[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 23.10.2007

SEC(2007) 1403

COMMISSION STAFF WORKING DOCUMENT Accompanying document to the

Proposal for a COUNCIL DIRECTIVE on the conditions of entry and residence of third country nationals for the purpose of highly qualified employment IMPACT ASSESSMENT

{COM(2007) 637 final}{SEC(2007) 1382}

TABLE OF CONTENTS

1. Procedural issues and consultation of interested parties 3

2. Problem definition 6

3. Objectives 21

4. What are the main policy options available to reach the objectives? 22

5. Analysis of impacts 28

6. Monitoring and evaluation 69

Annex I: Statistical appendix 72

Annex II: Problem assessment on socio-economic perspective 99

Annex III: Immigration systems in the Member States 117

Annex IV: Identification of the objectives 147

Annex V: International benchmark: United States 150

AnnexVI: International Benchmark: Australia 167

Annex VII: Description of policy options 189

Annex VIII: The casual model 199

Annex IX: Summary assessment of the policy options 200

Annex X: Assessment of administrative and implementation costs 211

PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES

Lead DG: Justice, Freedom and Security

Directorate-General Justice, Freedom and Security

Other involved Services

Secretariat-General, Legal Service, Bureau of European Policy Advisors, DG Economic and Financial Affairs, Directorate-General Employment, Social Affairs and Equal Opportunities, DG Enterprise and Industry, DG Employment Social Affairs and Equal Opportunities, DG Research, DG Internal Market and Services, DG Education and Culture, DG External Relations, DG Trade, DG Development, DG EuropeAid, Eurostat.

Agenda Planning or Work Programme Reference:

Reference number 2007/JLS/004 of the Commission Legislative Work Programme of 2007

1.1. Organisation and timing

The Commission Legislative and Work Programme 2007, including this strategic initiative (reference number 2007/JLS/004) under the priority for 2007 "A better management of migration flows", states that "The pressures of demography have added to the need for the European labour market to attract economic immigrants. […] Specific attention needs to be given to the position of highly skilled migrants, with a swifter response time to react to changing needs – something like a "green card" system[1]". A road map was prepared for this strategic initiative[2].

The chronology of this Impact Assessment was as follows:

- March 2006 – July 2007: data gathering and discussion with Member States in the context of the Commission's Committee on Immigration and Asylum (CIA);

- January 2006 – July 2007: consultation and exchange of views with relevant stakeholders (including NGOs, social partners, countries of origin, etc) in a number of meetings and conferences.

- 18 December 2006 – 15 July 2007: external study[3] (hereinafter “the external study”) ordered by the Commission in December 2006.

- 7 May 2007 and 2 July 2007: meetings of the Inter-service Steering Group accompanying the Impact Assessment.

- 11 July 2007: oral discussion in front on the Commission Impact Assessment Board (written opinion received on 13 July 2007).

1.2. Consultation and expertise

1.2.1. Consultation within the Commission and external expertise

The external study and this report have been drafted with the substantial input of DG Employment, Social Affairs and Equal Opportunities (hereafter "DG EMPL") that has been involved in this exercise from the very beginning. The other concerned DG have been consulted by means of the Inter-service Steering Group meetings and of direct bilateral had-hoc meetings/contacts.

This report is based on consultations with Member States and other stakeholders and on the external study commissioned by the Commission in December 2006. The data were collected from the consultations set out below as well as from case studies and literature reviews. The problem, objectives and policy options assessed were based on the draft final report from the contractor prepared in close consultation with the Commission.

The Commission’s Impact Assessment Board (IAB) was consulted during the second half of June 2007. In its the recommendations for improvement, the Board asked to better specify the consequences of the likely increase in HSW from third-countries admitted to the EU as a consequence of this policy, also in terms of possible brain drain impacts on the countries of origin. It also asked to better explain the links between this policy, intra-EU mobility and the Lisbon Agenda. As to the assessment of the impacts, the IAB asked to spell out more clearly the impacts of the main elements of each option, so to provide a better understanding of the net impacts of the preferred option. Finally, it was asked to analyse the costs for the target population and their (potential) employers. This paper has tried to take into account all these comments.

1.2.2. Consultation of stakeholders

A first consultation of stakeholders took place in the first half of 2005, with the Green Paper on an EU approach to managing economic migration[4], that launched a vast public debate on the future of the common legal immigration policy, and more specifically on which rules should be adopted at EU level for the admission of third-country nationals for employment, as well as on the added value of having such a European approach. The Green Paper addressed the main issues at stake through a series of concrete questions on the following issues: the degree of harmonisation the EU should aim at; admission procedures for paid employment (preference for the domestic labour market and admission procedures) and for self-employment; applications for work and residence permit(s); possibility of changing employer/sector; rights of the third-country nationals; “accompanying measures” (integration, return and cooperation with third countries). The Commission received more than 130 contributions from Member States, the other EU institutions, social partners, NGOs, third countries, academia, etc. (all relevant contributions are available on http://ec.europa.eu/justice_home/news/consulting_public/economic_migration/news_contributions_economic_migration_en.htm) and a public hearing was held on 14 June 2005. The outcome of this consultation process did not only constitute the basis for the Commission's Policy Plan on Legal Migration[5] but benefited also the work on this report.

Further more specific consultations were held by means of seminars and workshops, including discussions on relevant opinions issued by the European Parliament and the Committee of the Regions. By way of example, a conference organised by the Dutch Government on "Migration of high-skilled workers to Europe: Can member states get the people they want?" took place in Scheveningen (The Hague) on 25th of January 2007: participants came from Member States' administrations, academia, social partners and the Commission (DG JLS and EMPL). Member States were consulted within the framework of the Commission's Committee on Immigration and Asylum (hereafter "CIA"). Through the external study commissioned to support the impact assessment, further consultations of the main stakeholders were undertaken by means of questionnaires and interviews. However, as these consultations were specifically addressed to test the selected policy options and to inform the analysis of their impacts, it was not possible to send out the relevant questionnaires before mid-may: as many of the stakeholders addressed are umbrella organisations (NGOs and social partners), these asked for a prorogation of the deadline.

2. Main results and follow-up of the consultations

The analysis of the more than 130 written contributions received in 2005 in response to the Green Paper showed a general support for a common EU policy for economic immigration, albeit with important differences in the approaches to be followed and in the expected end result. Some clear elements emerged, i.e. the need for EU common rules regulating at least the conditions of admission for some key categories of economic immigrants (highly skilled and seasonal workers), coupled with the request to ensure a secure legal position to all immigrants in employment. These two categories – for which many Member States have special schemes already in place – were actually considered vital for EU competitiveness. Another clear request was to propose simple, non-bureaucratic and flexible solutions.

Comments made to the Policy Plan on Legal Migration[6] - that set down the Commission's vision on how to further develop the common policy on legal migration, based on the public consultation - have also been taken into account. This approach has been supported by the Member States in the framework of the CIA: data gathered and specific problems/positions expressed have been taken into account by the external study and by this impact assessment.

Further exchanges of views with the relevant stakeholders (other than Member States) lead to similar results to those that emerged during the 2005 public consultation. It must be however be recalled that NGOs and trade unions expressed some criticism in respect of a possible specific scheme for highly skilled immigrants: the main concern was that this would have created first and second class immigrants and that the same conditions should be offered to all third-country nationals seeking to enter the EU for employment purposes. On the other hand, many experts consulted recognised that this situation is inevitable if the EU wants seriously to be a major actor in the international competition for sought-for highly qualified workers. The Commission has carefully weighted both arguments both in drafting its Policy Plan on Legal Migration and in conducting this impact assessment and the one on an EC instrument on "a single application procedure for a single permit for third country nationals to work in the territory of a Member State and on a set of rights for third country workers legally residing in a Member State" (done in parallel).

2. PROBLEM DEFINITION

2.1. Context

Since the Tampere European Council of 1999 the EU has sought to develop a comprehensive immigration policy that would address the phenomenon in all its main dimensions, i.e. legal and illegal immigration, integration and cooperation with the countries of origin of immigrants. As concerns legal immigration, and in particular economic immigration, in 2001 the Commission adopted a proposal for a Directive dealing with “the conditions of entry and residence of third-country nationals for the purpose of paid employment and self-employed economic activities”[7]. Whilst the other European Institutions gave positive opinions[8], discussion in Council was limited to a first reading of the text and the proposal was officially withdrawn in 2006. It has to be recalled in this context that legal immigration is still subject to unanimity in the Council and simple consultation of the European Parliament. More recently, the Hague Programme, adopted by the European Council on 4-5 November 2004, recognised that “legal migration will play an important role in enhancing the knowledge-based economy in Europe, in advancing economic development, and thus contributing to the implementation of the Lisbon strategy” and asked the Commission to present a policy plan on legal migration[9], “including admission procedures, capable of responding promptly to fluctuating demands for migrant labour in the labour market”. The December 2006 European Council conclusions agreed on a series of steps for 2007, among which to "develop, as far as legal migration is concerned, well-managed migration policies, fully respecting national competences, to assist Member States to meet existing and future labour needs […]; in particular, the forthcoming Commission proposals within the framework of the Policy Plan on Legal Migration of December 2005 should be rapidly examined".

