The Spanish approach to immigration

“When we arrived on the coasts of Senegal in September of last year, we used to stop one wooden boat per day (cayucos). Currently, we only have only seen two, one with 109 immigrants and another with 173. Our presence here has reduced the inflows approximately by one-third”, recently declared one of the Spanish policemen assigned to the patrol boats in FRONTEX, the EU agency coordinating the operations of Member States in border security (EL PAIS, 24/06/2007). Thus, this type of policy is becoming partially effective in stopping illegal migration, which amounts to between 0.6m -1m people in Spain, out of which about 40,000 are Senegalese. However, Dakar has an unemployment rate of 65% with a population of 11.7m. The potential for illegal migration remains. In view of this situation, the Spanish government, with the support of the employers´ confederation, is launching a new programme in Senegal based on the creation of five new vocational training schools (escuelas talleres), 18 mixed companies concerned with the operation of the fishing fleet on the Senegalese coasts, and large investments in tourist industries, where 300,000 Spanish tourists visit the sub-Saharan African countries each year.

Spain is one of the countries with the largest immigration flows in the world since the late nineties. In 2000 there were 0.92m immigrants in the municipal rolls, implying an immigration rate of 2.3%. As displayed in Table 1, this figure rocketed to 4.15m in 2006 (9.3%). The latest (preliminary) figure for January 2007 is 4.5m (10%), out of which 2.8m were non-EU27 citizens (50% from Latin America and 30% from Africa). There are many reasons to explain this surge. The access from Spain into the euro-zone, together with the crises in several Latin American countries and the long-standing decline in Africa, provided the pull-and-push effects behind this amazing rise. The large fall in real interest rates following the adoption of the euro favoured sectors with long and large investments, like the building industry, which were intensive in unskilled labour. The progressive incorporation of women into the labour market also increased the demand for household services, which migrants were happy to provide at low wages (high in purchasing power terms in their countries of origin). In general, these initial effects, together with the network effects, attracted a burgeoning number of migrants. And all this has happened despite highly restrictive policies between 1996 and 2004 by the conservative government (annual quotas of 30,000 vs. inflows of 500,000 on average). The immigration authorities faced the stubborn reality by adopting stop-and-go policies consisting of numerous amnesties (1996, 2000 and 2001 on top of previous ones in 1985 and 1991). Thus, about 98% of those having obtained a residence permit in Spain did so from illegal immigration. When the new socialist reached power in 2004, they decided to follow the same track but at a much larger scale, and with the clear target of rapidly increasing social security revenues. The regularisation process in 2005 provided 640,000 work and residence permits out of 800,000 applications. Of course, this decreased the number of illegal immigrants at a stroke but, given the lack of enforceable bans and delayed cooperation (FRONTEX) from the EU, the 'call effect' gave rise to new sizeable inflows in the next two years, which are causing some stress in the public health and education system. A fortiori, however, one could undoubtedly say that immigration has been a blessing for the Spanish economy: wages moderated, domestic demand increased, and employment and investment surged.1 The flip side of the coin has been a huge current account deficit (8% of GDP) and a productivity slowdown. Yet a large fraction of this deficit is caused by having an investment rate quite above the saving rate (opposite to what happens in the US) and by the rising migrants´ remittances (€6.5 billion in 2006) which are bound to increase productivity and reduce migration, respectively, in the future.

The Senegalese example illustrates that fruitful immigration policies may work on a small-scale basis, but also that enormous difficulties remain. In a recent book, we have made a proposal based on a system of Temporary Work Visas with a sufficiently long duration to allow the immigrant worker to have a reasonable job-search period and an appropriate stay, in order to compensate for the huge capital investment associated with the decision to migrate.2 Our proposal is to offer Temporary Work Visas for an initial period of three years, rather than the current one-year period, which could be later extended to another two years. In the case of the current stock of illegal migrants, insofar as they have not been involved in any offence, they would be offered a maximum initial period of six months, to be subsequently subtracted from the 3+2-year visa if they find a job. Further, the Temporary Work Visas should not be linked to a specific job, fostering workers´ mobility.

These visas should be based on incentives rather that on non-enforceable sanction threats, as is currently the case. The distribution of the Temporary Work Visas would imply an initial payment by the migrant of, say, €1000, in order to finance their administration and the welfare costs of the immigrants´ arrival. A point system, auctions or bilateral agreements (like the one with Senegal) would provide appropriate distribution channels. To enforce the fixed-term duration nature of the visas, a further €1,500 should be paid upfront which, like a rent deposit, would be recouped at the end of the contract when leaving Spain (assuming that the worker has not got Spanish citizenship though the available legal procedures). Note that €2,500 is the amount that immigrants often pay to come as plain tourists, and that - if they were liquidity-constrained - the hiring firms could always anticipate the payment, adjusting their wages later on. The holders of Temporary Work Visas would be entitled to the “basic rights” of Spanish citizens (including the right to vote in municipal elections in case of reciprocal agreements with the countries of origin), although their access to some means-tested welfare programmes could be temporarily restricted. Finally, they would be entitled to family reunification in terms of a basic core of relatives (spouse and offspring).

The advantages of the Temporary Work Visas are: (i) to foster circular immigration instead of illegal immigration, which happens to be the most permanent one, and to help stop the countries of origin losing their best workers, (ii) to strengthen the accumulation of human capital both by immigrants and natives, the latter because they would see this investment as their best strategy when higher competition for jobs arrives, and (iii) to improve the bargaining power and wages of unskilled workers, since fostering legal contracts would avoid the exploitation and low salaries prevailing in the underground economy.

1. Carrasco, R., Jimeno, J.F. and C. Ortega (2007), “The Effects of Immigration on the Labour Market Performance of Native-Born Workers: Some Evidence for Spain”, forthcoming in Journal of Population Economics
http://www.popecon.org/forthcomingpapers.php
2. Dolado, J. y P. Vázquez (eds.) (2007), Ensayos sobre los efectos económicos de la inmigración en España, FEDEA. http://www.fedea.es/

1 See Carrasco, R., Jimeno, J.F. and A.C. Ortega (2007) for a study showing that the displacement effects of native workers by immigrants have been negligible.

2 See Dolado, J. and P. Vázquez (2007). These contacts are somewhat similar to the Permisos C in Spain (hardly used) or the visas I-688B in US