Refugees and asylum seekers are often portrayed as a burden for society. Yet, over the short term, might they provide a fiscal boost as government spending goes up (something the IMF has been calling for in Germany, for example). Over the longer term, could refugees help promote more dynamic economies, helping to offset Europe’s ageing population and shrinking labour force?
In order to take a closer look at the local impact of the refugee crisis, we recently launched our ‘Cities & Refugees‘ project – aimed at fostering a Europe-wide dialogue between citizens, refugees and asylum seekers, NGOs, politicians, and European leaders. The emphasis will be on connecting local, everyday life at the city level to decisions made in Brussels and national capitals.
Europe has to get this right first time. Failure to integrate refugees into the labour market could drive up unemployment and government debt, but successful integration policies might make all the difference. The question of how European governments handle such a transition over the coming years will be key.
Should rules be changed to make it easier for refugees and asylum seekers to start working legally? Should more be invested in classes to support refugees in learning the local language? Should a better framework be put in place to recognise qualifications from education institutes in refugees’ home countries?
This week, we’re looking at Vienna. Austria is one of the European countries standing to benefit the most from an increase in GDP in the short term, somewhere in the region of 0.5% (compared to a 0.31% fiscal cost to support refugees and asylum seekers in 2016).
Curious to know more about how the refugee crisis is impacting Europe’s economy? We’ve put together some facts and figures in the infographic below (click for a bigger version).
We had a comment sent in by Aryan, who argues that the influx of refugees has a very positive on the host country, not least from an economic point of view. Is he right to be so optimistic?
To get a response, we took Aryan’s comment to Jonathan Portes, Director of the National Institute of Economic and Social Research (NIESR), an independent research institution based in the UK. What would he say to Aryan?
In the short term, [the influx of refugees] probably will have some small positive impact, because governments have to spend more money to provide for refugees in the short term. And at the moment, with Europe’s economy still in a relatively sluggish state, a bit more government spending is actually a good thing (as we’ve seen in Germany and Sweden).
In the longer term, however, it depends entirely on how successfully countries can integrate refugees into the economy, society, and the labour market. If countries do a good job and are successful at integrating refugees, it will definitely be a benefit. If, on the other hand, refugees end up excluded, unemployed, etc., then it will not be a good thing at all.
We also had a comment from Mihai, who suggested that the (statistically younger) refugee population could help ease Europe’s coming demographic crisis, and that refugees should be seen as a potential “workforce to pay the pensions for an ageing population in the years to come”.
How would Jonathan Portes respond?
In principle, I would agree. If refugees are successfully integrated into German society, and hence into the economy and labour market, then it will undoubtedly be an economic boost for Germany over the long term. It will also help Germany to address some of its demographic issues. It is an ‘if’, though. It’s not always easy to integrate people; they will have to be taught the language, they will have to be taught to navigate the local labour market, and both refugees and German society will have to adapt. If that can be done, however, then it will be an economic boost.
Will the refugee crisis boost Europe’s economy? Will they help Europe better cope with an ageing population? How can refugees best be integrated into the labour market? Let us know your thoughts and comments in the form below, and we’ll take them to policymakers and experts for their reactions!