After the Crisis? Migration, Austerity and New

Challenges to Social Sustainability in the Baltic States

Professor Charles Woolfson REMESO

Institute for Research on Migration, Ethnicity and Society

Linköping University

Global Utmaning Workshop, 7 December 2012

Acknowledgments • Swedish Council for Working Life and Social

Research (FAS) Project Number: 2011-0338, Svensk modell och baltisk rörlighet: harmonisering eller social dumpning? En studie av arbetsmigration mellan Baltikum och Sverige.

• The Swedish Institute, Visby Programme grant 00749/2010 East-West labour migration, industrial relations and labour standards in a Swedish-Baltic context.

• Indre Genelyte, REMESO doctoral candidate prepared key empirical charts in this presentation

Where we are today

GDP per capita in PPS (Euros) 2010 Source: Eurostat, 2012

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

GDP per inhabitant and average monthly wage (2011)

Estonia

• GDP per inhabitant 11,900 EUR

• Average monthly wage 792 EUR

Latvia

• GDP per inhabitant Latvia 9,800 EUR

• Average monthly wage 633 EUR

Lithuania

• GDP per inhabitant 10,200 EUR

• Average monthly wage 576 EUR

Social protection expenditure as % GDP 2010

19.0%

30.5%

19.1%

17.8%

18.1%

The way we were – the ‘fat years’

The ‘Baltic Tigers’ GDP Growth Rates 2006

Global Property Guide, 2007

Market shares of Swedish banks in Baltic states

June 2009

Market shares public lending

Sources: Sveriges Riksbanken Bank reports and the Riksbank

Population 1.3 million

Population 2.3 million

Population 3.4 million

Sweden and Baltic household indebtedness as % GDP

Sources: Sveriges Riksbanken Bank reports and the Riksbank

A trend that cannot continue will not ….

‘Hard Landing’ – Taming the ‘Baltic tigers’

Real GDP growth rate compared to previous

year (%)

-20

-15

-10

-5

0

5

10

15

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (f) 2013 (f)

EU (27 countries) Estonia Latvia Lithuania

Baltic GDP 2009 % change compared with the same quarter of the previous year

Q1 Q2 Q3 Q4

Estonia -15.0 -16.1 -15.6 -9.5

Latvia -18.5 -17.0 -19.2 -17.1

Lithuania -15.3 -16.6 -14.7 -13.2

Source: Eurostat PEEIs http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-07042010-BP/EN/2-07042010-BP-EN.PDF

Unemployment rates in Baltic countries and

EU27

0

2

4

6

8

10

12

14

16

18

20

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

EU (27 countries) Estonia Latvia Lithuania

Real wages in Baltics year on year 2000-2010

-10.00

-5.00

0.00

5.00

10.00

15.00

20.00

25.00

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Estonia

Latvia

Lithuania

Source: harmonized index of consumer prices - Eurostat online database, nominal monthly salaries – Statistics Estonia,

Central Statistical Bureau of Latvia, Statistics Lithuania

Baltic household consumption expenditure 2009 % change compared to same quarter of 2008

source: Eurostat PEEIs

Q1 Q2 Q3 Q4

Estonia -16.5 -19.4 -19.9 -18.2

Latvia -18.3 -23.5 -25.6 -21.7

Lithuania -14.5 -16.9 -17.7 -19.0

Total Population: At risk of poverty % (Cut-off point: 60% of median equivalised income

after social transfers) Source: Eurostat

16.4 16.4 16.3

16.9

18.3

19.5 19.7

17.5

19.2

25.6 25.7

19.3

20

20.6

20 20.5

16.9 17.1

17.7

15

17

19

21

23

25

27

2005 2006 2007 2008 2009 2010 2011

EU 27

Estonia

Latvia

Lithuania

Poland

At risk of poverty, age less than 18 (cut-off point: 60 % of median after transfers)

2011 Source: Eurostat, 2012

0

5

10

15

20

25

30

35

Proportion of population at risk of poverty or social exclusion, 2010 (%) Source: Eurostat

20% of Lithuanians live on <240 Euros per month, 6% approx 90 Euros per month (2010)

Migration

Aggregate migration from Baltic states and Poland to Norway, Denmark and Sweden

1813

3573

4810

8069

9257

8737 7881

7135 7141

1116 2389

4439

9279

17305 18333

15172

21011

23418

3708

5098

8360

13725 15686

19146

9666 8741 9024

0

5000

10000

15000

20000

25000

2003 2004 2005 2006 2007 2008 2009 2010 2011

Sweden

Norway

Denmark

Cumulative outflows of EU8 citizens into EU15 Member States (2004-2007) Thousands of Emigrants

Source: Francesca D'Auria, Kieran Mc Morrow and Karl Pichelmann, Economic impact of migration flows following the 2004 EU enlargement process: A model based analysis.

