Migration patterns and woes in Europe

Nearly 30 per cent of Portugal’s working population between the ages of 15 to 39 is working in other countries. Most of them were migrating to Britain before Brexit. Now they go to the Netherlands for better wages.

It is the same pattern in other countries. People are moving from Hungary to Austria, and from Italy to London. Everywhere it is the same story. Migrants are looking for better wages and better standards of living. Portugal is trying to stem the tide of migration by offering tax exemption, 100 per cent for five years. And some of the potential Portuguese migrants are reconsidering their option.

But the Italian government is reconsidering its tax exemption measures because it finds it to be a costly measure. And the migrants are irked by the conditions set for the migrants who return. They are supposed to have children. One of them who was working in London and had returned to Italy is now thinking of moving back to London.

The migration paradigm is the same. People move from the poorer regions to the richer, from lower wage countries to countries where the wages are higher and attractive, and from countries where the living standards are low because of the poor economy to countries with thriving economies where the living standards are better.

Portugal, Hungary and Italy might want to discourage people from leaving the countries by offering tax incentives as in the case of Portugal and Italy. But, can tax incentives help if the economies of Portugal and Italy do not improve? That is indeed the bigger question. What is a matter of concern for countries like Portugal, and for Europe in general, is the ageing population and decline in birthrates. It poses a bigger challenge for the future.

Behind the migration stories are the dire economic figures. In Portugal, a single person without children earned 16,943 euros a year after tax while the earning in the Netherlands for the same person would be 45,429 euros in 2023. That is a wage gap difficult to close on the face of it. But what is attracting the potential Portuguese migrants is the offer of cheap housing as well.

Pedro Monteiro, studying space engineering and planning to go abroad, says, “The country needs and us and we want to stay but we need to see signs from the government that they are implementing policies that will help.” He points out that housing has become costly because the government is offering incentives to rich foreigners to settle in Portugal and that has shot up home prices.

The migration issue is quite acute in Portugal, though it is an issue that is haunting many countries in Europe. It is a vicious circle in some ways. Portugal wants to hold back the young and skilled people. But they go away in search of higher wages. It is interesting to note that 50 per cent of the 50,000 people who graduate from universities go abroad, costing Portugal billions of euros in lost in income tax revenue and social security contributions.

Pedro Ginjeira do Nascimento, executive director of Business Roundtable Portugal, says, “This is not a country for young people. Portugal is experiencing a true democratic hell because the country is unable to create conditions to retain and attract young talent.” The challenge faced by Portugal is not that of Portugal alone. It is the story of many European countries in the south and east.

And inside the prosperous and west and north of Europe the conditions of economic growth may not last. Germany is already facing problems. France is simmering on the surface.