How Spain Thrives on Immigration

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Nicolas Sarkozy, elected President of France on May 6, ran on a platform calling for stricter border controls. A recent poll by Harris Interactive shows that only 19% of British and French think immigration is helping their countries, vs. 42% of Spaniards.

New Demand for Workers

Certainly, Spain has some anxieties about immigration. A deadly 2004 train bombing in Madrid, blamed on a Moroccan-led terrorist group, underscored the risk of Islamic extremism, although there have been no major attacks since then. More recently, Spaniards have been alarmed by news reports showing African boat people trying to reach Spain's Canary Islands. And there have been scattered incidents of anti-immigrant violence.

Compared to its neighbors, though, Spain has had special reasons to welcome outsiders. As recently as the mid-1990s it was an economic backwater with an aging population and per-capita income only 80% of the EU average, vs. 96% now. But lower interest rates and a healthy dose of aid from Brussels sparked a demand for labor.

To fill jobs, Spain looked abroad. Immigration rose from 57,000 in 1998 to more than 600,000 for each of the past two years. The biggest influx, about 800,000 since the mid-1990s, came from Ecuador, followed by Morocco and Romania. Spain, unlike France and Germany, places no restrictions on immigration from the EU's new members in the old Soviet Bloc (see BusinessWeek.com, 5/1/07, "Germany to Keep Immigrant Labor Limits").

Many from other countries arrived under the radar: An estimated 25% to 35% of the current immigrant population is undocumented. But Spain has been generous with amnesty, granting legal status since 2000 to more than 1 million who could prove that they were employed.

Getting Ahead

Many found work in the booming construction sector. Across the suburbs of Madrid, armies of hard-hatted workers speaking a babel of languages are building row upon row of apartment high-rises on freshly bulldozed hillsides. "If you work well, you always have work," says Constantin Nitu, a Romanian who arrived in Spain in 1999 to work as a day laborer and now runs his own small construction business which employs other Romanian immigrants.

Now budding entrepreneurs are branching out into other sectors. Take Luminita Tecu, who runs a thriving bakery in the Madrid suburb of Coslada where she sells poppy seed pastries and other specialties of her native Romania. Trained as a nurse, she arrived in Spain in 1997 with little more than a suitcase, and took a job caring for an elderly Spanish woman while her husband did construction work.

By 2001, they had saved and borrowed enough from friends to open the bakery. When they wanted to expand the business two years ago, they easily got a $55,000 loan from a local bank. "At first my idea was to stay here for a year, earn money, and go back, but now I know I won't leave," she says. "I work hard, but my life is like a fairy tale."

Matlack is BusinessWeek's Paris bureau chief.

With Joan Tarzian in Madrid