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January 2013, Volume 20, Number 1

Southern Europe

Greece. The Greek government announced at the end of 2012 that it had "stopped" unauthorized migration over its land border with Turkey. Some 55,000 foreigners were detected crossing the Evros River in 2011, but none in December 2012. Some say that smugglers have shifted to sea routes, moving migrants to Lesvos, Sumos, Symi and the Farmkonis.

Greece's economy continued to struggle in Fall 2012. The anti-migrant political party Golden Dawn increased its support in opinion polls to 10 percent, making it the third most popular party, after the SYRIZA party with 23 percent and the New Democracy party with 21 percent. Golden Dawn won seven percent of the vote in June 2012 elections, making it the fifth-largest party.

Greece had 700,000 public-sector workers in Fall 2012, and the coalition government resisted calls from the IMF and the EU to lay off 150,000 government workers. It feared that, with unemployment at 25 percent and almost 60 percent for those under 25, those laid off would not be able to find other jobs. A German official's remark that 1,000 German local government officials could do the work of 3,000 Greek officials prompted Greeks in Salonika to throw coffee and water at a German diplomat.

Wages fell about 15 percent and GDP about 25 percent since Greece asked for a bailout in 2010. With rising taxes, average Greeks have lost 40 percent of their after-tax incomes since 2007. Greece collected about eight percent of GDP in taxes in 2011, while the government spent about 21 percent of GDP, increasing fears of a "Grexit," a Greek exit from the euro.

Wealthy Greeks appear to be keeping their money outside Greece to evade taxes and protect themselves from devaluation in the event Greece leaves the Euro. One estimate is that Greeks have E120 billion in assets outside the country, equivalent to two-thirds of Greek GDP, including almost 60 percent in Switzerland.

Greek's lenders insisted that the government end automatic salary increases for public and private sector workers and reduce the severance pay private sector workers receive when they are terminated. In November 2012, the government approved reforms demanded by creditors to raise the retirement age from 65 to 67.

Italy. Italy's October 2011 census enumerated 59.4 million residents, including four million immigrants. However, the number of immigrants appears to have fallen in 2012, as high unemployment encouraged some Chinese immigrants to return to China or move to Canada.

Foreign workers are often paid less than the minimum wage in southern Italy. African migrants and local residents clashed in Rosarno, Calabria in early January 2010 after a legal migrant was wounded in a pellet-gun attack. After the 2010 clashes, half of the 2,500 migrants among Rosarno's 16,000 residents were taken for their own safety to detention centers outside the region.

Amnesty International returned to Rosarno in December 2012 and reported that the migrants who pick local citrus continue to be exploited. AI criticized an Italian law that requires migrants to have formal contracts with employers before they can receive residence permits. This law, AI concluded, encourages some migrants to sign contracts offering less-than-minimum wages so that they can remain legally in Italy. African migrants often pay for contracts, and then are required to pay protection money to the local mafia.

Italy grants asylum to about 40 percent of the foreigners who apply, but provides government integration assistance to only 3,150 recognized refugees a year. The government provides housing, language assistance and job-seeking help to the refugees it assists, but recognized refugees from Africa often wait years to receive government assistance, living in informal housing where volunteers provide some medical and other assistance. An EU Directive requires EU member countries to give recognized refugees a long-term residence status after five years, but Italy has not yet implemented it.

Italian unemployment insurance law changed January 1, 2013 to offer benefits to workers employed as few as 13 weeks. Under the old system, laid-off workers received wage subsidies under the theory they would soon be recalled to their old jobs. Under the new ASPI system, also known as the Fornero law, UI benefits are up to E1,120 a month for up to 12 months, with an extra six months of benefits available to workers 55 and older, if the jobless workers actively seek new jobs.

Spain. Almost 5.8 million workers were unemployed, over 25 percent, in Fall 2012; Spain provides unemployment benefits for up to 30 months. Net emigration was 370,000 in 2011, as over a million naturalized Spanish citizens born in Latin American countries returned home.

There were 913,000 Romanians in Spain at the end of 2012, a sixth of the foreigners in the country. About 36 percent of Romanians who are in the Spanish labor force were unemployed in September 2012, a higher rate than the 23 percent of Spanish citizens. Half of the Romanians in Spain aged 15 to 64 are employed, and this low employment rate combined with the high Spanish unemployment rate prompted the Spanish government to suspend freedom of movement for Romanian workers.

Spain currently has 46 million residents; many projections suggest the population will shrink to less than 45 million by 2020. The Spanish government in Fall 2012 urged Latin American countries to invest in Spain, reversing the traditional flow of Spanish capital to Latin America and Latin American migrants to Spain.

About 170,000 Chinese are in Spain, and the New York Times reported January 3, 2013 that many are thriving despite the severe recession. Chinese families include members who work hard and share resources, and some are buying failing businesses and foreclosed homes. Almost a third of the foreigners who started businesses in Spain in 2012 were Chinese. The Spanish government in November 2012 enacted a law offering residency to foreigners who buy homes worth more than ?160,000.

Catalonia, whose population of 7.5 million includes up to 1.5 million migrants, voted for independence on November 25, 2012. Catalonia's leader argues that the provincial economy of $260 billion, 20 percent of Spain's GDP, is larger than a dozen EU member states. Barcelona's diversified economy attracted migrants during the construction-led boom that lasted until 2008.

Autos are a bright spot in the struggling Spanish economy. Labor costs in Spain are less than E21 an hour, compared to E30 in Germany and E34 in France, encouraging auto manufacturers such as Ford, Renault and Volkswagen and parts makers to expand; the auto industry currently employs 280,000 workers. The Spanish auto industry aims to produce three million cars a year, with 90 percent destined for export; Spanish car sales were only 700,000 in 2012.