The Lisbon strategy, launched by the European Council in Lisbon (March 2000) and further developed subsequently, aims at making the EU the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion. However, the first five years had seen insufficient delivery[10]. Therefore the Commission revised the original strategy and, by introducing the Lisbon Action Plan[11], proposed a partnership with Member States focusing on growth and jobs. Achieving the Lisbon objectives requires a skilled and adaptable labour force and a more open and accessible European labour market. Since the revision of the strategy in 2005, employment growth picked up well resulting in increasing employment rates, and declining unemployment rates. At the same time European enterprises are confronted with increasing vacancy rates, especially for highly-killed workers. To cover these needs, measures are needed to further reduce unemployment levels; to better use the potential of the inactive population (of which approximately 8% are high-skilled[12]); to facilitate mobility within and between MS and to improve educational attainments of many young people. These actions, however, require investments and time to deliver. In addition to developing and using human resources available in the EU already, Europe should therefore better recognise the relevance of labour supply resulting from immigration of third country nationals supported by an appropriate management of economic migration[13].

The reviewed Sustainable Development Strategy clearly recognised that the effective management of migration flows, including the integration of immigrants and their families, should form part of the response needed to “prepare Europe's economy and society for the onset of ageing”.

Notwithstanding these clear political mandates, no EC instrument addressing the management of economic immigration yet exists.

2.1.1. Community preference principle: the transitional arrangements

The transitional arrangements contained in the Acts of Accession of 16 April 2003 and 25 April 2005 provide that Member States shall give preference to workers from the Member States subject to the transitional arrangements over workers who are nationals of third countries as regards access to their labour market, to mitigate the fact that the transitional arrangements limit the freedom of workers from the Member States concerned to freely move to other EU Member States to work. Furthermore, Member States cannot treat EU nationals who are subject to the transitional arrangements more restrictively than third-country nationals.

This clause is therefore an important element to be considered for any EU intervention on economic migration of third-country nationals. In this regard, it is important to note that the preferential treatment clause in the transitional arrangements is primary EC law and, as such, it prevails over secondary EC legislation. This means that it obliges a Member State to implement a possible instrument of secondary EC legislation on economic migration in such a way that it complies with the clauses of the Accession Treaty, provided the instrument of secondary EC legislation itself complies with it (e.g. it cannot create a right for third-country nationals to access the labour market of Member States by obliging Member States to grant them access if certain conditions are fulfilled).

It should, however, be stressed that the respective clauses in the 2003 and 2005 Accession Treaties are of temporary importance as they will irrevocably come to an end in April 2011 and December 2013 at the very latest. In addition, Member States may decide to lift restrictions and apply full free movement to the EU nationals concerned earlier. In this context, it should be recalled that the transitional arrangements can be extended for another 2 years beyond the 5 year period (April 2009 and December 2011) only in the case the Member State concerned experiences serious disturbances in its labour market or a threat thereof.

2.2. The scope of the problem

2.2.1. The general problem: the demographic ageing and the challenge of economic immigration

In the context of the global economy the issue of immigration has seen its importance grow constantly in the course of the last decade. The role of economic immigration assumes even more significance in the context of demographic ageing which European countries are already experiencing and are expected to face in the next decades. Indeed, as a consequence of interactive demographic trends, it is expected that the total population of EU-25 will fall slightly, but will become much older in 2050. In economic terms, the main change will involve the size of the working-age population (15-64 years), which will decrease by 48 million between now and 2050. As a consequence, the dependency ratio (the number of people aged 65 years and above relative to those aged from 15 to 64) is set to double and reach 51% by 2050, which means that the EU will change from having four to only two people of working age for each citizen aged 65 and above.

This ageing of the EU population could have relevant implications on the socio-economic development: apart from the direct effect on pension systems (an increasing difficulty to finance pensions through employment growth should be expected), the stagnation and decline of working age population will substantially affect the potential of economic growth as a whole as it may become a limiting factor for GDP growth. Indeed, unless the fall in the volume of employment is compensated through higher net immigration inflows, in a context of shrinking EU working age population, higher productivity growth will be necessary in order to maintain the same level of GDP growth in the long period.

On the whole, this evidence, as well as further elements confirmed by the literature on this issue, suggests some preliminary remarks. The demographic ageing could call for the attraction of more economic immigrants in the future in order to compensate trend of EU population at all levels of skills and qualifications; at the same time, a skilled and adaptable labour force could be increasingly crucial in order to achieve higher level of productivity. As a matter of fact and as a result of growing shortages of labour at both skilled and unskilled levels, a number of Member States have already begun to actively recruit third country nationals from outside the Union, with a significant consequence also with respect to the typology of migrants entering EU[14].

2.2.2. The specific problem: the situation and trends in the highly qualified sector of the labour market from a socio-economic perspective

As a preliminary remark, it should be noted that the analysis here presented has been partly constrained by limitations in data availability and significant lack of comparability in migration statistics at EU and international level, as explained in the Annexes.

The size of the problem: EU and Third-country highly skilled workers in the EU

The recent and current rates and patterns of employment within the EU suggest the growing need for highly skilled workers (hereafter "HSW") in the European labour market:

- The employment growth rates increase together with educational attainments (between 1996 and 2003, employment of people with a high level of educational attainments increased by 2.9%, while it was simply negative for people with lower education)[15];

- The greater employment growth in high-education sectors[16] (such as manufacture of office machinery and equipment, computer and related activities, education, health and social work, or activities of membership organizations) equal to 3% per year as compared to 1% in other sectors[17];

- The change in the occupational structure of the employed population in EU in favour of high-skilled non-manual workers (i.e. “legislators, senior officials and managers”, “professionals” and “technicians and associate professionals”, according to the ISCO-88 classification of occupations)[18] between 2000 and 2005.

On the other side, the current differentials in employment rates according to educational/skill levels[19] should be considered. In fact, in the EU, people with high educational attainments[20] have actually reached high employment rates. This is particularly evident in EU 15[21], where the employment rate of highly educated people was 82.5% in 2004. Moreover, in several Member States (such as United Kingdom, Nederland, Ireland), the high employment rates recorded for people with high education are associated with low unemployment rates for the same categories[22]. The result is a further tightness of the internal labour markets and the increasing possibility that labour and skills shortages arise[23].

In fact, another key element, which substantially calls for an increase in the supply of HSW, relates to the current and estimated labour and skills shortages[24] within EU.

Presently, in several EU Member States, employers have already started to experience difficulties in filling vacant positions and, overall, concerns about the availability of labour on domestic markets are growing[25]. Several investigations at national level show that the shortages of highly qualified workers are particularly widespread in engineering, information technology, pharmaceuticals, healthcare and education sectors (e.g. such shortages are recorded in Belgium, Estonia, Germany, Ireland, Sweden). In this context, many of these countries are currently filling job vacancies on the internal labour market by looking to third countries immigrants. For example, this the case of UK and BE, where the immigrants have given a strong contribution to meet the labour market demand for qualified labour as well as to compensate the outflows of highly skilled nationals.

Because of the above mentioned limits in data collection, it is difficult for the time being to evaluate the flows and stocks of HSW from third countries legally resident in the EU. According to the estimates, in 2003 the inflow of third-country HSW was 74,300 (11.7% of total work permit issued in EU25)[26]. On the basis of the existing surveys at MS level, it is possible to obtain more up-to-date and detailed data: in the 14 Member States that provided data in the context of this study, a total of 34,219 work permits were issued for HSW in 2005. With reference to the 6 Member States for which information on the total number of work permits issued in 2005 is available[27], the share of work permits for HSW appears to be 3.6% of total work permits.

As a result of the above trends and of the growing demand for highly qualified workers in the EU, the incidence of third country nationals in the highly skilled occupations[28] is rapidly increasing in the EU Member States. In 2004, the share of non-EU nationals in total highly skilled employment was the 2.3% in EU-15; the same figure was only 1.8% in 1999. In some Member States the increase has been particularly notable: in Ireland (+1.7%), United Kingdom (+1.6%), Spain (+1.3%) and Austria (+0.9%).

Furthermore, third country HSW incidence on total employment is growing with a higher rate if compared to the trend of HSW who are EU nationals. Between 1999 and 2004, in EU 15[29] and in particular in these Member States (e.g. Austria, Greece, Portugal and the United Kingdom), the share of HSW (ISCO categories 1, 2 and 3[30]) coming from third countries as compared to total number of employed increased at an average annual growth rate of 4.8%[31]. In the same period, the share of EU nationals employed in highly skilled occupations increased at an average annual growth rate of 0.8%[32]. This trend can be substantially explained by the growing demand for HSW in the EU labour market and, at the same time, the high employment rates of EU national HSW, close to full employment.

With regard to the socio-demographic characteristics of third-country HSW (employed in ISCO categories 1, 2 and 3) currently employed in the EU labour market, with reference to the 14 EU MS for which data is available[33], three remarks can be made:

- The majority of third-country HSW (47%) have high education attainments[34];

- The majority of third-country HSW is concentrated in the age segment of between 25 and 54 (86%), and there has been no significant change in the recent years.

- the gender composition of third-country HSW: the share of third-country HSW women slightly increased, from 40% in 1999 to 42% in 2004 (significant differences among Member States exist although).

