Labor migration to Austria Recent labor market trends

Labor migration to Austria Recent labor market trends in the context of the opening of the labor markets Thomas Horvath Bratislava, 21. 4. 2016

Overview § § Brief history of labor migration to Austria How did the open labor market affect labor supply in Austria? What are the consequences of increased labor supply for the local population? Conclusion Folie 2

Brief history of labor migration to Austria Folie 3

(some) Milestones of Austrian Migration § § § 1961: Start of the „guest worker model“ 1974: Oil crisis led to recruitment stop 1989: Fall of the Iron curtain and Balkan wars 1990: introduction of ceiling foreign labor supply 1993: immigration quota on regional level 1994: member of the EEA freedom of settlement and free access to labor market third country vs. EU workers 2003: restriction of work permits to highly qualified third country nationals 2011: criteria based settlement system instead of quota (redwhite-red card) Folie 4

Migration to Austria since 1960 20. 0 18. 0 16. 0 14. 0 10. 0 8. 0 6. 0 4. 0 2. 0 0. 0 19 61 19 63 19 65 19 67 19 69 19 71 19 73 19 75 19 77 19 79 19 81 19 83 19 85 19 87 19 89 19 91 19 93 19 95 19 97 19 99 20 01 20 03 20 05 20 07 20 09 20 11 20 13 20 15 % 12. 0 Foreign born workers Source: Main Association of Austrian Social Security Institutions , Statistics Austria. Foreign born population

Access to the Austrian Labor market § When joining the EEA the Austrian labor market was opened for all EU members − For new member states (EU 2004, EU 2007) Austria applied maximum transition period (7 years) − Since 2011 (2014) full labor market access (except Croatia) § § Labor migration today only partly directly controllable (third countries) For third country nationals settlement and work permission restricted − RED-WHITE-RED Card System aiming at highly qualified − Quotas in place mainly for family reunion Folie 6

How did the open labor market affect labor supply in Austria? Folie 7

Labor market and economic performance in Austria 12. 0 8. 0 6. 0 4. 0 2. 0 -4. 0 unemployment rate (incl. persons in training) unemployment rate real GDP active employment (dependent) Values for 2016 and 2017 based on WIFO-forecast (March 2016) Source. : Labour market service, Main Association of Austrian Social Security Institutions , Statistics Austria, WIFO-calculations. Folie 8 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 0. 0 1989 Rate or change to previous year in percent 10. 0

Employment by country of birth 160, 000 Germany 120, 000 Slovakia 100, 000 Turkey 80, 000 EU 15 (w. o. AUT and GER) 60, 000 former Yugoslavia (w. o. SLO and CRO) 40, 000 EU-2004 (w. o. SVK) 20, 000 EU-2007 Q. : Main Association of Austrian Social Security Institutions, WIFO-calculations. Folie 9 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 0 2000 Employment relationships 140, 000

Educational level by country of birth (population, 25 -64 years) 120% 100% 80% 60% 40% 20% 0% Natives EU 14 max. compulsory schooling EU 2004 form. Jugoslavia apprenticeship/middle education Source: Statistics Austria, Labour Force Survey; WIFO-calculations. Folie 10 Turkey higher education other university or similar

Characteristics of recent work migration § In total the number of workers from EU 2004 states increased from 65. 000 to 162. 000 between 2010 and 2015 − Slovakia: from 10. 000 to 27. 000 − Hungary: from 26. 000 to 71. 000 § § § Skill composition shows higher education levels than earlier migrant groups Concentrated in Eastern Region and tourism, construction and service Work migration often only temporary and often no relocation (commuters!) Folie 11

What are the consequences of increased labor supply for the local population? Folie 12

Unemployment by nationality 25. 0 AUT EU-14 EU-07 Turkey form. Yugoslavia Unemployment in % 20. 0 15. 0 10. 0 5. 0 2008 2009 2010 2011 2012 2013 Source: Public Austrian Employment Service AMS, Main Association of Austrian Social Security Organisations, WIFO calculations. Folie 13 2014 2015

Unemployment by educational level 30. 0 28. 0 26. 0 24. 0 20. 0 18. 0 16. 0 14. 0 12. 0 10. 0 8. 0 6. 0 4. 0 low middle high total Source. : Statistics Austria: Labour force survey, Labour market service, Main Association of Austrian Social Security Institutions, WIFO -calculations. Folie 14 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 0. 0 1991 2. 0 1990 Unemployment rate in % 22. 0

Impact of immigration: Empirical Evidence § § § Impact of immigration depends on multiple factors (education structure, degree of complementarities to natives, business cycle. . ) Empirical evidence implies generally small effects on native workers on average Highly qualified natives hardly affected while low skilled experience increased competition and declining wages Recent labor market trends imply that increased labor supply from opening labor markets affected mainly earlier migrant cohorts and low qualified Regional and sectoral differences Overall Austria profited from European Integration in terms of GDP and employment growth (Breuss, 2014) Folie 15

Conclusion § § § Economy benefits from European Integration Labor Migration became less directly controllable Labor supply clearly increased due to open labor markets Currently weak economic growth and growing labor supply leads to increased unemployment among earlier migrant cohorts and low skilled (Labor Market) Integration is main challenge: − Former guest workers struggle with increased competition and disadvantages (language skill) − Also 2 nd generation migrants face disadvantages (higher drop outs, . . ) Folie 16

Thank you for your attention! Folie 17

Cross-border commuters 35, 000 30, 000 Employement relationships 25, 000 20, 000 15, 000 10, 000 5, 000 0 2008 2009 Germany Source: Labour market service. 2010 Hungary 2011 Slovakia Folie 18 2012 2013 Slovenia Czech Rep. 2014 2015

Access for Third Country Nationals: Red-White-Red Card System § § Aim: attract highly qualified migrants and hinder low qualified migration Criteria based system (catalog) without quotas for: − − − § § § Very highly qualified (e. g. University degree) Skilled workers in shortage occupations (specified by PES) Other key workers (labor market test, minimum earning levels) Graduates from Austrian Universities (minimum earnings level) Self-employed key workers (assessment by PES, „requires some value added“) Blue-Card: highly qualified, no criteria system but income requirement and labor market test Both cards bound to specific employer „Red-white-Red card Plus“ grants full labor market access After 5 years permanent residence and work permit Family reunion subject to quotas in some cases (requires prove of income, residence and social insurance) For students an other specific groups special rules Folie 19

Population (15 -64) by country of birth 6, 100, 000 foreign-born (main scenario) austrian-born (main scenario) 5, 600, 000 foreign-born 5, 100, 000 4, 600, 000 austrian-born 4, 100, 000 Realisation Main Scenario 3, 600, 000 2002 2005 2008 2011 2014 Q. : Statistics Austria, WIFO Calculations. Forecast: 3. 12. 2015. Folie 20 2017 2020 2023 2026 2029