Europe risks being left behind in the race for talent and the development of a knowledge economy and has failed to compete with other OECD destinations. EU policy needs to be more flexible and knock down the barriers to recruitment of the highly qualified, writes Jonathan Chaloff.
Jonathan Chaloff is a migration policy analyst at the Organisation for Economic Co-operation and Development.
Yesterday (7 June), the European Commission released a key part of its New Skills Agenda to deal with skills shortages in Europe, proposing a reform of the EU Blue Card. The Blue Card reform is timely and urgently needed to make Europe more attractive for global talent and convince member states to incorporate EU instruments into their own national migration and skills strategies.
It may seem counter-intuitive to launch a proposal to attract more migrants to Europe when there is clearly no shortage of people desperate to come here and when the reception and integration of refugees is such a hot topic. There are two strong arguments.
First, highly qualified migrants bring productivity, innovation and growth and Europe is not getting its fair share of them. North America has 57% of all tertiary-educated third-country migrants residing in OECD countries. Europe has only 31%.
Second, compared with employers in other OECD countries, EU employers are gloomier about their ability to attract and retain talent, in particular in the context of population ageing and shrinking labour forces in many European countries. Migration to the EU may seem very high, but compared with the OECD average it is not: In 2013 and 2014, the EU took as many migrants in absolute numbers as the US, even though the US population is 60% larger.
Labour migration to the EU has so far not really been about skills. Over the past decade, labour migration from third countries to the EU has been driven by migration to southern European countries and to the UK. In southern Europe, most labour migrants come through programmes with no skill requirements.
The UK limits its labour migration flows is limited to skilled migrants (in any case, it’s one of the countries which isn’t covered by the EU Blue Card). Currently, the inflow of skilled migrants to the EU – excluding the UK – is barely 60,000 annually. This corresponds to the annual admissions of migrants to Australia and Canada, for example.
No waiting list
Some EU countries have tried to increase these flows by making it easier for employers to recruit highly-qualified third-country nationals, but inflows haven’t really budged, and there’s certainly no waiting list.
EU policy starts off with a few limitations. First, the member states decide on individual applications and issue residence permits, meaning that there is no EU permit valid for employment across the EU.
Second, the EU policy measures on legal migration do not apply to the UK, Ireland and Denmark, due to protocols negotiated at the time of the 1999 Amsterdam treaty.
Third, the EU policy-making cycle is long: it can take up to ten years from the first discussion of a proposal to its final transposition. Since it takes years to pass a directive, the only way to make sure policy can react to changes in the situation is to give leeway to member states.
In the case of the Blue Card, however, this has led to such wide differences in implementation and huge variation in the ease of obtaining the permit.
Yet there are also some points in favour of Europe. Many highly-qualified workers outside of the EU want to come, but can’t find out how to match with employers. Other OECD countries rely on just a few Asian countries for their skilled migration: China, India and the Philippines.
The EU, on the other hand, is the stated preference for highly-educated potential migrants in many origin countries, so the EU has a wide pool to rely on. The EU – as a whole – has a wide diplomatic, linguistic and cultural presence in many countries and can thus build on a good infrastructure for improving bilateral relations and use this to attract more global talent.
The original EU Blue Card failed because it is too difficult to obtain and its benefits were hard to understand or similar to conditions offered by national schemes targeting the same group.
The current Blue Card is only for full-time employees with a very high salary, a one-year minimum contract. The job must match the field of study, and there are cumbersome requirements to prove education. Per year, only about 10,000 new arrivals in countries covered by the directive have been able to meet the salary and education conditions. And only half of these people ended up with the Blue Card, as most EU countries offer alternative permits with less paperwork.
Just Germany and Luxembourg
Most member states have been giving the EU Blue Card short shrift in their national policies to attract talent. Only Germany and Luxembourg, where most highly-qualified people earn more than the Blue Card threshold, effectively used it as their main scheme. Also, migrants who have to choose between the Blue Card and more accessible alternative residence permits didn’t think the Blue Card benefits justified the hassle. And employers, who in many countries make the call on which permit they request for their recruits, also failed to see any advantage in getting Blue Cards for their foreign employees.
The Commission’s proposal addresses many of these obstacles. A reform of the EU Blue Card should lower the salary threshold. Currently, even among EU citizens, less than one in three highly-educated in skilled occupations would be able to meet Blue Card salary requirement. For third-country nationals, it is even harder to reach.
The proposal would also make it more attractive to Blue Card holders by giving benefits which are at least equal if not superior to anything currently available under a national scheme. It will take less time to get permanent residence and be easier to take up a new job in another EU country while keeping the Blue Card benefits of faster and simpler access to permanent residence.
Now employers who identify an eligible worker can expect fast processing time, fewer documents to notarise and a permit that allows their third-country national employees to take business trips within the EU more easily, making the use of the Blue Card much more attractive.
There are some recommendations in the OECD report that are not included in the Commission’s proposal. For example, the OECD underlines the importance of making the Blue Card more attractive by giving holders access to the EU lanes at border crossings and pre-clearing them for recruitment in a second member state after having worked for some time in a first member state.
EU policy for talent can’t just be the Blue Card, however. The piecemeal approach taken so far has failed to provide a bridge for third-country students graduating in the EU to get work permits or the Blue Card in either the country of study or another EU country. And this despite the fact that the EU has overtaken the US as a destination for international students.
As a result, EU retention rates are only between 15 and 30%, less than in other OECD countries of study. The recast Students and Researchers Directive, approved in May 2016, at least gives a post-graduate job-search permit, but special conditions are still missing for graduates of EU universities when they find a job and try to qualify for a work permit.
In addition, Working Holiday Programmes, which bring university-educated youth on cultural exchange, have worked well in other countries. The EU should negotiate these too, since youth-mobility programmes can boost attractiveness: just think of the hundreds of thousands of European youth in Australia, Canada and the US on these programmes. It’s good for learning languages and putting smaller countries on the radar.
Another challenge is intra-EU mobility which is much lower than often perceived. Only one in 400 EU citizens moves within the EU every year. Language barriers and difficulties in recognising professional and educational qualifications make moving hard for EU citizens but even more so for third-country nationals.
Every step towards making it easier to switch jobs within the EU – for EU nationals and for resident qualified third-country nationals will boost the perception of the EU as a single destination rich in opportunity. Better branding the EU as a destination for talent would also help.
Finally, it’s not just about convincing employers and potential migrants; it’s also about convincing the member states themselves. Half-hearted transposition has meant that policies haven’t achieved their objectives. Smaller countries which are completely unknown by talent abroad, for example, benefit from the appeal of a larger labour market and from the EU’s ability to identify and even train qualified workers in third countries to meet skills shortages in Europe. The EU needs to simplify the process for member states, too, and absorb the best national practices into its own framework.
It is time for the EU to use its competences in labour migration to their best advantage. Without attracting talent, it’s hard to see how the EU will be able to stay on a path to growth.