With reference to the origin of the HSW present in the EU labour market, it appears that the most relevant quota of third-country HSW working in EU in 2005 comes from the aggregated geographic area “Other Africa”[35], which represents the 45.59% of the total number of HSW in EU in 2005[36]. “South America” (25.89%), Southern and South Eastern Asia (15.59%) and Central America and Caribbean (8.54%) are the other main geographic areas of origin of migrant HSW to EU.

A further element to be considered as influencing the capacity of the EU to face its existing and arising skill shortages is the geographic mobility of HSW across the EU. Currently, also because of the freedom of movement enshrined in the EC Treaty for the EU citizens as opposed to barriers for non-EU nationals, the migration flows of the HSW involve mainly EU nationals[37] and are a rather limited phenomenon (less than 2% of the EU citizens). In 2005, 55% of all EU-15 active mobile were highly skilled[38].

However, the population trends as well as the employment trends within EU suggest that, in future, Member States can hardly rely exclusively on EU human resources. In other words and assuming that labour shortages also arise as a result of low mobility of the domestic labour force, intra-EU mobility, if limited to EU nationals, may not by itself offset the labour supply shortages, given that practically all European Member States face similar problems of an ageing population and highly skilled EU nationals have, on average, reached high employment rates in the majority of Member States[39]. Further data and research confirm that the most intense labor and skills shortages that European Union will have to face in the next 20 years are expected to be in skilled and highly skilled occupations[40], as well as estimates of future trends suggest there will be a high potential employment growth for HSW in the coming years[41].

In this scenario, the possibility for mobilizing the unused employment potential of lawfully residing third country nationals should be the first measure to be taken, as these persons , including HSW, have much lower employment rates than EU nationals (in 2004, 65.4% for non-EU HSW against more than 80% for EU HSW; in 2005, 66.7% vs. 83.3%)[42]. This suggests a strong under-utilisation of important human capital. The disparity is particularly pronounced for high-skilled females (exceeding 20 percentage points). Moreover, over the last years, the unemployment rate of third country nationals has remained more than three times higher than the one for EU nationals, in the majority of the Member States[43]. Furthermore, the occupational structure of third country workers in the 1995-2004 period on European labour market shows that non-EU nationals tended to be more concentrated (53.0%) in low-skilled occupations, whose incidence increased by almost 6.0 % during the relevant period[44]. On this basis, it becomes more and more important to mobilize the existing resources (EU nationals and legal residents) and, particularly, to widen the tertiary-educated and highly qualified labour supply in order to promote a knowledge-based economy and the future productivity growth[45].

On the other hand, the mobilization of existing highly educated resources (EU and non-EU nationals) into the EU may not be sufficient for matching the future skills and labour demand. As mentioned in Section 2.1., the different measures foreseen by the revised Lisbon Strategy require investments and time to deliver. Additionally, it cannot be assured that gaps in specific sectors or professions will be filled in case of temporary shortages or mismatch between the existing/foreseen shortages and the educational and professional preferences of the (potential) EU workers. Furthermore, in several MS (United Kingdom, Austria, Portugal, Greece) the employment rates of highly educated third country nationals are significantly above average and comparable to the employment rates of the EU nationals. To be able to adjust labour demand and supply on relatively short notice, the possibility to find skills outside of the EU is therefore crucial.

Coming back to geographical mobility and assuming that labour shortages also arise as a result of low mobility of the domestic labour force and that shortages are expected to increase as the EU economy is expected to become a more knowledge based one, providing for facilitated conditions for intra-EU mobility could be an asset for both the immigrants and the EU. In fact, studies[46] show that immigrants – being more income-maximizing, more efficient in using employment opportunities and less tied to the country of residence – move quicker to areas with high wages and low unemployment, and thus act as complements to the much less mobile natives[47]. This is even more evident in respect of highly qualified immigrants, in a situation where the employment rate of highly educated EU citizens is over 80% and shortages in the highly qualified sectors already exist. Additionally, highly skilled immigrants have been proven to contribute positively to the host economies, by supporting the development and competitiveness of the enterprises the work in, with scale effects on the host economies (creation of new jobs, etc). They also have not been found to negatively influence the transitions of natives out of or into unemployment.

The growing importance of a knowledge-based economy, the structural economic change and the growth of service sector, the delocalization of labour intensive production¸ the outflows of nationals (brain drain) all contribute to these conclusions. What clearly emerges is that the attraction of highly qualified immigrants will be more and more needed in the EU development perspective. On the whole, the attraction of HSW and a better utilization of highly qualified resources coming from third countries will remain crucial challenges for the EU development perspective. At the same time, the mobility of workers between occupations (job mobility) and across borders (geographical mobility) should be recognized as a primary mechanism for improving labour market efficiency, preventing skills shortages and offsetting regional imbalances[48].

The size of the problem: non-EU supply of HSW and the attractiveness of the EU

In respect of the situation in the countries of origin, it should be noted that highly qualified people may face high unemployment rates and low returns to skills in their countries of origin. This is certainly the case of MENA countries, which represent the closest potential pool for economic migration into the EU. For example, in Algeria and Morocco the unemployment rate is particularly high among highly educated persons, as this figure is around 20% for people with a high school degree[49]. Another element relates to the return in terms of human capital, as it has been argued that images of success of highly skilled migrant workers could also enhance non-migrants’ motivations for investing in education in the countries of origin , and thus foster human capital building in the sending countries. In this perspective, on the one hand, attracting highly qualified resources from less developed countries could results in a better utilization of the potential human capital but also in a general increase in the skills endowments of the sending countries.

On the other hand, many less developed countries, especially in Africa and in the Caribbean, already face the problem of their relatively limited in numbers highly qualified workers emigrating to other regions of the world for employment reasons. One of the sectors that are particularly affected by the negative effects of scarce human resources combined with emigration is the health sector in certain countries, as analyzed in several studies, the most recent being from OECD[50]. While brain drain only affects some countries and, within them, some occupations, it can sometimes have highly detrimental effects on affected countries' development prospects and any policy at EU level must take this challenge into account. Section 5.4 and Annex II describe a number of detailed policy measures with a view to mitigating the negative impacts of emigration of highly skilled workers on countries of origin.

Notwithstanding the increasing demand for highly qualified occupations in the EU labour market, the incidence of third-country HSW on the total of those employed is still quite low: in 2004, in EU-15, third-country HSW represented 0.9% of total employed (versus 38% recorded for HSW EU nationals)[51]. These data reveal a substantial difficulty for the EU in attracting – and in certain cases, valorizing – HSW from third countries with respect to the main worldwide benchmarks: the EU (with a value of 1.72%) definitely lags behind the performance of all the other main immigration countries, such as Australia (9.9%), Canada (7.3%), US (3.2%) and Switzerland (5.3%).

The issue of the specific factors influencing the difference between the EU and the other traditional countries of immigration in terms of capacity of attraction of HSW is a complex one[52], as many elements could be taken into consideration[53]. There are different elements that a highly qualified potential immigrant could take into consideration when analyzing his/her options. Factors such as language, salary levels, possibility of professional development, business culture, historical ties, links with the diaspora, etc are important for such choices. Other factors are as important, such as settlement schemes and the possibility of obtaining the nationality of the host country in few years. However, almost all these factors cannot be influenced by an immigration instrument or fall within the competences of the Member States (i.e. naturalization policies, etc). A crucial point relates to the legislative and policy initiatives enacted by governments to attract and retain foreign HSW. The capacity of countries to attract HSW relies to a significant extent on the conditions of entry and residence offered to migrants (e.g. residence schemes, possibility or not for job mobility, demand or supply-driven systems, etc.). While these elements will be investigated in more detail in the next section, EU governments frequently refer to the temporary and even seasonal nature of the immigration which they are willing to allow. On the one hand, these kind of immigration policies are largely aimed at facilitating only short-term labour-market adjustment, whereas the effective integration and contribution of migrants into the labour market may require some time. On the other hand, the traditional countries of immigration, which offer permanent residence from the outset or at least a path to permanent settlement, seem to clearly have an advantage in terms of attraction of HSW.

Another important aspect influencing – if not limiting – the attractiveness of EU with respect to HSW is represented by the barriers existing for HSW who would like to move to other Member States to work[54], still present for EU citizens to a certain extent[55] and more binding for third country nationals. The EC acquis allows forms of intra-EU mobility for third-country students and researchers[56]: in particular for researchers, the directive underlines that it is important, to reach the objectives of the Lisbon Agenda, to foster " the admission and mobility for research purposes of third-country nationals […]in order to make the Community more attractive to researchers from around the world and to boost its position as an international centre for research ". Third-country workers enjoy intra-EU mobility only once they have acquired the EC long-term resident status[57]: but this only occours after 5 years of legal and continous residence in a Member State and may still be subject to limitations by the second Member State. Barrers to mobility are therefore lowered, but may still limit the importance of this provision as a driver of both the demand (i.e. efficient allocation of the human resources and improvement of the European skills endowment) and the supply side (i.e. the possibility and willingness of moving throughout EU labour market and of competing for remuneration and career's improvements) of HSW. While there is yet no evidence of these barriers being a substantial element of non-attractiveness for the EU, it can be assumed that facilitating this mobility – as for researchers – could raise the interest of the "best and the brightest" for the EU. The high barriers to geographical mobility for third-country HSW therefore represent a specific weakness of the EU labour market and, more generally, of EU policy on economic immigration towards HSW.

