Luggage full of GDP
If handled properly, migration can be a very useful resource and a net producer of wealth.
- Friday, 29 June 2018
Up until a short while ago, Bashkim Sejdiu was often invited to conferences and round tables as a success story. An American opportunity: an immigrant who lands in a country and has a brilliant idea for a start-up. Two to be precise: an app that helps to simply bureaucracy for foreigners; and another, a health camp, to monitor the risk of TBC within immigrant communities. In actual fact Sejdiu, an Albanian of Kosovar extraction doesn't feel he's an immigrant at all. He arrived in Varese as a child and now he's 35, having spent twenty years in Italy. And like many of his peers he has escaped across the border, in his case to Switzerland, because his Italian "Silicon Valley" tale did not have a happy ending. His bureaucracy facilitating app – which transferred the 168 different forms required to secure a permit of stay, translated into ten languages, onto smartphones and tablets – came unstuck at the last hurdle: the bureaucratic one of course, which was supposed to provide the codes; and the administration, the project's potential partner. "I did it because I witnessed the entire process the hard way, first hand". Which still to this day, involves reams of paper documents moving from pillar to post. "The Post Office earns 45 million a year sending out the permit kit. I provide the same product at a lower cost and removing the middle-man. But the whole thing made sense if it had no cost for the user". Struggling with funding issues – very much lower than the current costs – and bureaucratic ones, the app is currently in limbo. In spite of the praise, prizes and acknowledgement. "I even presented it in Montecitorio (the Italian Parliament), to Matteo Renzi and Marianna Madia".
Bashkim is married with a son, and now all three live in the Ticino Canton, where he has abandoned start-ups and set up a consultancy. But Varese is just a stone's throw away and he has retained his role as president of the province's Albanian community which numbers 12,000. They may not all be so skilled at writing code and developing algorithms; but they are all fully integrated in the economic and social fabric to such an extent that they are invisible. Very much in contrast to the dominant images and fears over immigration. "So what, they're a different matter altogether, compared to those coming from Africa", is the standard answer. But the perception of an "invasion" was not that different 27 years ago, when the Vlora ferried over 20,000 people to the Italian coast in one day, and saw the start of the Albanian exodus: causing alarm, uncontrolled fears (rumours spread about cholera), rejections and tragedies at sea, much the same as the Mediterranean route today. Compared to then, Italy now has a consolidated immigrant presence – 5.6 million, 8.4% of the population-, is still in the throes of a major economic crisis and has an undeniable demographic emergency. All pieces of the immigration's economic contribution puzzle, which in the North East of Italy has led to the simultaneous success of the most xenophobic of European parties and the fear among businesses of the possible departure of the immigrant workforce. (see box).
The immigrant contribution
In a study published in the Bank of Italy's Occasional Papers, researchers analyse the demographic contribution to economic growth. A narrative that covers 200 years, and does a sharp U-turn right on the eve of the first 'invasions'. For the last 25 years, according to the Bank of Italy's scholars, the demographic contribution to economic growth has been negative, owing to the sluggish Italian birth rate, which has only been partially compensated by foreign arrivals. Without the help of immigrants, according to economists Barbiellini Amidei, Gomellini and Piselli, Italy would have lost over 10 points of its GDP. More specifically: between 2001 and 2011, the contribution of immigration to GDP amounted to 6.6 percentage points; between 2011 and 2016 it amounted to 3.3 points. In terms of per-capita product, the contribution of immigrants drops but it is still positive: 1 point between 2001 and 2016, 2.6 points for the next five years.
Then there's the other major issue concerning the economic contribution of immigration on the public purse: on welfare and pensions. Incoming foreigners are on average younger than Italians, with a higher rate of employment and few older people. The result, as the President of INPS, the Italian state pension department, Tito Boeri keeps repeating: without the dues paid by immigrants, the public social security system would be much worse off. The last INPS Report provided figures for the net contribution of foreign workers: 36.5 billion euro.
Offer and demand
The list of studies, reports and simulations produced to establish what immigrants bring to the economy is extensive. It ranges from the study of the wave of marielitos who landed in Florida from Cuba in the summer of 1980 – 120,000 people, almost all with low levels of education and qualifications, a real choc to the offer of labour that was promptly absorbed to the great advantage of the local economy -, to the contribution of Mexicans to the world's fifth economic power, California, to the data on the impact of refugees from Syria and Iraq on the German GDP and the contribution of Russian refugees to Israel after the fall of the Berlin Wall. All seem to back the theory that immigrants "are carrying GDP in their suitcases". However, those who dispute this claim that not enough attention is paid to the disruption caused to the local workforce, thus the fact that the arrival of immigrants affects the variables on which one builds the scenarios referred to above. In other words: if the arrival of immigrants means Italians are forced out of jobs, as they are prepared to work for lower wages, this changes the overall result. Is this actually the case? In previous case studies, like the ones mentioned earlier, there is little proof of the disruptive effect on local worker employment, while – as recently explained by economist Fadi Hassan, an Italian of Syrian origin during the Vicino Lontano Festival in Udine – it has been proven that at times the arrival of other foreigners compresses the wages of earlier immigrants, while it has little impact on the indigenous workforce, which is concentrated in other sectors and other specialisations. That's the theory. The truth, at least in Italy, is the presence of almost 2 million foreign workers employed by private undertakings, and 590,000 entrepreneurs. Unioncamere has calculated that the 42% increase in companies witnessed in 2017 was produced by foreigners, who currently own close to 10% of all businesses. But the figures will be much harder to compute in the future, if we bear in mind that the sons of the first great wave of migrations are now becoming Italian citizens. As a result, in the future, it will make little sense trying to understand economic and demographic trends in terms of the contribution afforded by "Italians" and "foreigners".