Net outflow of migrants from CEE slowing as life at home improves

Net outflow of migrants from CEE slowing as life at home improves
CEE countries saw their populations fall by about 10% in the 1990s but as life at home improves and income differentials with the rest of the EU narrow the outflows have slowed or even stopped in some countries. / bne IntelliNews
By Ben Aris in Berlin August 8, 2023

Central and Eastern European (CEE) economies have seen significant net migration outflows over the past few decades, but the trend has started to shift in the last five years as outflows have reduced considerably, Capital Economics reports.  

“This is likely to continue, with net outward migration set to run at a much slower rate than in the past and cushion the blow from negative natural population change. We expect populations to continue falling in CEE this decade, but net migration should limit that to 0.1-0.2% per year on average (vs. 0.2-0.4% in the 2010s),” Liam Peach, an emerging market economist with Capital Economics, and Harry Chambers, an economist, said in a note.

There are some problems with migration data, as different organisations define migrants differently, leading to potential underestimations of actual migration and labour flows. For example the UN classifies as migrants as anyone who stays in a country for more than a year, whereas national statistics offices tend to only count migrants with permanent residency, which can take up to five years to obtain.

Still, despite data discrepancies, it is evident that CEE has experienced net migration outflows since at least 1990, with the late-1990s and mid-2000s witnessing the largest waves of outward migration. Germany and the UK have been the primary destinations for many emigrants due to various factors, including economic opportunities and EU accession.

“Net outward migration has contributed to large population declines in most economies – populations have fallen by more than 10% in Croatia, Romania and Latvia since 2000, more than half of which is due to net migration. Population falls have been smaller in Estonia, Lithuania and Poland, but migration has been a big driver. Only in Czechia, Hungary and Slovakia has net migration been positive,” says Capital Economics.

In the past five years, the situation has changed as net migration outflows have slowed, primarily in Poland and Romania, where fewer people are leaving.

“Poland’s central bank noted in 2019 that a sharp fall in unemployment slowed outward migration to Germany and the UK. This has come alongside other factors, such as stronger GDP growth in CEE, EU investment into infrastructure and an improvement in living standards, education and healthcare,” says Capital Economics.

Several factors explain this shift. First, wage differentials between CEE and Western Europe have narrowed, reducing the incentive to migrate. Second, Brexit, tighter work and visa restrictions, and changing perceptions of Western Europe have made it less attractive for emigrants. Third, some CEE governments have implemented policies to encourage the return of highly-skilled diaspora members.

Looking ahead, net migration dynamics will be influenced by developments around the war in Ukraine and other non-war factors. The war led to a significant influx of around 8mn Ukrainians into CEE in 2022, with most projected to return home starting from 2024.

“Net migration due to the war is projected to be 1.1 million in Poland in total over 2022-29, 350,000 in Romania and 200,000 in Hungary. The total CEE-10 population is projected to be 1.8mn higher by the end of this decade due to the war,” says Capital Economics.

Apart from the war, other factors like income dynamics and policy measures will continue to influence migration flows. Stripping out the impact of the Ukraine war, projections indicate that net outward migration will persist in CEE this decade, but at a much slower rate than before. This more favourable net migration outlook should help cushion the decline in working-age populations, reducing labour shortages. It is expected to boost population growth in major CEE economies by 0.1-0.3% per year compared to the past. While Poland could see stable population growth, Czechia, Hungary, and Romania are likely to experience falling populations, but at a reduced rate compared to previous years.



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