Demand for skilled workers in the UK and other big Western countries would create more inequality and dead zones in the regions that provide these employees, European business leaders and academics said yesterday.

At the Munich Economic Summit - organised by CESifo, the German think-tank, and backed by the BMW Herbert Quandt Foundation - business leaders debated the potentially negative impact of mass migration on the countries that surround Western Europe. Millions of Eastern Europeans have emigrated in pursuit of job opportunities in richer countries in recent years and this brain drain has limited the economic development of their home nations.

Gilles Saint-Paul, Professor of Economics at the University of Toulouse, said: “Places like Romania may become the Alabama of Europe. People are going to locate where there is already a lot of activity. There will be lower populations, lower levels of talent and that is a real consequence of economic integration.”

This movement of workers was also said to increase inequality because pay of skilled workers who stayed in their home nation increased because of skill shortages while the pay of unskilled workers fell because mass emigration reduced economic activity.

Mr Saint-Paul said: “This has the impact of increasing inequality. That is the inevitable consequence of making knowledge economies in Western countries.”

About 1.5 million people are thought to have left Poland since it joined the EU in 2004 and Lithuania has lost about 350,000 people - equivalent to about 10 per cent of its population.

Hans-Werner Sinn, Professor of Economics at the University of Munich, said that 164,000 Poles had moved to Germany and 59,000 to the UK in 2006 alone. About 112,000 Romanians had gone to Spain in the same year.

Lithuania has responded by encouraging foreign companies to set up business there. It has a corporate taxation rate of 15 per cent, one of the lowest in Europe, and the tax deduction for research and development is set at three times actual costs, which is thought to be the most generous in the world.

Rimantas Sadzius, Lithuania’s Finance Minister, said: “We have lost about ¤Many of the migrants to Western countries are low-skill workers who take jobs that British or German people do not want. Business leaders at the Munich summit said that the developed economies of Europe now needed to encourage more skilled workers into the region.

The EU is considering introduction of a blue card scheme, similar to the green card in the United States, which would allow a greater number of skilled migrants to enter from non-European countries.

However, Jürgen Chrobog, chairman of the BMW Herbert Quandt Foundation, a political and business think-tank set up by the carmaker, said that experience of such schemes had shown that they often did not work. He said: “We will not be able to grow without direct immigration of skilled workers. We need to put more emphasis on skilled immigration and change laws to make this happen. We need to relax the legal requirements for foreign workers and introduce softer admittance requirements for students.”

The issue of how Europe can attract more skilled workers — “the brain gain” — is to be addressed at the Munich summit today. Tito Boeri, an economics professor at Bocconi University, in Milan, will say that Western countries need to compete for the best human capital to support long-term growth rates and that Europeans have so far failed to attract as many skilled workers as the US.

However, business leaders at the summit also gave warning that even rich Western European countries could not assume that they would gain skilled workers in the future. Migration of skilled European workers to the US has been common for many years, but rapid economic growth in Asia and the Middle East may lure entrepreneurs and ambitious executives to countries such as China in the future.

Jürgen Dormann, the chairman of Adecco, a provider of temporary workers to businesses around the world, said: “We should look to Asia for movements of workers and less to America in the future. The world is shifting and the mature industries we have in Europe are going to shift to the East.”

Explore Economics

• Autumn Budget 2007

• Budget 2008

• World Economic Forum

• The Times MPC

Times Recommends

• Food prices rise 8.3% on soaring fish and meat
• Car sales crash as economy hits skids
• House prices fall but Bank leaves rates on hold