2.2.3. The specific problem: current legal framework in the Member States for the admission of highly skilled workers who are third-country nationals

The approach of Member States in respect of legal immigration for employment purposes is not homogeneous. This is in general due to factors which pertain both to the historical ties and to the economic development of the country. In the EU we can broadly distinguish 3 groups of Member States: the traditional countries of immigration (i.e. UK, FR, BE, etc.), Member States that became countries of immigration in the last 10-15 years (i.e. ES, IT, etc) and the Member States that acceded in 2004 and 2007, that are at the same time countries of emigration, transit and more and more immigration. This very general premise serves the purposes of explaining the big differences in approach between the Member States, and in particular why only ten of them have put in place until now specific admission schemes for highly skilled immigrants.

Based on the replies to a Commission' questionnaire sent to Member States, the external study has analyzed in details the admission systems in the Member States, including for those where no specific scheme as (yet) been put in place[58]. It clearly emerged from the replies that all Member States have in fact special schemes in place that cover specific categories of third-country nationals admitted to exercise an economic activity for which high qualifications are currently required, but only ten[59] go further than scientists, artists, intra-corporate transferees, researchers, university professors, etc. Furthermore, all these Member States – but Belgium – also grant more favourable conditions in terms of rights attached. Looking at the admission systems of these Member States, the identification of who should be considered a HSW is not unanimous and/or difficult to define: the minimum salary level is the main criteria (with big differences), used by six out of ten Member States, even though usually associated with other criteria such as professional qualifications. Four Member States do not define the category at all (AT, BE, NL and PT), while two (DK and IRL) restrict it to specific sectors/occupations for which there are recognised gaps in the labour market. Finally, four Member States (DE, FR, GR and IRL) have more than one category of HSW, for which different entry (and/or residence) conditions exist. Twenty-six Member States have demand-driven systems, meaning that the existence of a job contract or a firm offer of work is the basic prerequisite for being admitted. The only exception is the UK that revised its immigration system in 2005 and introduced a point system for HSW[60], based on a supply-driven approach (i.e. successful applicants do not need to have a job to be admitted). One of the systems in place in France (" carte competences et talents ") does not require a job contract, but admission is nevertheless conditioned on the presentation of a concrete project (of research, investment, etc). Other elements examined concern the length and the type of the permit, the conditions for acquiring permanent residence and for family reunification, the concrete rights granted, etc. Finally, eight Member States have declared being in the process of drafting new legislation or at least planning to do so.

In the light of the above, the most interesting remarks can be summarized as follow:

- The vast differences among Member States in terms of the definition of HSW and admission criteria clearly limit the internal mobility of HSW throughout the EU. Thus, a worker who is treated as highly skilled in one Member State may be not considered so in another. This affects an efficient re-allocation of human resources already legally resident.

- With the exception of the UK, no Member State seems to have put in place any scheme/facilitated procedure in order to promote circular and return migration of third-country HSW (for example, preference to workers having already worked in the country for a certain period, facilitated procedures for re-entry, etc). Such schemes would foster the mobility of HSW, but they could also help to maximize benefits for all interested parties, i.e. responding to labour needs in Member States, while contributing, through eventual return, to the development of their countries of origin.

- A strong competition for highly skilled workers takes place not only at a global level, but also among Member States. In this context, differences relating to welfare state systems, to labour market institutions as well as to the conditions of admission for third country nationals create imbalances across the European countries. Overall, the lack of a common European system seems to hamper the overcoming of regional imbalances in European labour markets and to give rise to additional costs for neutralizing the effects of policy competition by other EU Member States. Competition in itself is not negative, but economies of scale could be realized for the benefit of the EU economy as a whole.

- In order to attract HSW, the length and the complexity of admission procedures could play a fundamental role, as well as admission systems generally demand-based. The absence of job seekers permits could represent a significant obstacle to attracting HSW, since the need of a job offer/work contract as a prerequisite for admission clearly acts as a limiting factor (but at the same time it ensures that admission responds to concrete job needs).

- In order to retain HSW, almost one third of Member States grant them internal mobility in the labour market (even if with limitations in many cases) and/or foresee more favourable conditions of entry and residence for their family members (in terms of family reunification and/or access to the labour market for family members). Nevertheless, very few Member States recognise more favourable conditions for acquiring permanent residence than those foreseen under Council Directive 2003/109/EC. In other words, the full social and economic integration of HSW does not seem to be comprehensively pursued in these Member States.

- Finally, even though the issue of labour market/skills shortages assumes a particular relevance with respect to the current and estimated development patterns in the European context, not all the Member States provide for a specific assessment of labour shortages in order to foster the admission of HSW in those sector/occupations.

2.3. What are the underlying drivers of the problem?

The following underlying drivers have been identified:

1. the increasing demand for highly qualified workers, due to:

2. the structural change that is currently characterizing the EU economy, in which a substantial growth of the service sector increasingly demands highly qualified human resources;

3. the delocalization of firms, which suggests an increasing need to concentrate in the EU the business executive functions, and the associated high profile professional figures;

4. the growing importance of a knowledge-based economy in the global competitiveness scenario: the EU needs to increase its productivity and competitiveness with respect to the emerging work-intensive economies like India and China by basing its development on factors like innovation and human resources qualification, as well as to face the increasing perspective demand of qualified human resources in order to reach the Lisbon’s objectives;

5. the growing difficulty in relying exclusively on the EU-national labour force to respond to the demand for highly skilled occupations, due to:

6. the high levels of employment already reached by highly skilled EU-nationals, which underlines scarce labour reserves;

7. outflows of EU nationals, which have an important impact on skills composition, and depend on the structure of the EU labour market, whose features are on average constantly becoming less attractive for highly skilled workers if compared to business or research conditions in certain non-EU countries;

8. the substantial difficulty for the EU in attracting and retaining third country HSW.

As concerns the last driver, the following causes can be considered:

- a variety and/or the absence of systems in the EU regulating the conditions of entry and residence of HSW, which suggests that competition for highly skilled workers takes place not only at a global level, but also among Member States. It also undermines competition for the "best and the brightest" at global level[61];

- the wide differentiation among MS in terms of legal definition of HSW and of criteria to be fulfilled in order to be classified as HSW, which also hamper the efficient functioning of the EU labour market (i.e. if equal or similar job opportunities/offers exist, highly skilled migrants could base their choice of the Member State of destination on where they can be more easily admitted under special schemes);

- the requirements of admission conditions, as the systems in the EU are demand-driven (with the exception of the UK) contrary to other immigration countries;

- the low attractiveness of the residence and work conditions recognized to HSW from third countries in terms of residence and work conditions where a special scheme has not been put in place.

- the lack of clear and common rules regulating and encouraging the possibility of intra-EU mobility of third-country HSW between Member States, which is also hampered by the wide differentiation among MS in terms of legal definition and scheme of accession of HSW. At the same time, intra-EU mobility of EU citizens has contributed to offset skill shortages, through a more efficient allocation of human resources throughout the EU labour market.

Figure 1: Problem Tree

[pic]

The problem of skill shortages in EU market labour is wider than what has been tackled in this problem definition, and, as explained in the previous sections, certainly the attraction of HSW from third countries alone is not by itself a sustainable long-term solution, but only it shall be part of a comprehensive package of measures (other than immigration policies) that must and are implemented in parallel by Member States and the EC. In particular, it is clear that the contribution of HSW immigration to mitigate negative consequences of the demographic ageing will not be crucial, as the whole number of HSW entering EU labour market is supposed to remain limited (the migration of HSW is clearly “selective” kind of migration). To this purpose, the HSW inflows would only contribute to a more limited extent in comparison to other measures and policies, in particular those contained in the Commission Communication on "The demographic future of Europe – from challenge to opportunity" . The contribution of HSW immigration to offset skills shortages would in turn be more relevant as they would bring skills and professionalism that are becoming more and more in short supply into the EU labour market. This is especially clear in a demand-based approach, assuming that employers wouldn’t gain particular advantages in recruiting third-country nationals (i.e. lower salary).

2.4. How would the problem evolve, all things being equal?

The problem as described above is expected to deteriorate if the current status will remain unchanged, due to the fact that the most intense labour shortages that the European Union will have to face in the next years are expected to be in skilled and highly skilled occupations.

In fact, in the medium to long term the expected growing demand for HSW will be increasingly difficult to be met only by means of the EU-national labour force because of:

- the EU demographic projections, which clearly indicate a considerable decline of EU working age population for the foreseeable future, combined with a continuous growth of employment in high education sectors and the high levels of employment already reached by highly skilled EU nationals[62];

- the fact that other non immigration-related common policies – such as better educating the EU labour force – require investments and time to deliver and cannot guarantee that mismatches between the supply and the demand of labour will not continue to arise.

- the expected decreasing contribution of the intra-EU mobility of EU national HSW to offset labour supply shortages, given that all European Member States (including new Member States) will face similar problems in the highly qualified segment of the labour market and that the EU citizens are not particularly mobile.

Furthermore, future labour market needs will lead to increased international competition for highly skilled immigrants. Without an appropriate management of economic migration, EU competitiveness and growth would be at risk, compromising the achievement of the objectives established by the mid-term review of the Lisbon Strategy.

