Why Welcoming More Refugees May Stimulate the Economy

Images of drowned boy Aylan Kurdi sparked international outrage about the Syrian refugee crisis, which has been described as the worst humanitarian disaster since the cold war. As governments in the Middle East, Europe and North America struggle to accommodate the millions of Syrians that have been displaced as a result of ISIS and other foreign backed militias, economists have been surprisingly silent on the question of whether countries should accept more refugees. Given how politically charged this topic has become, very few people are considering the economic benefits of resettling refugees into their respective countries.

To be sure, the question of refugee resettlement is an extremely difficult one. Lebanon has received millions of Syrian refugees since the war broke out four years ago and Europe has received an influx of more than 360,000 this year alone. These regions are concerned that accepting asylum seekers would encourage more, resulting in a huge economic burden. But does the evidence really support that?

Europe faces a much different demographic reality than most care to realize. Many European countries are facing significant labour shortages; the combination of an ageing workforce and very low birth rates is expected to place an even bigger burden on their economies. Without workers, economies don’t grow. A lack of economic growth depresses nations and diminishes the standard of living for all. For these countries, as well as for places like Canada, Australia, the United States and others, immigration is an economic development strategy. Collectively, these countries accept millions of immigrants each year. And before you ask, not all of these immigrants arrive to accept jobs. In fact, many come as students, to reunite with family, to fill quota and to escape their war-torn homes.

Most research clearly demonstrates that the overall economic impact of immigrants is positive. Even refugees who come to a new country make positive economic contributions after resettling. Although the resettling process usually entails immediate costs to the host country, the migrants later find jobs, spend money, bring new skills and open the door to international markets for their hosts. This same model has helped create untold prosperity for “New World” countries like the United States, Canada and Australia, regardless of how the immigrants came in the first place.

Obviously the case of Syria is different; the sheer magnitude of the resettlement is much bigger than most host countries have prepared to accommodate. But consider that Germany, Europe’s largest economy, has a labour shortage of 140,000 technical professionals. Given that many asylum seekers are well educated, they may be candidates to fill these occupations.

According to Ulrich Grillo, the head of the powerful federation of German industry BDI, “If we can integrate them quickly into the jobs market, we’ll be helping the refugees, but also helping ourselves as well.”

At the very least, their integration into the economic system might ensure that future labour shortages aren’t exacerbated by low birth rates. According to think-tank Prognos, the shortage of qualified workers is expected to surge to 1.8 million in 2020 and as many as 3.9 million by 2040.

Skills and labour shortages are being felt throughout Europe and North America, making asylum seekers potential candidates for filling in-demand jobs. As reported in the Daily Mail, Britain is currently facing its worst shortage in some roles including plumbers, engineers and builders in 30 years and countries like Canada and Australia are also facing shortages in various roles. However, looking at asylum seekers as a long-term strategy for filling in-demand jobs is assuming that they are here to stay. Most people don’t realize that most refugees simply want to return home. They are not economic migrants nor are they necessarily seeking family reunification, two common reasons for legal migration throughout the world. Therefore, accepting more refugees doesn’t necessarily mean more will come. People escaping imminent death do not sit around calculating where they can collect the best benefits. The traditional cost-benefit analysis simply doesn’t apply in cases of extreme hardship.

In addition to the humanitarian imperative to protect asylum seekers, there’s also an economic case to keeping them. Countries all over the world integrate asylum seekers into their society and economy each and every year. Beyond cultural prejudices, there’s little reason to believe that the same model can’t be successful for the recent influx of Syrian migrants, even though their situation is much bigger in scale.

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