Refugees will double Europe’s investment in them within 5 years – report

© Fabrizio Bensch
Refugees who arrived to Europe last year will have such a positive impact on the economy that they are projected to make the continent almost twice the money spent on accommodating them in only five years, a groundbreaking new study says.

Many are worried in Europe about the economic impact of hosting a large number of refugees fleeing war, but the benefits will far outweigh the disadvantages, according to Philippe Legrain, a former economic adviser to the president of the European Commission.

“Investing one euro in welcoming refugees can yield nearly two in economic benefits within five years,” says the international study by the NGO Tent Foundation, which was set up to help refugees and the displaced.

“The main misconception is that refugees are a burden – and that’s a misconception shared even by people who are in favor of letting them in, who think they’re costly but it’s still the right thing to do,” Legrain told the Guardian. “But that’s incorrect. While of course the primary motivation to let in refugees is that they’re fleeing death, once they arrive they can contribute to the economy.”

Refugees will not only create more jobs, they will spur demand for products and services, as well as fill job gaps and increasingly contribute to tax revenues in the long term. At the same time, they won’t contribute to unemployment for native inhabitants and are unlikely to lead to a lowering of wages, the study finds.

Legrain, currently a fellow at the London School of Economics, estimates that while it is true refugees will increase public debt by almost €69 billion ($77.8 billion) in the 2015-2020 period, they will also more than double GDP to €126.6 billion.

So, while a short-term strain on public finances will be felt, a short-term increase in economic demand will also be experienced, acting as a fiscal stimulus in EU countries where demand is otherwise low.

There seems to be an opinion that there are a fixed number of jobs to go around, but that is not the reality, says the report, because taking jobs also creates jobs. When refugees go about spending their earnings, “they boost demand for the people who produce the goods and services they consume,” the study says. “And they also create jobs for people in complementary lines of work. For instance, refugees who become construction workers create jobs for locals who are supervisors or sell building supplies.”

READ MORE: Poland ‘won’t accept refugees because of threat to security’ – Kaczynski

There is another issue of dire importance Europe is facing – and that is a shrinking working-age population. The figures are quite serious, according to new estimates, which predict it will shrink by 8.7 million people by 2030 – that’s one-sixth of the continent.

The one thing Legrain says will stand in the way of progress is Europe’s slow pace at acceptance and assimilation of refugees into the workforce. The economic advantages he calculated would only be possible if the EU takes urgent steps to speed this up.

One possible strategy is allowing migrants to work while their asylum applications are being processed; another is to expedite the process of academic certification for degrees obtained in the country of origin. This is especially good if a particular economic sector faces a shortage of labor.

Finally, according to the report, working in this direction will ensure that refugees’ reliance on public funds will be reduced as a result of their contributions. And quick access to the market will also help them adapt faster to a new life, as well as reduce the chances of their marginalization in a host society.

Other recent analyses of the refugee situation gave varying estimates and forecasts. The IMF had been promising only “a modest increase in GDP growth” if refugees are well integrated into the job market. The report from January gave smaller figures in the hundredths and tenths of a percent for leading EU members like Germany, Sweden and Austria by 2017.

But not every outlook is as positive when it comes to particular countries. Part of the problem, at least for Germany, is that over 80 percent of asylum seekers are unqualified. An October report by the Federal Employment Agency pointed to the problem.

Moreover, leading refugee hosts like Germany are experiencing a huge wave of anti-immigrant, often Islamophobic, violence. And the more the state contributes to migrant welfare, the more frequent and loud are the voices of movements such as PEGIDA (Patriotic Europeans Against the Islamization of the Occident). Scenes of violent protests by similar-minded protesters have been seen all over the continent.

And Fortune magazine’s November analysis paints a darker picture for the prospect of integration of foreign populations. It believes we are seeing similar doubts as in Greece, when the euro was called into question. It further says there are still no signs of European solidarity with the refugees, and no concerted approach, with governments in every member country looking out for themselves. Germany, it believes, has now reached its full capacity. But the analysis agrees that any success in further integration must start with the employment sector.