2.5. Does the EU have the right to act?

The legal basis for Community action in the area is established in Article 63 (3)(a) and (4) of the Treaty establishing the European Community. These provisions state that the Council is to adopt “measures on immigration policy within the following areas: (a) conditions of entry and residence, and standards on procedures for the issue by Member States of long-term visas and residence permits, (…)” and “measures defining the rights and conditions under which nationals of third countries who are legally resident in a Member State may reside in other Member States”. The principle of subsidiarity applies since this is an area of shared competence. For this reason, any measure proposed will respect the competence of the Member States to determine the numbers of economic migrants seeking access to the EU, including by means of national quotas.

If Member States act alone, they may not be able to face international competition for highly skilled third-country workers. And this is even more true for the smaller Member States, as explicitly recognised during the discussions in the Committee on Immigration and Asylum. From the immigration policy's point of view, and considering that elements such citizenship are under the exclusive competence of the Member States, one of the main attractiveness of the EU compared to its competitors is the possibility to accede to 27 labour markets, so to grow professionally while responding to concrete needs of the EU companies by means of a more efficent allocation of human ressources. Moreover, this could lead to a higher level of brain circulation that should produce spillover and beneficial effects for all the EU economy. From the immigrant point of view, granting the possibility of intra-EU mobility for third country nationals before EC long-term residence[63] could represent an incentive for HSW in their decision of entering the EU economy. But this possibility can only be granted through Community action and may also require a common understanding on the admission of these workers to EU. Presently, the attractiveness of EU appears to be dependent on the opportunities offered by the single national labor markets and immigration regimes.

3. OBJECTIVES

3.1. Global objectives

Based on the needs and problem analysis outlined above and on the EC legal framework in the field of legal immigration, the following objectives have been identified:

9. To improve EU ability to attract and retain third-country highly skilled workers as one of the conditions for increasing the contribution of economic immigration within the set of policies and measures aimed at enhancing the competitiveness of the EU economy, as well as at addressing the consequences of demographic ageing;

10. To effectively and promptly respond to existing and arising demands for highly qualified labour, and to offset skill shortages, by enhancing the inflows and circulation of third-countries highly skilled workers between jobs, regions and Member States and promoting their efficient allocation and re-allocation on the EU labour market.

3.2. Specific and operational objectives

The following specific objectives should be pursued:

11. To develop a coherent approach and common immigration policy concerning the third-countries highly skilled workers;

12. To increase the numbers of third-country HSW immigrating to the EU on a needs-based approach, i.e. where and when there are gaps in the highly qualified segment of the Member States' labour markets that cannot be filled in by EU citizens or legal residents.

13. To lower barriers to entry, simplifying and harmonizing admission procedures for third country highly skilled workers, without prejudice to EU nationals;

14. To promote highly skilled workers social and economic integration by granting them and their family with favorable conditions of residence, without prejudice to EU nationals;

15. To encourage intra-EU mobility, allowing a more efficient allocation of third country highly skilled workers through the EU, without prejudice to EU nationals

At this stage, it is possible to define a set of basic operational objectives, i.e. those objectives which should be considered valid irrespectively from the policy option actually adopted:

16. To establish a common definition and common rules concerning the condition of entry of third-country highly skilled workers, as pre-condition for developing a common EU immigration policy and for fostering intra-EU mobility;

17. To establish common rules concerning the condition of residence of third-country highly skilled workers;

18. To set up specific instruments aimed at encouraging the intra-EU mobility of third-country highly skilled workers;

19. To send a clear message to third-country HSW, highlighting the EU commitment to facilitate their admission and residence (including for family members).

20. Monitoring and evaluation on a regular basis.

The present analysis takes due account of the need to ensure consistency and mutual reinforcement among the different policies and objectives of the Union. In particular, it was necessary to develop the above objectives so to respond to the political mandate of the Hague Programme and complement the other measures developed by the EC and its Member States to achieve the objectives set in the Lisbon Strategy and in the Integrated Guidelines for Growth and Jobs (2005-2008), in particular those described in Section 2.1. Consistency with the objectives of the reviewed Sustainable Development Strategy has also been ensured. As concerns respect of fundamental rights, specific objective 3 addresses specifically the right to family life and the other rights that should be recognised to third-country nationals so to foster their successful integration in the EU. As concerns the existing immigration legislation, these objectives are in line and support the existing legislation and policies in this field. Finally, the specific and the operational objectives will have to be pursued respecting the principle of EC preference as laid down in the Council Resolution of 2004. As concerns the Community preference as contained in the Acts of Accession of 2003 and 2005, it was already recalled that, these being primary law, any option would have to be implemented in full respect by those Member States that will maintain the transitional measures affecting the freedom of circulation of workers from the new Member States, as long as they do.

The link between global objectives one and two requires an additional clarification (also as a premise to the analysis carried out in Section 5): the aim of an EU policy should be twofold. On the one side, to attract and retain those HSW that are needed in the EU: this also means that total number of HSW from third-countries admitted in the EU is likely to increase, depending on the situation in the labour markets. On the other side, the policy should contribute to compensate the negative effects of the existing segmentation of Member States' labour markets and of the relatively low mobility of EU citizens by simplifying job and geographical mobility (i.e. within the Member State of residence and within the EU). The correlation between the two objectives is clear: they both concur to better matching supply and demand of highly qualified labour – by complementing policies addressed to EU workers – and to creating a favorable environment for third-country highly qualified workers and their employers. For both objectives, regional differences in employment gaps and unemployment rates should not be overlooked. However, this is a matter falling within the competence of the Member States, as they will remain responsible of the final decisions on whether or not to admit an HSW (see section 2.5.).

4. WHAT ARE THE MAIN POLICY OPTIONS AVAILABLE TO REACH THE OBJECTIVES?

A first list of policy options has been developed taking into account in particular the outcome of the consultation with the relevant stakeholders[64], the results of the benchmarking analysis on the Australian and US systems for the admission of HSW and the consistence with the different policies and objectives of the Union, with particular attention to the existing provisions in the field of immigration and employment. An explication on the reasoning beyond the choice of the different specific elements considered in each policy option and a table listing them are included in Annex VII.

Figure 2: possible policy options

[pic]

The use of a regulation has been discarded as it would not be consistent with proportionality principle and, more in particular, with the minimum legal constraint principle.

Policy option A: No EU Action

Current developments in Member States and at EC would continue within the existing legal frameworks.

Policy Option B: Directive focusing on establishing a basic common ground

This option would propose establishing a minimum common ground at EU level for attracting HSW. It would be an intervention aimed at establishing a minimum set of admission conditions on which to base a common policy (i.e. necessity of a job contract or firm offer of work, plus one common criterion as the salary threshold, while possible additional ones could be decided by each Member State), while leaving to national legislations a great extent of autonomy in specifically defining the peculiarities and distinctive elements of the legislation on HSW in terms of residence and work conditions.

Policy Option C: Directive focusing on lowering barriers to entry (by simplifying the admission system)

This option would be focused on lowering barriers to entry with specific reference to bureaucratic and administrative procedures and to a certain level of harmonisation of the entry conditions. This aim would be reached, inter alia, through the introduction of:

- an EU points system, whose minimum set of criteria (i.e. salary level, educational qualifications; past work experience; existence of job offer) and relative minimum weights could be defined at EU level.

- a fast-track procedure (single procedure/single permit), defining also a maximum period of time for processing the applications.

- a provision which will consider the economic needs test implicitly satisfied by fulfilling the admission criteria.

- a procedure allowing family reunification within the shortest delays or, in association with the points system, a procedure establishing an application for entry covering a family unit.

- as a complementary measure, of a skill-matching database in which significant information (education, experience, civil status, composition of the family and profession/qualification level of the spouse, etc.), related to the potential applicants for admission to the EU as HSW, would be recorded.

Policy option D: Directive focusing on fostering HSW integration

This option would be focused on fostering HSW social and economic integration: making the EU more attractive to HSW by a legislative system establishing more favourable conditions of residence for them and their families and providing for common admission conditions. This aim would be reached, inter alia, by means of:

- Admission conditions based on the definition of a common set of criteria an applicant must comply with (i.e. salary level, educational qualifications and/or past work experience; existence of a job offer) but without a point-system and with the inclusion of specific exceptions.

- Fast-track procedure for issuing work/residence permits.

- Introduction of relevant protection/rights related to access to the labour market for the HSW, including job mobility (the right to freely change job/employer within the same MS) from the beginning.

- Possibility for HSW to acquire EC long term resident status before the 5 years period provided for by Council Directive 2003/109/EC.

- Provisions ensuring family reunification within the shortest delays and immediate access to the labour market for the spouses of HSW.

As regards the condition of entry, it should be noted that the Policy option foresees the economic needs test as a general rule but with possible exceptions to be defined at MS level.

Policy option E1: Directive focusing on fostering intra-EU mobility (“EU Blue Card”)

This option would be focused on fostering intra-EU mobility: giving significant relevance to intra-EU mobility as a specific aspect of the EU policy for attracting HSW. This policy option would be characterised by the following elements:

- Common admission criteria (job offer, salary threshold, relevant education or professional experience).

