European Union Pact on Migration and Asylum

Policy Description and Objectives

In 2024, several measures were approved by the European Parliament and the XXIV Portuguese Government aimed at strengthening arrival controls and reducing the number of immigrants.

The European Parliament approved the European Pact on Asylum and Migration, which seeks to deeply reform migration policy in Europe. The Pact aims to enhance border control. Asylum seekers and refugees will be identified within seven days of their arrival in the EU. A database, Eurodac, will be created, requiring all Member States to register various migrant situations. This database will enable identification, provide authorities with more information to accelerate asylum procedures, detect irregularities, and combat irregular migration. Refugees may be detained at the borders and wait in detention centers in Cyprus, Croatia, Spain, Italy, and Malta for up to 12 weeks for a decision from the authorities.

The 24th Portuguese Government developed the Action Plan for Migration. The government began reviewing Portugal’s migration system to align it with the European Pact and reduce migration pressure in Portugal. The main measure of this plan is the end of the “manifestation of interest”, a mechanism obtained through the Agency for Inclusion, Migration, and Asylum (AIMA) that allowed the regularization of immigrants already in Portugal who had entered irregularly but were contributing to social security. Since the Plan’s approval, immigrants who wish to work in Portugal must apply at Portuguese consulates in their country of origin; otherwise, they will not be able to regularize their status. Immigrants from Community of Portuguese Language Countries (CPLP) will still be able to obtain a manifestation of interest.

Objective: Both the Pact and the Plan aim to reduce the number of immigrants and refugees.

Final assessment of the measure: Effective, but intergenerationally unfair.

Policy Evaluation from an Intergenerational Perspective:

Immigration in Portugal and Europe

Figure 1 – Permanent Immigrant Entries in Portugal (2008-2023, in thousands)

Source: Statistics Portugal (INE)

Figure 2 – Permanent Immigrant Entries in Germany, Spain, and France (2008-2022, in thousands)

Source: Eurostat

The number of immigrants in Portugal has increased significantly in recent years. In 2008, Portugal had a relatively low immigrant population (4.2% of the total population), especially when compared to other European countries such as France (8.4%), Germany (8.2%), and Spain (11.1%). That same year, only 29,718 immigrants entered the country, resulting in a slightly positive migration balance.

During the economic crisis, the number of entries declined further, reaching its lowest point at 14,668 in 2012. During this period, Portugal had a negative migration balance, with 51,958 people leaving the country in 2012.

From 2017 onwards, immigrants were able to obtain residence permits with only a “promise of an employment contract” and registration with social security, without needing to present a signed contract. In 2019, a new policy allowed the regularization of immigrants as long as they had been registered with social security for at least 12 months.

Both of these decisions significantly increased immigrant inflows. By 2023, the total immigrant population in Portugal surpassed 1 million, representing 9.9% of the Portuguese population, bringing the country closer to France (10.7%). However, these figures remain lower than those in Spain (13.8%) and, especially, Germany (16.4%). In 2022 alone, 1.9 million immigrants entered Germany, while 1.26 million immigrants entered Spain.

What Role can Immigration play in Public Finances’ Sustainability in an Aging Europe?

• The ratio between the young and elderly population and the working-age population in the European
  Union is expected to increase from 0.89 in 2020 to 1.13 in 2100 (Bernardino et al., 2024).
• As the number of beneficiaries rises, this trend will increase pressure on the sustainability of public
  finances (Franco et al., 2021).
• In Portugal, to maintain the current level of benefits and balanced public finances, taxes would need to
  increase by nearly 15%, assuming the current immigration flow remains unchanged.
• If net migration drops to zero, the required tax increase would rise to 20%, meaning an additional 5 percentage points—the highest increase in the Eurozone (EZ) compared to a scenario where
  immigration remains at current levels.
• Conversely, if Portugal shifts to a net migration flow of 2% annually, the necessary tax increase would
  be reduced to just 7.5% to rebalance public finances.

Immigration Impact

Income and work

• In the short term, the impact of immigration on the labor market can be significant. The increase in the
  labor supply leads to greater competition for jobs, exerting downward pressure on wages and employment rates. The effects may be more pronounced for native workers with lower education levels and skills similar to those of immigrants (Edo, 2019).
• In the medium and long term, the labor market begins to adjust to the presence of immigrants through various mechanisms, such as changes in raw material prices, shifts in the types of products produced, and technological advancements in production. These adjustments help mitigate the initial negative impacts on wages and employment (Docquier, 2014 e Foged et al. 2021).

Housing

•  In the short term and at an intragenerational level, immigration tends to put upward pressure on housing
  prices and rents. This is mainly due to the sudden increase in housing demand as immigrants settle in new
  areas (Sharpe, 2019; Gopy-Ramdhany and Seetanah, 2020).
• In the medium and long term, the effects of immigration on housing markets become more complex and
  multifaceted. The initial demand increase may stabilize, but other factors—such as labor market participation, income levels, and social integration—start to play a more significant role (Moos and Skaburskis, 2010 e D’Albis et al., 2017).

Assessment of Intergenerational Fairness and Effectiveness

• Moves Portugal away from its vision for the future? Uncertain. Portugal focused little on immigration until recently (starting with the 21st government and beyond), making it difficult to identify a clear historical trend.
• Increases inequality between generations? Yes. A reduction in immigration would deteriorate social security balances and have negative effects on pension allocations in the medium and long term.
• Increases intragenerational inequality? Probably not. The policy would have few short-term effects, except for upward pressure on minimum wages, greater job availability in sectors occupied by immigrants, and some deceleration in rental prices.
• Reinforces the transmission of inequalities across generations? Yes. Any decrease in immigration would affect the sustainability of social security and, therefore, future pensions. Pension cuts would disproportionately impact those who rely solely on the public system and lack savings or investments.
• Limits the choices of future generations? Yes. Restricting immigration will lead to higher taxes, reduced public spending, deteriorating public finances, and increased public debt, or a combination of these factors.

Final assessment: Effective (allows the defined objectives to be achieved), but intergenerationally unfair.

Recommendations

Develop policies to attract immigrants. Increasing the number of immigrants improves the sustainability of social security.

The discussion on immigration policies has largely focused on its effects on the labor market and security, meaning the short-term impact of immigration, while overlooking its long-term benefits, particularly regarding the sustainability of social security. Policymakers considering restrictions on immigration flows must recognize that such policies would lead to a significant increase in the tax burden for future generations. Portugal and most other European Union countries are experiencing a demographic aging trend. This means that the ratio of citizens contributing to social security vs. those dependent on it is decreasing, requiring greater fiscal effort from younger generations. Since immigrants are, on average, younger than the general population and contribute to social security, reducing their flow would result in fewer contributors to the sustainability of the social security system.