Tuesday, January 18, 2005

Europe's immigration policies

Christopher Caldwell's article in Saturday's FT (subscription needed) examines several issues which face companies in Europe, and the states in which they operate.

The article discusses last week's EU green paper on economic migration which could give some workers receiving an American-style 'Green Card', a permanent work-residence permit.

It argues that without a plan to attract more immigrants Europe will not have fewer immigrants, it will just have less legal ones. The International Labour Organisation has recently predicted that Europe could face a 22% drop in per capita income unless measures are taken to reduce the forthcoming labour shortage.

Many companies have started to gain from the newly expanded Europe and the opportunities brought by a larger pool of talented workers, but whilst this is significant geographic mobility of labour is still quite strong and the solution is probably most successful at the margins.

I see no reasons to expect Europe to become more open to immigrants, if anything an aging population could be expected to be less welcoming. Given this it seems likely that companies will build more of a network of interconnected centres around the world, attracted to areas where there is a strong supply of talent. R&D will be a prime candidate for this type of approach, as will any area which is not directly dealing with customers.

What will this mean? Due to the increase in demand for services as a population becomes older or more wealthy and the increasing localisation that this promotes we can expect to see a larger proportion of customer-facing roles in many societies. This does not suggest that roles such as design can depart as great design is usually seen serving local communities, especially of early adopters. Being near the customer can be beneficial.

What is certain is that companies and individuals will adapt. The doom merchants won't be right, economies are dynamic.