- Provision of specific exceptions for specific sub-groups of HSW, who could benefit from even more favourable condition of entry (i.e. acceptance from in-country requests for gaining HSW status, professions in national priority lists, etc.).

- Economic needs test as a general rule.

- Coordination at the EU level in the definition of national priority lists. As an alternative to this, an EU priority list could be defined, in which the priority categories of HSW for EU are included, according to the shortages emerged at the level of all MS. Professions included in these priority lists would not be subject to the economic needs test.

- Definition of a maximum period of time (i.e. 4 weeks) for processing the applications and a minimum period of validity the initial permit (i.e. 2-3 years).

- Internal (job) mobility after 2 years.

- Creation of an EU Blue Card that would grant – among other things – to HSW the possibility of moving within the EU for reasons of employment. Intra-EU mobility would be allowed after a minimum “waiting period” in the first Member State (i.e. two years) and under certain conditions (first of all, job offer in second MS).

- Creation of a database of the EU Blue Card owners.

Possibility of cumulating periods of residence in different EU Member States in order to be eligible to the EC long-term residence status after 5 years of legal residence in the EU. This option would be focused on fostering intra-EU mobility: giving significant relevance to intra-EU mobility as a distinguishing aspect of the EU policy for attracting HSW. The option would be composed of the following elements:

- Common admission criteria (job offer, salary threshold, relevant education or professional experience).

- Provision of specific exceptions for specific sub-groups of HSW, who could benefit from even more favourable condition of entry (i.e. acceptance from in-country requests for gaining HSW status, professions in national priority lists, etc.).

- Economic needs test as a general rule.

- Coordination at the EU level in the definition of national priority lists. As an alternative to this, an EU priority list could be defined, in which the priority categories of HSW for EU are included, according to the shortages emerged at the level of all MS. Professions included in these priority lists would not be subject to the economic needs test.

- Definition of a maximum period of time (i.e. 4 weeks) for processing the applications and a minimum period of validity the initial permit (i.e. 2-3 years).

- Internal (job) mobility after 2 years.

- Creation of an EU Blue Card that would grant to HSW – among other things – the possibility of moving within the EU for reasons of employment even before acquiring such right as EC long-term residents. Intra-EU mobility would be allowed after a minimum “waiting period” in the first Member State (i.e. two years) and under certain conditions (first of all, job offer in second MS).

- Creation of a database of the EU Blue Card owners.

- Possibility of cumulating periods of residence in different EU Member States in order to be eligible to the EC long-term residence status after 5 years of legal residence in the EU (in order not to penalise mobile workers).

Policy option E 2: Directive focusing on fostering intra-EU mobility (“no EU blue card”):

As compared to the Policy Option E 1, the main specific feature of this option would be that intra-EU mobility rights existing for EC long-term residents under Council Directive 2003/109/EC would be extended to HSW from the very beginning or after 2-3 years: this element would replace the EU Blue Card of option E1. This provision would be supported by:

- Setting up of a skill-matching database in which relevant information (education, experience, skills, occupations, previous earnings, civil status, composition of the family and profession/qualification level of the spouse, etc.), related to all third-country nationals admitted to the EU as HSW, would be recorded.

- Introduction of an EU points system as admission system (see Policy Option C): this would be the other relevant difference with the previous option.

For the rest, this option is has; mutatis mutandis, the same elements of the previous one.

Policy option F: Communication, coordination, and cooperation

Actions would be developed within the existing legal framework, without new legislative intervention but using a comprehensive programme of communication and cooperation with all parties and coordination of Member States’ legal and policy initiatives to achieve a greater approximation. The following measures could be implemented:

- Support the exchange of best practice on HSW legislative system (in terms of legal definition, conditions of entry, conditions of residence, etc.).

- Setting-up of networks of expertise on different national HSW legislative systems.

Information campaigns clarifying the differences/commonalities between the Member States legislation on admission of highly skilled workers, so to enhance information of the potential immigrants and employers and to favour the autonomous approximation of the different national systems. Actions would be developed within the existing legal framework, without new legislative intervention but using a comprehensive programme of communication and cooperation with all parties and coordination of Member States’ legal and policy initiatives to achieve a greater approximation. The following measures could be implemented:

- Support the exchange of best practice on HSW legislative system (in terms of legal definition, conditions of entry, conditions of residence, etc.).

- Setting-up of networks of expertise on different national HSW legislative systems.

- Information campaigns clarifying the differences/commonalities between the Member States legislation on admission of highly skilled workers, so to enhance information of the potential immigrants and employers and to favour the autonomous approximation of the different national systems

Elements common to different policy options discarded at an early stage.

21. Differentiated systems based on the level of skills (i.e. “Highly skilled workers”, “qualified workers”): this element concerns policy options C and E. This sub-option would imply different conditions of entry and residence according to each category of HSW, rendering its transposition and implementation more complex and burdensome for Member States. Therefore, the option would be not efficient for achieving the identified objectives of the proposal. Furthermore, in respect of option E1 and E2, it would not be sustainable to propose significantly lowering or even eliminating existing barriers to intra-EU mobility for qualified third-country workers, as this may have a very significant – and most likely negative – impact on Member States' labour markets and on qualified workers who are citizens or legal residents.

22. Salary level (as one of the criteria for admission) expressed in absolute terms: this has been discarded given the wide differentiation in salary levels between Member States. Therefore, only the possibility to express it in relative terms (i.e. sufficiently high in comparison to the average salaries in the Member State) has been considered.

23. Defining at EU level the employer's role: this sub-option has been discarded in respect of the principles of subsidiarity and proportionality (except, partially, in respect of Option D and of the fast-track procedure).

24. An "EU Blue Card" (option E1) that would be issued by the Member State of first entry but would be valid throughout the EU: this option of validity throughout the EU has been discarded as, under the existing EC legislation, the residence permit is only a substitute for a visa that can be used by a third-country national, together with a valid passport, to travel freely within the Schengen area. It therefore does not grant any right of residence in a Member State different from the one that issued it. Creating a residence card valid throughout the Union would not be consistent with the principles of subsidiarity and proportionality, and would entail high costs for implementation

5. ANALYSIS OF IMPACTS

5.1. Assessment criteria

A multi-criteria analysis has been used to assess and compare impacts. The assessment criteria are aggregated with respect to their relevance, feasibility and expected impacts. In view of the limits of the data available and of the fact that Member States will retain competence on the numbers of HSW admitted to the EU territory for employment purposes, no attempt has been made to quantify the impact of each option.

For each policy option, the expected impact has been assessed by using a synthesis grade. The assessment is carried out on a purely qualitative basis (apart from the financial and administrative costs) and the judgment of policy options is expressed on an ‘intuitive scale’ of positive impacts from one to five (where five is the best score). Negative impacts are pointed out by the sign “-” and neutral effects by the sign “0”. It must be noted that when it comes to the difficulties for transposition and the costs, the number of "√" indicate instead how high the difficulties or the costs may be. Moreover, the motivation of the rating is explained as well as a brief analysis of each policy option with respect to the assessment criteria is provided. Furthermore, the elements of each option have been evaluated to ensure compliance with the provisions contained in the Acts of Accession of 16 April 2003 and 25 April 2005, limiting the freedom of movement of the workers who are nationals of these Member States (with the exception of the Maltese and Cypriot nationals). The main element to examine whether the proposed policy options comply with the preferential treatment clause of the transitional arrangements is whether they provide for an economic needs test or not. Such a test, by checking if no national, EU national or long-term resident third-country national already present on the labour market can fill the vacancy concerned, ensures compliance with the clause in the transitional arrangements.

Before analysing the impacts on each option, a causal model has been developed to identify the impacts and the cause-and-effect linkages between each of the policy options/instruments and their impacts. The figure in Annex VIII illustrates these interrelations.

5.2. Assessment of measurable impacts of each of the policy options[65]

The tables below outline the main impacts. A summary assessment of the policy options is included in Annex IX (including a table listing the specific elements of the options).

