Labour market performance and migration flows - European ...

European CommissionOccasional Paper 60, Volume Ithese countries, as well as the impact of remittances on wages, labour participation and employment. Abrief analysis of circular migration and the impact of return migration closes this chapter.In Chapter 6 we turn to EU migration policy. After a review of the process of development of acommon EU migration policy (still incomplete) culminating in the Global Approach to Migrationadopted in December 2006, we analyse the adequacy of the new policy instruments to attract skilledmigration to the EU (in particular the Blue Card approved last May) and the scope for, implications ofand conditions for matching EU labour demand as the population ages with the increasing excess laboursupply AMCs experience as they complete the demographic transition. We conclude that there is awindow of opportunity if the right policies are implemented (both as regards the implementation of legalmigration schemes and the upgrading of the skills of AMC labour). Finally, we explore the extent towhich the Euro-Mediterranean Partnership and the European Neighbourhood Policy become appropriatepolicy tools to take advantage of this opportunity.All chapters (and sometimes sections) are preceded by a brief review of existing theoretical literatureand empirical evidence related to AMCs. This review is particularly exhaustive in relation to the impactof migration on labour markets in AMCs (Chapter 5), as one of the Thematic Background Papers isdevoted precisely to this literature review (Marchetta 2009).The Study concludes with a chapter including some proposals for action and policyrecommendations. Indeed, the Study is meant to trigger a much needed debate among policy-makers ofEU institutions, EU Member States and AMCs and with social partners on the interaction betweenlabour markets performance and migration flows, and the consequent policy requirements.1. The Labour Supply in AMCs: Determinants and Prospects1.1 Demographic Dynamics and ProspectsArab Mediterranean Countries will face the most challenging phase of their demographic transition in thenext ten to fifteen years. According to the latest available data, the total population of the 8 countriesconsidered in this Study amounts to more than 180 million persons (see Table 1.2.1). The populationgrowth rate, though it has decreased substantially over the last decade in all AMCs, is still at an average of2% a year. In terms of fertility rates demographic behaviour there has already reached (in countries likeTunisia or Morocco) or is rapidly converging towards the long-term equilibrium level, but the rapid pace ofthis demographic transition has given rise to a very young population structure.More than 30% of the population is under 15 and will enter working age in the next few years, andanother 35% are in the 15-30 age bracket and so have entered the labour force in the last few years.This has been interpreted as a demographic gift to the extent that the proportion of the working agepopulation to total population, two thirds on average, will increase steadily until 2035-2045,depending on the country in question. But it also entails an unprecedented challenge to ArabMediterranean Countries: to create jobs for the largest generation in their history, to benefit from thisadvantageous demographic structure and to avoid large-scale frustration and social tensions.This challenge will last for several decades, since the working age population will continuegrowing in most of these countries until at least 2040. But the highest growth rates will come in thenext ten to fifteen years, as shown in Figure 1.1.1. Between 2010 and 2020, the working agepopulation of AMCs will increase by 2.5 million persons a year, from 129 to 154 million over thatperiod. Egypt alone concentrates almost 40% of the region’s working age population and will providemuch of that increase, and the three central Maghreb countries a third of it. Given the reference period28