and is therefore likely to remain unaffected by immigration policy instruments.

Only two features of European lifestyle, which act as barriers to the entry of high-skilled migrants, are discussed here: wage differentials and plurality of languages. First, it is common knowledge that the US has a more unequal society in terms of income as compared to almost any other developed country. Such inequality is more likely to attract high-skilled migrants, who often occupy high-paid positions. By contrast, the gap in wages in the EU is much narrower, what might also explain why the EU is a magnet for low-skilled labour. The wages’ effect is furthermore reinforced by the differences in tax structure. A study conducted by KPMG demonstrates that Western Europe has an average tax rate on personal income (46,1%) that is almost twice as that in North America (27,7%). Second, linguistic diversity is a serious barricade for both intra-EU mobility and high-skilled migration from third countries. Although there is a growth of job opportunities with English as the main working language, this applies only for certain profession (such as IT specialists). It is difficult to imagine a doctor or a lawyer who does not speak the native language of the patient or client. Fair redistribution of wealth and preserving our differences in terms of religious beliefs, culture and languages (being “united in diversity”), albeit objectives worth pursuing, are likely to curb EU’s ambitions to become the new “land of opportunity” for the high-skilled.

The verdict

The tool Mr Frattini spoke of in his speech, the EU Blue Card Directive, is one step in the right direction towards boosting EU’s ambitions of becoming a magnet for high-skilled migrants. It is, however, only a minor step forward and, due to its unambitious design is likely to remain in the shadow of the much more ambitious US Green Card. To escape this shadow, the EU would at least have to design a new weapon representing a common approach followed by all Member States, providing for a higher level of harmonization, liberalizing entry requirements and facilitating cross-border movement.

However, even such a well-designed instrument might not be sufficient to bridge the gap between the EU and the US. More should be done to increase the attractiveness of the EU than adopting more effective immigration policy instruments. To have a realistic chance of winning the battle against other developed countries, the EU must become more business-friendly, achieve a deeper unification of its labour markets and (why not?) reconsider its approach towards matters regarded as sacred in our society, such as the plurality of languages.

 

 

2 thoughts on “The Battle for Brains: Why is EU the Loser?

  1. duizendpootBXL (@1000ptBXL)

    This blog post contains various inaccuracies and is incomplete. It could be improved by taking into account the Commission’s report on the Blue Card adopted on 22 May 2014 and the fact that the incoming Commission president Juncker has made a review of the Blue Card a top priority as mentioned in his speech to the EP on 15 July 2014 and his mission letter to the incoming Commissioner for Migration and Home Affairs.

    More recent numbers than those mentioned in a speech 7 years ago would also help. Up-to-date statistics on highly qualified workers coming to the EU under the Blue Card [migr_resbc1] or national schemes [migr_resocc] are available on the Eurostat website: epp.eurostat.ec.europa.eu

    The Blue Card did not come into force in 2009. It was adopted on 25 May 2009 with a foreseen entry into force on 19 June 2011, yet many Member States were late in their transposition. Most Member States transposed in the course of 2012.

    The website mentioned and linked to in the blog post is not an official website on the Blue Card. It is a private for-profit initiative that misappropriates elements of the European Union’s visual identity and logo’s (strangely enough also of the Council of Europe) and may be doing so illegally.

    Official information on the immigration policies of the EU and all Member States, including the EU Blue Card, can be found on the EU Immigration Portal: http://ec.europa.eu/immigration/

    The post also contains some doubtful analysis. Suffice to mention the so-called barriers to the entry of high-skilled migrants: the post does not substantiate its claim that income inequality and language diversity are “real cause for Europe’s comparative unattractiveness to high-skilled migrants”. Without any arguments to back this up, this is circumstantial at most, and contrary narratives are easily found.

    The main question “So, how is the EU performing in attracting high-skilled workforce?” is not addressed and the title is suggestive “Why is EU the Loser?” without actually comparing the situation in the US with the EU.
    Is this blog post really published on 9 September 2014? It would have been timely in 2009.

    See:
    Communication from the Commission to the European Parliament and the Council on the implementation of Directive 2009/50/EC on the conditions of entry and residence of third-country nationals for the purpose of highly qualified employment (“EU Blue Card”), COM(2014) 287 final
    http://ec.europa.eu/dgs/home-affairs/what-is-new/news/news/2014/20140522_01_en.htm
    http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1410777276259&uri=CELEX:52014DC0287

    Jean-Claude Juncker, Political Guidelines for the next European Commission, Strasbourg, 15 July 2014, http://ec.europa.eu/about/juncker-commission/docs/pg_en.pdf

    Mission letter to Dimitris Avramopoulos, Commissioner for Migration and Home Affairs, 10 September 2014, http://ec.europa.eu/about/juncker-commission/docs/avramopoulos_en.pdf

    Reply
  2. petarcimentarov Post author

    Many thanks for expressing you opinion on the short Note. It would have been sad, if the Note had not attracted any comments.

    I will abstain from replying to each one of your comments, but will just clarify for you the main purpose of the Note. First, it is a personal opinion on the topic (of course the title is suggestive and there is nothing wrong with that). Second, it is a short opinion. Obviously, this is a topic on which one can write a PhD paper. Feel free to give me your e-mail if you would like me to provide you with the more extended version of my paper on the topic (which contains a more detailed argumentation on why inequality and language are a barrier for high-skilled immigrants and also the comparison with the US which you wanted to see in the short Note).

    It is a bit of a pity, however, that your comments do not contain any substantive arguments for or against any of the statements made in the Note as this is what this Blog is mostly about. Please feel free to express your opinion on the substance as well next time.

    Reply

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