5.2.1. Policy option A: No EU Action (status quo)

Policy Option A: Status Quo |

Assessment Criteria | Rating | Motivation of the rating and aspects of the policy option necessary to achieve the impact |

Relevance |

Attract and retain third-country HSW, enhancing the competitiveness of the EU economy, and addressing the consequences of demographic ageing | - / 0 or √ | In its current state, the EU substantially fails in attracting HSW in comparison with the traditional immigration countries (such as Canada, Australia). Even if several MS are planning to introduce new legislation (i.e. Group B) or to amend the existing rules on HSW (6 MS of Group C), other MS (Group A) have neither a specific scheme in this field nor are planning to review the current legislation for the time being. Moreover, the autonomous initiative left at MS level is likely to result in the development of national schemes different one from the other, with the risk of having a negative effect in terms of increased competition among MS and no effect on the attraction of the EU as a whole (even though some MS could have positive effects, especially the big MS). Thus, policy development at the MS level could only partially offset the negative effects expected at EU aggregated level if no action is taken. |

Respond to existing and arising demands for highly qualified labour, offset skill shortages, enhancing the inflows and circulation of third-country highly skilled workers | - / 0 | Labour shortages exist and are increasingly expected in numerous MS. In addition, the limited intra-EU mobility among EU nationals, the EU demographic trends and the high employment rate among national HSW strongly suggest that MS cannot rely exclusively on national labour force in order to offset the labour and skills shortages expected in the future. In this view, third-country HSW could give a relevant contribution (combined with a set of policies at the EU level aimed at increasing education and skills, promoting a better “utilization” of those human resources already present in the EU, contrasting the brain drain of EU national HSW). In this context, two policy choices of individual MS must be analysed: 1) no specific national policies to attract HSW in a context of present or expected needs: these MS might not be able to fill in quickly and effectively existing and arising labour gaps. This objective may be partially be met through classic immigration schemes and through intra-EU mobility of EC long-term residents. 2) MS already having or setting up attractive schemes will be able to fill in gaps, but labour markets will continue to be segmented along national frontiers for HSW who are third-country nationals. Inflows may be enhanced, but not circulation. Thus, the status quo could hardly deal with the current and expected issues, and even in the light of policy developments at MS level, the continuation of the status quo could only partially offset the foreseen evolution of the problems, if no action is taken. |

Develop an EU coherent approach and common immigration policy | N/A | At the moment, a wide differentiation exists in this field among MS. Several MS are discussing/are in process of amending/introducing a new legislation addressed to HSW (Groups B and C). Nevertheless, without an EU intervention, the EU MS could hardly reach a coherent approach on immigration policy of HSW. |

Lower barriers to entry | 0 | In its current state, many MS are characterized by low barriers to entry for HSW. However, there remain numerous MS who have no special legislation in this field (Group A) or where high barriers to entry of HSW are present (some MS of Group C). |

Promote highly skilled workers social and economic integration | 0 | Improvement in this field will depend on the policy initiatives at MS level. In particular, MS having no scheme for HSW (Group A) or not foreseeing specific conditions for the integration of HSW (some MS of Group C) are in process of amending the current legislation, but very few information is currently available about the provisions envisaged. |

To foster intra-EU mobility | 0 | The geographic mobility (across MS) would remain extremely limited or impossible for third-country HSW, except once they have acquired EC long-term residence (but in this case, they should be already integrated in the country of residence and this entails the possibility that they end up following the same scenario existing for EU citizens, i.e. low mobility). Anyway, due the transnational nature of the problem, Member States cannot act alone in this field. |

Feasibility |

Difficulty/risks for transposition | N/A | N/A |

Financial and administrative costs | 0 | No additional cost |

Expected Impacts |

Impact on EU competitiveness | -/ 0/ √ | As previously noted, the EU substantially fails in attracting HSW with respect to the traditional immigration countries . The demographic trends in the EU will concern all MS, implying a growing difficulty in relying exclusively on national labour forces and their mobility within the EU. More importantly, the current and expected labour shortages in numerous MS, associated to a low mobility of EU citizens, could hamper in the long term the EU economic growth. Moreover, the SMEs (where also labour and skills shortages are recorded) may be particularly damaged in case of complex and the lengthily procedures for hiring foreign HSW, especially when they have to recruit them outside the EU. The policy developments at MS level (several MS are planning to introduce national legislations specifically addressed to HSW) could promote the attraction of HSW and improve the current macroeconomic framework. However, negative effects, in terms of increased competition on the international scene among MS, could arise if the status quo is maintained. The introduction of new specific national rules aimed at attracting third-country HSW in only a certain number of MS could damage the relative position/the attractiveness of other MS, by diverting the inflows of HSW from one MS to another. Thus, the development of new legislations at MS level could have no/little effect at aggregated EU level. On the other side, as the competition at international level is becoming increasingly harsh, the EU could better act as a block in attracting HSW and then compete internally for such resources. In this view, the maintenance of status quo would not allow the EU as a whole to improve its role as a global player, with low result in the global competition for HSW. As concerns the impacts on EU competitiveness of the lack of common rules to allow a facilitated circulation of HSW among the MS, it would most likely be negative: to fill labour needs, EU enterprises will not be able to fully benefit of HSW who are already in a MS, but who might have become redundant in the MS of residence. The negative impacts on the EU labour markets of the low mobility of EU citizens would only be partially compensated if the status quo is maintained. |

Impacts on third countries | -/0/√ | In the absence of EU action in this field, policies in respect of brain drain and brain circulation would be left to Member States and to what is already done or planned at EC level. Member States' policies could take diverging directions. |

Impact on EU national HSW | 0 | No effect is expected in this field. |

Impact on third-country HSW | (-)-/0/√ | Impacts on third-country HSW would substantially continue to depend on national policies. The slightly more negative rating depends on the fact that an HSW would have to find his/her way among 27 different systems and that he/she would have to start from zero in case he/she wishes to move to a second Member State (until EC long-term residence is acquired under Directive 2003/109/EC): mobile HSW would therefore be penalized in respect of non-mobile ones in case they have expectations of obtaining EC long-term residence. This is of course not the case for all HSW admitted (or to be admitted) in the EU. |

Fundamental rights: |

- Protection of personal data (art. 8) | 0 | No effect |

- Respect for private and family life (art. 7) | 0 | No effect |

- Freedom of movement and of residence (art. 45(2)) | 0 | No effect |

- Non-discrimination (art. 21) | 0 | No effect |

Compliance with the Acts of Accession of 2003 and 2005 | Compliant |

Accompanying measures | N/A |

Stakeholders and experts’ view | The social partners, international organisations and experts expressed consensus on the negative impacts that the "No EU Action" option would have on the economic competitiveness and, to a lesser degree, on the position of EU national and third-country HSW. On the whole, the “No EU Action” option appears to be the worst case scenario in respect of EU economic growth and productivity in the medium to long terms. According to the European Club for Human Resources (EChr), it also appears susceptible to perpetuate a situation conducive to irregular migration, human smuggling and trafficking. |

5.2.2. Policy Option B: Directive focusing on establishing a basic common ground

Policy Option B: Directive focusing on establishing a basic common ground |

Assessment Criteria | Rating | Motivation of the rating and aspects of the policy option necessary to achieve the impact |

Relevance |

Attract and retain third-country HSW, enhancing the competitiveness of the EU economy, and addressing the consequences of demographic ageing | √√ | This policy option, on the whole, would only have a limited effectiveness in attracting HSW, as no provision for setting up quick entry procedures is envisaged (in particular, the requirement of the economic needs test as a general rule would most likely slow down the admission procedures) and no advantage in terms of conditions of residence is foreseen for HSW with respect to the other categories of TCW (unless MS decide to grants more favourable conditions in their national legislations). However, as compared to the status quo, the development of a minimum standards common approach in terms of entry conditions, based on certain common criteria (job offer plus salary threshold) plus other to be defined by MS, could represent a minimum step forward enhancing the EU attractiveness (especially if MS do not add too many additional criteria). It would however send a rather weak message to HSW who could consider Europe as a place of potential residence and work. |

Respond to existing and arising demands for highly qualified labour, offset skill shortages, enhancing the inflows and circulation of third-country highly skilled workers | √ | Only a marginal effect, as no specific mechanism aimed at matching labour supply and labour demand or at promoting HSW circulation is foreseen. The considerations done for Option A would apply – in terms of development of national schemes different one from the other – to this option as well, even though the minimum harmonisation foreseen could nevertheless lead to a slightly positive effect. |

Develop an EU coherent approach and common immigration policy | √√ | The establishment of at least a single common criterion (i.e. the salary level, besides the job offer) and a common entry condition (economic needs test as a general rule, with possible exceptions at MS level) would pursue a certain level of harmonization among MS. This would contribute to the development of an EU coherent approach. Moreover, the establishment of a common system, although limited in the scope of action, would be relevant as compared to the current lack of specific rules and schemes. |

Lower barriers to entry | 0/√ | The admission system based on only one common obligatory criterion (i.e. salary level, in a demand-based system) could lead Member States not to introduce additional ones (or at least not too many additional ones) or to simplify existing ones (the majority of MS already foresee admission system based on a set of criteria, whereas other MS do not foreseen any scheme for HSW), therefore leading to a positive effect. This is however not sure: on the contrary, it is likely that many MS would introduce/maintain several criteria. The impact of the requirement of a job contract would be in line with the current practice in all Member State (except UK and partially FR), but would be negative in respect of this specific criterion. |

Promote highly skilled workers social and economic integration | 0 | No specific advantage is foreseen in this field: MS legislations and present acquis would apply. |

Foster intra-EU mobility | 0 | No specific measure provides for the circulation and the efficient allocation and re-allocation of HSW in the EU labour market (except for application of the present acquis, i.e. Council Directive 2004/109/EC, Chapter III (residence in other MS) on long term residents: in this case, considerations done for option A would likewise apply). |

Feasibility |

Difficulty/risks for transposition | √√ | Wide autonomy left to MS in defining the peculiarities and distinctive elements of the national legislations on HSW. Moreover, the majority of MS already have national legislations specifically addressing HSW. Thus, such a proposal is likely to require little efforts to be ratified and transposed by MS. The problem of political acceptability (and the related risks for transposition) would be limited to the MS having no specific legislation addressed to HSW and no plan to introduce it. The MS of Group B should not represent an obstacle to the acceptance of such a policy option. |

Financial and administrative costs | √ | Limited additional costs due to the limited scope of the new legislation. These would be mostly limited to the introduction of a specific scheme for MS not yet having one or for those who would have to slightly modify existing ones (most likely, information for companies, training of immigration officials on the new rules, and similar). |

