Welcoming refugees makes good economic sense, too
an economic opportunity for their host countries
The so-called ‘boat people’ who fled Viet Nam in the late 1970s were often seen as a burden and were often refused refuge elsewhere. Eventually, the United States of America accepted many of them. Most arrived with little or no English, few assets or no relevant job skills. Yet Vietnamese refugees now have a higher employment rate than people born in the United States and higher average incomes, too.
As well as a humanitarian and legal obligation, welcoming refugees is an economic opportunity. Indeed, investing one euro in refugees can boost the economy by nearly two euros within five years, according to a study co-published by the Open Political Economy Network (OPEN), an international think-tank I founded, and the Tent Foundation, which helps forcibly displaced people. Still, making the most of refugee contributions requires good government policies and Europe has a lot to learn from successes elsewhere in putting refugees into work.ECONOMIC CONTRIBUTION
Refugees contribute as workers, innovators, entrepreneurs, taxpayers, consumers and investors. They can help create jobs; raise the productivity and wages of local workers; enhance capital returns; stimulate international trade and investment; and boost innovation, enterprise and growth.
Investing in refugees provides a direct fiscal stimulus, yielding an immediate demand dividend to depressed economies. Once refugees start working they can provide seven further dividends. Some will do jobs that locals dislike, such as farm work and caring for the elderly, the area of fastest employment growth in advanced economies. This enables locals to seek the higher-skilled and better-paid jobs they prefer.
Higher-skilled refugees (and their highly-skilled children) can fill skills shortages and enhance locals’ productivity, thereby providing a deftness dividend. A third of recent refugees emigrating to Sweden are college or university graduates and two-thirds of those have skills that match graduate job vacancies.
Enterprising refugees start businesses that create wealth, employ locals, make the economy more dynamic and boost international trade and investment. This dynamism dividend can be huge. Sergey Brin, who arrived in the United States as a child refugee from the former Soviet Union, co-founded Google. In the United Kingdom, migrants are nearly twice as likely as locals to start a business – in Australia, refugees are the most entrepreneurial migrants.
Thanks to their diverse perspectives and experiences, refugees and their children can spark new ideas and technologies. People who have been uprooted from one culture and exposed to another tend to be more creative. Studies show that diverse groups outperform like-minded experts at problem-solving. This diversity dividend is substantial too: more than three in four patents generated in 2011 at the top-10 patent-producing United States universities had at least one foreign-born inventor.
Refugees, who on average tend to be in their early twenties, also offer a demographic benefit to ageing societies with a shrinking working-age population, such as Germany’s, where the average age is 46. Dynamic young refugees therefore complement older, more experienced local workers.
Refugees can also provide a debt dividend. Migrants in general tend to be net contributors to public finances, studies by the Organisation for Economic Co-operation and Development (OECD) show; in Australia, refugees become so after 12 years – sooner than local children.DEVELOPMENT DIVIDEND
Last but not least, refugees provide a development dividend – to themselves, their children and their countries of origin. Money sent home to Liberia, a big refugeesending country, amounts to 18.5% of its annual income.
Refugees have plenty to contribute. While greater investment in refugees is desirable, it needs to be combined with access to jobs. In the United States, which provides some initial help but then expects refugees to fend for themselves, refugees are more likely to be employed than locals. In Sweden, which is much more generous but makes it harder for refugees to work, they are much less likely to be employed. Other European Union (EU) countries tend to be stingy and also stunt refugees’ prospects with high barriers to employment. This breeds hardship and misplaced resentment towards refugees.
To get asylum-seekers and refugees into the workplace quickly they need the right to work, appropriate skills and job opportunities. Governments should process their claims more quickly while allowing asylum seekers to work. The EU should make it easier to claim asylum from outside its borders; as well as saving lives, it could provide resettled refugees with the right to work as soon as they arrive.
Employability is also crucial. Refugees’ education level and skills should swiftly be assessed to identify language and job training needs and better match them to employment opportunities. The recognition and conversion of foreign qualifications should be streamlined. Training a refugee doctor to practise in the United Kingdom costs £25,000 (US$30,600), a tenth of the cost of training a British doctor from scratch.
However, skills aren’t much use without job opportunities. Refugees should be resettled in areas where there are jobs, not in those where housing is cheap and employment scarce. Governments should vigorously enforce anti-discrimination laws. Opening up the labour market and making it easier to start a business are crucial. Looking to the future, ensuring refugee children don’t get left behind at school is also vital.
With wise policies, investing in refugees can yield significant benefits for their employers and the economy as a whole. They are not a burden to be shared or shirked. They are an opportunity to be welcomed.