Cumulative outflows of EU8 citizens into EU15

Member States (2004-2007) % Working Age Population of EU8 Countries

Source: Francesca D'Auria, Kieran Mc Morrow and Karl Pichelmann, Economic impact of migration flows following the 2004 EU enlargement process: A model based analysis.

Emigration rates (per 1000 inhabitants) from Estonia, Latvia and Lithuania (2001-2011)

Baltic emigrants by age group 2011 (% of all who emigrated that year)

Source: National statistic offices, 2012

15.5%

4.2%

13.9%

17.3%

13.5%

10.5%

8.6%

6.1%

13.2%

8.4%

19.9%

17.4%

9.7%

7.6% 6.9%

5.5%

10.5%

7.1%

21.8% 21%

12.7%

8.6%

6.5%

5%

0%

5%

10%

15%

20%

25%

0-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49

Estonia

Latvia

Lithuania

Emigration by gender (% of all emigrated that year) 2011

Source: National statistic offices, 2012

47.3% 48.3% 50%

52.7% 51.7% 50%

0%

10%

20%

30%

40%

50%

60%

Estonia Latvia Lithuania

Male

Female

Remittances

Remittances and earnings abroad* (EUR million)

Source: SEB Baltic Outlook April 2012

Latvia

Remittances and earnings abroad* –

share of household disposable income 2000-2010

Source: SEB Baltic Outlook April 2012

Remittances to Baltics and Poland % of GDP 2004-2011

Source: World Bank 2012

1.5

1.8 1.8

2.5

3.1

4.6

2

1.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2004 2005 2006 2007 2008 2009 2010 2011

Estonia

Latvia

Lithuania

Poland

Demographics and population loss

Life expectancy at birth 2010 Source: Eurostat

Life expectancy at 50 years of age (years) Source: Jagger et al the Lancet, 17 November 2008

Life expectancy at 50 years of age (years)

Natural increase/decrease in the Baltic states per 1,000 population

From Peteris Zvidrins ,Centre of Demography, University of Latvia, DEPOPULATION IN THE BALTIC STATES

Aggregate natural population increase/decrease 1990-2011

Source: SEB Baltic Outlook April 2012

Population reduction in Latvia (data 2011 compared to 2000)

Demographic projections for Baltic states 2010-2060

Source: Eurostat

Census 2012 3 007 700

Census 2012 2 041 763

‘Voice’, democratic representation and

social justice

Narratives of austerity

Riga January 2009 Largest mass demonstration since 1991

Riga street battles

Vilnius January 2009 Doors of the Lithuanian parliament

No Fear!

Teargas on Independence Square, Vilnius

Lithuania 1991 76% 2009 50%

Change -26%

Lithuania 2009 48%

Things are going in the right direction or in the wrong direction in your country? (% of positive) Source: Estonia HDR 2011

President Dalia Grybauskaite ‘State of the Nation’ address 2010

I do not think about (emigration) as merely an economic phenomenon. It is rather a reflection of the relationship between an individual and the state.

The decision to leave the homeland is a difficult one. We console ourselves by saying that it is a natural consequence of the downturn. However, the countries where our fellow citizens emigrate are also challenged by the crisis…

So, let us look the reality in the face and admit that people are emigrating not only for economic reasons. They are moving abroad because they feel alien at home.

Threats facing Baltic countries

1. Demographic decline threatens long-term fiscal sustainability, especially of pension systems.

2. Labour force high youth unemployment, shortage of skilled labour and skill mismatches, aggravated by high emigration.

3. Poverty and social exclusion even higher strains on public finances in the near future.

4. Social disenfranchisement and political alienation creating further migration ‘exit’

After the crisis: meeting the challenges of globalisation

1. Education: Investment in skills, vocational and higher education for ‘high road’ of competitiveness

2. Labour: Recruitment of non-Baltic labour forces to fill labour force gaps

3. Citizenship: ‘Dual citizenship’ and position of non-citizens in Latvia and Estonia

4. Migration policies: integration of return migrants

5. Democratic/cohesion issues: ‘voice’ in politics, community and workplace