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Spain sees US-style economic boost from immigrant workers

2024 04 24T064354Z 2 LYNXNPEK3N05R RTROPTP 4 MIGRATION SPAIN ECONOMY scaled - Global Banking | Finance

Spain sees US-style economic boost from immigrant workers

By Belén Carreño

MADRID (Reuters) – Achieving her career ambitions in Spain has proved remarkably easy for Sara Hernandez, a systems architect from Venezuela who found her skills were in hot demand when she arrived in Madrid.

Spain may have Europe’s highest unemployment rate but moving to Madrid in 2021 after seven years in Chile, where she worked in less qualified positions in IT, she was surprised how seamless it was to find work.

“This is where I’ve been able to fulfil my goal of becoming a systems architect,” Hernandez, 36, told Reuters.

Spain is also benefiting: immigrants such as Hernandez are a big reason why its economy is outperforming its European peers. She is one of hundreds of thousands of immigrants, chiefly from Latin America, who have come to Spain to plug post-pandemic labour shortages, especially in the tech and restaurant sectors.

Mirroring a similar boon to the U.S. economy, Spain is seeing a virtuous circle where an influx of foreign workers is boosting the supply of labour and raising its economic growth rate – a rare feat in the European Union.

“As Spain’s economy improves, migrants come, and as they come, the economy improves,” said Jesus Fernandez-Huertas, a professor in the economy of immigration at the Carlos III University in Madrid.

The International Monetary Fund (IMF) projects that Spanish and U.S. economies will grow the fastest among advanced economies in the next two years.

Immigration accounted for 64% of new jobs created and half of Spain’s economic growth in 2023, according to Raymond Torres, chief economist at Funcas, a Madrid-based think tank.

The wave of migrants, most of them documented and with work permits, has increased the proportion of resident foreigners in Spain to 18.1%, above the EU average of 13.3%.

In Spain, 39 % of new citizens were born in Latin America, according to Funcas. In Germany, nearly half of nationalized immigrants were of Asian origin.

Immigrants in Spain used to fill low-skill vacancies in construction and domestic help but that has shown signs of tapering off.

Instead, migrant job growth has been in technology or science, which more than doubled to 109,000 in 2023 from 2018. Immigrants working in hospitality rose by 30% to 525,000 in 2023 from 2007.

SHARED CULTURE

In Latin America, Spain has a labour market it can tap that is easily adaptable thanks to a shared language and culture.

Some feel more comfortable in Spain than in other countries in Latin America. Hernandez, who now works for one of Spain’s largest insurance companies, said she found it harder to adapt in Chile, adding: “When I came to Spain I felt right at home”.

The ease of integration has also meant less political friction. Even anti-immigration parties such as Vox support Latin American migration, while calling for curbs on African arrivals.

While Spain’s unemployment rate has fallen to its lowest since 2007, at 11.8% it is still the highest in Europe. But companies still struggle to fill certain vacancies and rather than retrain its native population it is often easier to bring in qualified candidates from abroad, said a source at CEOE, Spain’s main employers’ association.

Spain is facilitating the migration wave through visas for highly qualified professionals.

Marianela Morales, a 28-year-old algorithm programmer from Argentina, said it took just three weeks to process her visa to work at IMDEA, a higher education institute in Madrid where she does research in improving algorithms.

“They filed the papers on December 15 and on January 15 I was working,” she said. Most colleagues in her department are foreigners, she said.

Spain has also been more accommodating in recognising equivalence of some Latin American qualifications, something that has held back the integration of immigrants in countries such as Germany.

With migration set to dominate the U.S. election campaign, a boost the economy is enjoying from new arrivals may allow President Joe Biden to refocus the debate.

The Congressional Office revised upwards its forecasts for U.S. growth over the next decade, saying the upgrades were “largely attributable” to new, much higher projections on net immigration in coming years.

“It creates a domestic political problem and not everybody who crosses the border adds positively to the economy, but that labor supply also gave to the United States another comparative advantage” versus Europe, IMF Managing Director Kristalina Georgieva said on April 18.

Migration policy won’t, however, define European Parliament elections in June, according to the European Council on Foreign Relations. Voters are more concerned about the fragility of the global economy, ECFR said in a report.

But Jose Antonio Moreno, head of migration at Spanish labour union CCOO, warned the wave risks a backlash by driving down wages as migrants take jobs that around 2.5 million unemployed Spaniards will not accept because of poor conditions.

“Social dumping cannot be allowed to take place,” he said.

 

(Reporting by Belen Carreño, writing by Charlie Devereux, editing by Emelia Sithole-Matarise)

 

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