NATO Parliamentary Assembly
HomeNEWSNews 201629 May 2016 - Providing jobs quickly for refugees could ease host country economic burdens, NATO PA Report suggests

Providing jobs quickly for refugees could ease host country economic burdens, NATO PA Report suggests

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Tirana, Sunday 29 May 2016 – The Syrian refugee crisis is often characterised as a humanitarian and social tragedy transforming the political landscape of the Levant and Europe. But according to the Icelandic parliamentarian and rapporteur of the NATO Parliamentary Assembly’s Sub-Committee on Transatlantic Economic Relations, Ossur Skarphedinsson, the economic consequences of mass migration are frequently underestimated and misunderstood.

In a draft report debated by the Assembly’s Economics and Security Committee at the annual Spring Session in Tirana on Saturday, Skarphedinsson said that Europe confronts an array of pending labour bottlenecks that are likely to restrict economic growth over the coming decades.  “There is a mounting imbalance between pensioners and active workers needed to support them,” he said.  “Europe needs to find new ways to open up its labour markets in order to get more people working.” Employing refugees and other migrants, he said, could be part of the solution.

The draft suggests the wave of migrants flooding into Europe might actually constitute an economic opportunity rather than a burden. But it will require properly calibrated policies to ensure that this potential labour force is integrated quickly into job markets in a socially and politically acceptable fashion. It will not be an easy task.

But several European countries are making progress on this front. Sweden and Germany have recognised that working refugees are far less of a burden than those who are compelled to live off of state largesse because they are denied access to legal work.  Skarphedinsson’s report notes that both countries recognise that once refugees are able to work, they are in a position to pay taxes, and their presence is more likely to bolster GDP growth both on the supply and demand sides of the macroeconomy.  Moreover, work hastens social integration and reduces the risk of alienation, which can lead to an array of social problems.

There have been suggestions that refugees will bid down local wages, but there is little evidence of this in Europe where wages are “sticky” and the refugee numbers are not large enough to have a massive impact on them.  This is not the case in parts of Lebanon, however, where refugees now constitute as much as one quarter of the population.  Most refugees there are low-skilled workers, and are directly competing with the locals for jobs. This has bid down wages, particularly in the informal sector and added to other refugee related problems such as water and housing scarcity and demands on limited public assets like education.

Many of the refugees now living in Europe, which has a far greater capacity to absorb refugee populations, are likely to remain for a long time. How European governments respond to this situation will ultimately dictate the costs they must bear. Governments should move quickly to integrate recently arrived migrants and refugees into the labour market. Skarphedinsson’s report accordingly suggests that skills assessment and training programmes focused on the needs of newly arrived migrants, are required.  Some overly stringent worker qualification requirements should also be at least temporarily waved. 

In a presentation to the Economics and Security Committee, Jean-Christophe Dumont, head of the Migration Division at the OECD, stressed that the actual costs to Europe and North America of hosting refugees has been negligible given the size and level of development of these economies.  He noted that few countries have had to undertake significant budgetary adjustments to accommodate the arrival of so many migrants over the past year, even though the increase in government spending is likely to have a discrete demand driven impact on GDP growth.

Opening up opportunities for self-employment and reducing administrative demands on start-up firms would also be helpful and, in many cases, would be welcome policy changes in a continent where administrative burdens are partly responsible for high unemployment rates.

Finally, language training, and access to education should facilitate both social and economic integration. Even if refugees trained in Europe return to their home countries, Skarphedinsson’s report concludes, they do so with skills that can be critical to national reconstruction. Or as Jean-Christophe Dumont concluded: "Integration needs to be approached as an investment for future economic growth.”