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We must ease the cost burden on Millennials of integrating migrants

What is Europe's toughest challenge? Youth unemployment? Populism and Euroscepticism? The future of the eurozone and perhaps of the EU itself? It's none of these, worrying though they are

By: EBR - Posted: Tuesday, October 09, 2018

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It's not too late to address these looming difficulties but doing so demands a revolution in our thinking. Social and fiscal policies that have long gone unchallenged must be upended as failure to do so would invite economic catastrophe.
It's not too late to address these looming difficulties but doing so demands a revolution in our thinking. Social and fiscal policies that have long gone unchallenged must be upended as failure to do so would invite economic catastrophe.

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by Giles Merritt*


What is Europe's toughest challenge? Youth unemployment? Populism and Euroscepticism? 

The future of the eurozone and perhaps of the EU itself? 

It's none of these, worrying though they are. 

The greatest threat to Europe's wellbeing is invisible. It doesn't catch the eye or merit attention, lurking as it does below the surface of EU political debate. 

Yet it promises disruption and turmoil on a scale that risks the devastation of economic growth, living standards and social peace. 

This widely ignored menace is the grim outlook that awaits Europe's under-privileged young. The "millennials" and their children will have to bear the brunt of Europe's ageing, and must grapple with its many associated problems – most of all, the increased migration that will surely be many EU countries' response to the shrinkage of their workforces.

It's not too late to address these looming difficulties but doing so demands a revolution in our thinking. Social and fiscal policies that have long gone unchallenged must be upended as failure to do so would invite economic catastrophe. 

For anyone who isn't blind to reality, it must be obvious that building higher walls is no answer to Europe's migration problems. 

The only durable solution is to build more houses, schools and hospitals so that newcomers can be integrated and gainfully employed. That will be even more expensive, but it is also the Keynesian flywheel needed to stimulate faster growth. 

Spending money on immigration is essential, but how can Europe's taxpayers afford it when many EU member states already have perilously large debt overhangs? 

It's likely that more than sixty million migrants will be needed by mid-century, so massive investments are needed if these newcomers are to become productive citizens. 

The many billions of euros required are only part of the burden to be borne by Europe's young and by future generations too. 

The other big snag is that younger people in Europe are so impoverished and politically disadvantaged that it will require a major re-think of taxation and benefits if they are to afford these costs.

The 'baby bust' with its disastrously low birth rates since the 1970s has wrecked the balance between generations, with consequences that are now ringing alarm bells. 

Assets and property that once passed at a fairly even rhythm from the elderly to their heirs are being frozen by longevity. 

The diminishing numbers of young Europeans entering the labour market mean economic growth is slowing and the wealth gap between rich and poor is widening.

That gap is increasingly generational. Pensioners' healthcare costs and social benefits can be as much as four times higher than for 40-year-olds, yet older people yield roughly four times less money in tax contributions. 

That didn't matter when the generations were in balance, but now it's a major issue. The present ratio in Europe of four workers for each pensioner will by mid-century be only 2:1.

Radical change is needed if today's young are to afford tomorrow's costs of ageing and the integration of migrants. 

New inheritance taxes that will help expand home ownership should be coupled with a far tougher approach to taxing companies. 

It's not just the Amazons of this world that aren't contributing their fair share; surveys show that big corporations are now paying about a tenth less tax than at the turn of the century, while taxes on individuals have risen.

Younger people, meanwhile, have failed to defend their interests politically. They don't turn out to vote in elections right across Europe in the way their elders do, and they are not nearly as powerful a political constituency. 

They are a minority that represents only a third of Europe's active electorate, while approaching two-thirds of over-60s don't hesitate to vote.

Over the next half-century, the over-60s will go from less than a fifth of Europe's population to almost a third. Even when the millennials wake to the importance of democracy, younger voters will face inbuilt disadvantages.

That is why it is vital that these hidden aspects of demographic change, along with the need for the revitalising new blood of migrants, should move to the forefront of the EU's political debate.

*Founder and Chairman of Friends of Europe
**First published in friendsofeurope.org

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