Economic Survey of Greece 2005: The economic impact of migration

 

The following OECD assessment and recommendations summarise Chapter 5 of the  Economic Survey of Greece 2005 published on 7 July 2005.

Immigration has increased flexibility in the labour market

Greece has not yet found a way to bring immigration legislation into line with the facts on the ground. There are now large numbers of illegal immigrants more or less openly recruited on a highly flexible informal labour market and working at low wages, whereas the legislation admits low-skilled immigrants only under a cumbersome procedure. Illegal immigrants have helped to satisfy the latent demand for low-skill, low-wage labour that labour market practice and legislation had helped to create, while at the same time further encouraging the informal sector and segmenting the labour market. The regularisation exercises (of which the most recent has taken much longer than foreseen to complete) have reduced this segmentation somewhat, by allowing some immigrants to acquire legal status and labour market rights. At the same time, they may also have increased the attractiveness of Greece as a destination for illegal migrants.

The benefits of immigration are particularly clear in certain sectors, such as agriculture, construction and household services, where Greeks were unwilling to work for sufficiently low wages. To the extent that it is minimum wages and the social safety net that have created the labour market gaps filled by immigrants, some of the immediate gains to the Greek economy from immigration will be reduced if immigrants are subject to the same constraints and incentives as nationals. This may explain why the theoretically strong legislation against employment of illegal immigrants is rarely enforced. In the longer run, as even illegal immigrants become increasingly integrated into Greek society, it may be difficult to maintain the differential treatment of migrants and nationals in the labour market. The net effects of integration would nevertheless tend to be positive, especially if the need to increase employment is taken into account.

Legislation should be amended to facilitate legal work of low-skilled immigrants

Measures to increase wage flexibility in the formal labour market, such as action on the cost of employing low-skilled workers or relaxed employment protection legislation, may be helpful. They would allow the economy to continue to benefit from the expansion of employment of Greeks as well as immigrants in sectors that have absorbed immigrants, encourage activity in these sectors to move from the informal to the formal sector, and also make it easier for low-skilled immigrants to work legally. The provision that household service workers and their employers pay only half of the minimum wage earners' social contributions is a good step in this direction. Measures such as these may not make it any easier to develop immigration policy itself, though they might help to improve the information on which such a policy could be based. They might also allow immigration policy to be more transparent and easier to enforce, by reducing the size of the informal sector.

Return to the Economic Survey of Greece 2005 homepage

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A printer-friendly Policy Brief  (pdf format) can also be downloaded. It contains the OECD assessment and recommendations, but not all of the charts included on the above pages.

To access the full version of the OECD Economic Survey of Greece 2005:

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For further information please contact the Greece Desk of the OECD Economics Department at webmaster@oecd.org.

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