Expected Impacts |

Impact on EU competitiveness | √(√) | This policy option seems weak with respect to both the objective of attracting needed third-country HSW into the EU (as no favourable provision in terms of conditions of entry and residence is envisaged) and the production of a long-term change in the composition of immigration inflows into the EU. In terms of efficiency of the EU labour market, no specific measure is directly addressed to more efficiently manage matching of labour demand and supply. However, those MS that presently show relevant labour shortages in several sectors but do not have any scheme specifically addressed to HSW, could benefit from the establishment of such a scheme. As concerns the impacts on EU competitiveness of the lack of common rules to allow a facilitated circulation of HSW among the MS, it would most likely be negative: to fill labour needs, EU enterprises will not be able to fully benefit of HSW who are already in a MS, but who might have become redundant in the MS of residence. The negative impacts on the EU labour markets of the low mobility of EU citizens would only be partially compensated by this option. As a consequence, the whole net impact on the EU macroeconomic environment is likely to be quite limited. |

Impacts on third-countries | - and √ | No or small effects on sending countries, due to the marginal effectiveness of the policy option in terms of attracting and retaining third country HSW (especially in a long term perspective). Thus, at the EU aggregated level, no negative effect in terms of brain drain is envisaged but, at the same time, no advantage in terms of remittances is expected for third-country HSW (or, if such effects take place, they are not likely to be very significant) in comparison with the status quo. |

Impact on EU national HSW | 0 | Due to the small effect expected in terms of HSW attraction, no significant effect is expected in terms of job displacement, job opportunities and working conditions of EU national HSW. |

Impact on third-country HSW | 0 or √ | No favourable condition in comparison with the other categories of immigrant workers is foreseen. Thus, no significant effect is expected with reference to job quality and working conditions of third-country HSW. Similarly, the position of third-country HSW (in terms of social inclusion and economic integration) would be hardly influenced. However, the presence of a minimum salary level as one of the admission criteria would protect the third-country HSW from being hired at (significantly) lower salary levels than the EU nationals (therefore protecting also the EU HSW from unfair competition). |

Fundamental rights |

- Protection of personal data (art. 8) | 0 | No effect |

- Respect for private and family life (art. 7) | 0 | No effect |

- Freedom of movement and of residence (art. 45(2)) | 0 | No effect |

- Non-discrimination (art. 21) | 0 | No effect |

Compliance with the Acts of Accession of 2003 and 2005 | The economic needs test would be the general rule for first time access of high-skilled third country nationals to the labour market of EU Member States that apply transitional arrangements vis-à-vis other EU Member States. Moreover the option does not foresee provisions on intra-EU mobility. Therefore there should not be problems of compliance. |

Accompanying measures | Information campaigns targeted at employers and HSW. |

Stakeholders and experts’ view | As a general remark, consensus was expressed on the opportunity for proposing an open definition, given different employment needs in each MS. At the same time, the stakeholders agree on a basic set of admission criteria to be fulfilled, such as the job offer, educational attainments and work experience. With reference to the economic needs test, some stakeholders agree with the option of putting in place a fully-fledged economic needs test in order to effectively guarantee respect of the Community preference principle. However, the employers' organization interviewed suggested that a case by case analysis would actually be a too complicated tool. On the whole, notable differences concerned the general opinion on the relevance, feasibility and sustainability of the policy option. Similarly, the possible effects of this policy option on the considered fields of impact are differently assessed by the social partners and international organizations (the general impact of the policy option could be from neutral or quite limited to high). |

5.2.3. Policy Option C: Directive focusing on lowering barriers to entry (by simplifying the admission system)

Policy Option C: Directive focusing lowering barriers to entry (by simplifying the admission system) |

Assessment Criteria | Rating | Motivation of the rating and aspects of the policy option necessary to achieve the impact |

Relevance |

Attract and retain third-country HSW, enhancing the competitiveness of the EU economy, and addressing the consequences of demographic ageing | √√√√ | This policy option could have a high effectiveness in attracting HSW, due to several provisions such as: the introduction of fast track schemes, the economic needs test implicitly satisfied by admission criteria, the definition of a maximum period of time for processing applications, the acceptance of in-country requests. A strong message would be sent to potential highly skilled immigrants. These provisions would have a positive impact especially on temporary migration (i.e. 2 or 3 years, as the validity of the initial permit). If a supply-based system is introduced (the job offer would therefore constitute a plus in terms of additional points, not a pre-requisite), this option would rank high in terms of attraction of highly skilled workers to the EU. The establishment of favourable conditions of residence is also pursued, in terms of right to internal mobility after a waiting period, family reunification within the shortest delay (or application covering the family unit), possibility for longer period of absence from the EU without interrupting the period for obtaining the EC long-term resident status. The latter provisions could have an impact in terms of type of immigration, as the immigrant could go back to his/her country of origin (or elsewhere, maybe in another MS) for a certain period of time without heavily compromising his/her possibilities of obtaining the EC permanent residence (with positive impacts on retaining HSW where necessary). On the whole, this policy option could increase the EU attractiveness in respect of both temporary and permanent migration: its different elements could motivate third-country HSW in their choice of the country of destination and therefore contribute to EU competitiveness by increasing (and where necessary, retaining) highly qualified labour supply. |

Respond to existing and arising demands for highly qualified labour, offset skill shortages, enhancing the inflows and circulation of third-country highly skilled workers | √√√ | The requirement of the job offer (that would be one of the criteria of the point-system) would ensure that the HSW fill the vacancies existing in the internal labour market, if the weight assigned is high enough (therefore having a positive impact in respect of this assessment criterion). If, on the other hand, the weight is low enough to allow the creation of a supply-based system (the job offer would therefore constitute a plus, not a pre-requisite), this may have a high positive impact in MS where gaps in the highly qualified segment of the labour market are widespread, but could create tensions on the labour markets of those MS where such gaps are not (yet) so important or where there is highly skilled unemployment. The idea of a supply-system is of course to attract "the best and the brightest" under the assumption that these professionals will not have problems in finding a job corresponding to their qualifications and capacities. On the whole, however, in the present EU situation the net impact of a supply-driven system would not be so clear-cut, as it could not correspond to actual national needs. At the same time, specific instruments for improving the match between labour supply and demand are envisaged in this option: the Skill Matching Database (integrated with other instruments, such as EURES, etc.) could collect data of potential applicants for HSW schemes, partially available to potential employees. Moreover, besides supporting the match between labour supply and labour demand, this instrument could also support the creation of an entry-exit system within the EU be used for immigration management purposes. Moreover, harmonized and faster entry procedures would indirectly favour the ability of the EU economy to promptly respond to the existing and arising demand of highly qualified labour. Finally, it should be remembered the possible positive effect of the right to job mobility (although after a “waiting period”) in terms of more efficient re-allocation of HSW in the internal labour markets of EU MS. For all these reasons, the rating is quite positive, notwithstanding the net impact of a supply-driven system (see above). |

Develop an EU coherent approach and common immigration policy | √√√√ | The policy option would imply the establishment of common criteria and procedures at the EU level (introduction of an open definition, set of the minimum criteria and associate weights of the points system, introduction of fast-track scheme, etc.) and therefore it would clearly foster the establishment of a common EU policy in this field. |

Lower barriers to entry | √√√√ | The policy option intends to also lower procedural entry barriers for third-country HSW to the EU labour market. To this purpose, several elements are particularly relevant: Considering the economic needs test implicitly satisfied by the admission criteria; Introduction of fast-track scheme (single procedure/single permit); Definition of a maximum period of time for processing the applications. These provisions would reduce bureaucratic burdens and cut down waiting periods for third-country HSW applying to be admitted to a MS and for their employers. Moreover, and under the assumption that a demand-driven system is chosen at the beginning, on a medium-long term perspective the point system could allow a easier shift to a supply-based approach (and to the introduction of job-seekers permits), further lowering barriers to entry for HSW (no need for a job offer or only additional points attached to it). |

Promote highly skilled workers social and economic integration | √√√ | With reference to this objective, granting job mobility after a “waiting period” as well as allowing family reunification within the shortest delays (or allowing application covering family unit in the case of a points system) would clearly promote the economic and social integration of HSW in the MS. |

Foster intra-EU mobility | √(√) | No specific measure provides for the circulation and the efficient allocation and re-allocation of HSW in the EU labour market. However, the setting up of harmonised entry conditions and procedures could indirectly simplify intra-EU mobility of HSW. |

Feasibility |

Difficulty/risks for transposition | √√√(√) | More limited scope for national decision for both alternative sub-options as concern entry conditions, as the minimum set of criteria and the minimum relative weights for the point-system (as well as the maximum period for processing applications) would have to be defined at EU level for the system to be coherent and have an EU added value. Moreover, the introduction of a point-system could actually represent a notable shift in the current immigration policy, even if initially it could be demand-driven (more points to be allocated to the existence of a job contract). The definition and effective implementation of a point-system could be quite difficult, also at an operational level (for example, the scoring of each criterion should be defined so that a shift from a demand to a supply-based system would require no new EU intervention, but this may be difficult to achieve). It is likely that the criteria will have to be more strict in a supply-driven system, as the idea of such a system is to attract the "best and the brightest", who are not expected to ha