The EU moves cautiously to fill the skills gap

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On Wednesday (27 April), the EU Commission presented its proposals for a legal migration package that should make it easier for EU companies to find workers from third countries and should protect migrants from abusive labour practices.

The proposals encompass the possibility to lodge visa applications online, as well as a revision of the long-term residents directive, which would make it easier to acquire the EU long-term residence status, according to the Commission.

“With today’s initiatives we recognise that legal migration has a positive impact all round: it gives those who want to migrate an opportunity to improve their circumstances while providing more skilled workers for host countries,” Commission Vice-President Margaritis Schinas said, warning that Europe faced a “major skills shortage”.

Record-high vacancy rates

In the last quarter of 2021, 2.6% of all jobs in the EU were vacant, according to Eurostat, with some states like Czechia and Belgium achieving vacancy rates of nearly 5%. These are the highest job vacancy rates in Europe in at least a decade.

Even though the economy is set to slow down again due to the effects of Russia’s invasion, demography suggests that the baby boomer generation will be leaving the workforce in the coming years, leaving a lot of space to be filled.

If the EU wants to keep its economic engine running, on which its global relevance relies, it will need more people in the engine room.

“We need them,” Commissioner Ylva Johansson said talking about the two to three million non-EU migrants that come to Europe legally every year.

Nevertheless, migration remains a dicey topic in the EU. Vice-President Schinas stressed, once again, that “the member states are the ones that are deciding on the volumes of legal migration, not the European Union.”

That is why the legal migration package contents itself with offering a slightly more inviting and more easily navigable framework, rather than announcing a great plan to invite the workers and entrepreneurs of the world to help push the European economy forward.

Against exploitation

For example, the Commission proposes to reform the single permit directive in a way that allows workers to change employer while keeping their permit to stay. Today, the permit is linked to a single employer, which puts employees into a position where they can be easily exploited.

“You can also include a period of unemployment without being thrown out,” Commissioner Johansson said.

Moreover, the Commission aims at making the EU long term residence permit more attractive. Currently, non-EU nationals have to stay in one and the same member state for five years to get a long term residence permit.

“Now we propose that you can have these five years in different member states, so you can add them up, and you can also add a period of being here as a student,” Johansson explained.

The Commission’s proposals will have to be debated and approved by the European Parliament and the 27 member states, and they are certain to confront political hurdles due to the very nature of the topic. The “new pact on migration and asylum” has been blocked for one and a half years now.

It’s the reforms, of course!

While the intra-EU politics of migration policy are obvious, one might miss the fact that migration can also be – and has been – used in international politics.

Also on Wednesday, for example, Vice-President Schinas announced on Twitter that the Commission was proposing short-stay visa-free travel to the EU for Qatari and Kuwaiti citizens.

He said this was “the result of the remarkable success of both governments in achieving far-reaching reforms”. However, a rather more likely reason for granting visa-free travel to the two Gulf monarchies is the much-needed fossil fuels that they can provide.

 

Chart of the Week

Earlier this week, the European Parliament’s trade committee decided on its negotiating stance on the “Foreign Subsidies Distorting the Internal Market” regulation that was proposed by the Commission in May last year.

The regulation is a reaction to the subsidies foreign countries provide to their companies, which can then in turn use these subsidies to unfairly compete against European companies in the single market.

While the regulation applies to all countries, the real target is clear: China.

The chart below shows how many subsidy measures China has taken every year compared to the next-largest subsidiser, the United States of America.

The difference is stark but, as usual with charts, this one has to be relativised a little. Many of the Chinese subsidies are temporary, so most of the measures counted in the chart will not be in force at the moment.

Graph by Esther Snippe

Nevertheless, China remains the country that dishes out by far the most subsidies. In 2018, China spent €520 billion in subsidies, according to numbers from the World Trade Organisation, while the numbers reported for the US stood at €17 billion for the same year.

Again, these numbers have to be treated with caution, but the general picture is one of two completely different concepts of interaction between the state and the economy.

The proposed regulation would allow the EU to disadvantage foreign companies that are benefiting from subsidies at home, for example, when they try to buy a European company, or when they bid for public procurement contracts.

Compared to the Commission’s proposal, the Parliament’s trade committee aims to lower the thresholds above which companies would be obliged to inform the Commission about their foreign subsidies. This would bring more companies into the scope of this regulation.

Next, the Parliament will have to find an agreement on the details of the regulation with member states’ governments before it can be put in force.

 

Literature Corner

The Marshall Plan is no longer niche history: This article by Gillian Tett for the FT Magazine describes how the Marshall plan is getting more and more attention due to the scale of destruction in Ukraine and the corresponding need to rebuild the country.

Creating a safe asset without debt mutualisation: The opportunity of a European Debt Agency: The EU’s fiscal framework is clearly lacking, but debt mutualisation is a no-go for many of the more “frugal” EU member states. Massimo Amato and other researchers make the case for a European Debt Agency that might offer a way out of the dilemma.

The Climate Game: More from the FT here. Would you make a good global climate minister? In this game, you can test if you would be able to stop climate change if you had the power to direct global resources and set the global policy agenda. The game shows how daunting the task would be, even if there was a well-meaning institution with extensive global powers, which there isn’t.

Green Public Procurement: A Neglected Tool in the European Green Deal Toolbox? This article by Bruegel Scholars Simone Tagliapetra, Tom Schraepen, and André Sapir argues that green public procurement is underutilised in Europe.

Brexit: The Major Trade Disruption Came After the UK-EU Agreement Took Effect in 2021: Rebecca Freeman, Kalina Manova, Thomas Prayer, and Thomas Sampson show how the UK’s trade in goods was affected by Brexit.

[Edited by Zoran Radosavljevic]

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