Albert Edwards has a big problem with Europe.
The notoriously bearish Societe Generale strategist has used his latest note to let lose on the failure of eurozone governments to integrate the children of migrants into the labour force, and their failure to provide proper educational opportunities.
These failures are “disgraceful, disgusting and dangerous,” he says, and are helping to contribute to the eurozone’s disappointing economic recovery.
Writing to clients in his weekly Global Strategy paper, Edwards argues that not only is the underachievement of people born to immigrant parents a human failure on the behalf of governments, but also an economic one that is helping keep growth subdued.
As Edwards notes, as a means of trying to stimulate growth some governments — particularly Angela Merkel’s in Germany — have turned to allowing mass migration in an attempt to boost their workforces. More bodies in the labour force should in theory help increase economic activity and in turn growth. As a result, Germany’s decision to let more than one million refugees into the country in the past year was not simply a humanitarian one, but also a means of stimulating the economy.
Merkel has recently said that if possible she would “turn back time” so that she could be better prepared for the migrant crisis that hit Europe last summer, but as Edwards notes, she didn’t explicitly note that she regrets letting so many refugees into the country. “But the essence behind the policy remains — rapid growth in the working age population will boost Germany, and the eurozones, potential growth rate,” he says.
“Or will it? Well not if the appalling underachievement in educational outcomes for immigrants in Germany, France, Holland and Belgium continues in marked contrast to the UK. I dont know about you, but I find this chart below truly shocking,” he continues.
The children of migrants not only have lower educational attainment than their native-born peers, but are also far more likely to be unemployed. Adding all these workers into the labour market is pointless if they can’t get jobs, because they’re being undereducated, and often discriminated against.
Here’s Edwards once again (emphasis ours):
“Actually let’s not beat about the bush: the educational and job prospects for the children of migrants in many eurozone countries are disgusting, disgraceful, and frankly dangerous. That cohort will only grow in number in the wake of the migrant crisis unless radical policies are undertaken to reverse the clear discrimination that occurs in terms of outcomes. It is no use adding to the working population in the hope of raising the potential growth rate if a large number of these migrant children end up ill-educated and out of work.”
And here’s the chart illustrating that point:
Things are different in the UK, Edwards argues, pointing out that “the UK’s excellent record of migrants thriving in higher education also spills across to employment opportunities, with the children of immigrants enjoying a significantly lower unemployment rate.”
He does note that while the children of immigrants tend to outperform other nations in Europe, native Brits leaving school at 16 are the “most likely to be unemployed in the developed world,” according to a recent OECD survey.