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Refugees vs The EU Economy

 4 min read / 

The moral fairness seems to outgrow the economic drawbacks and nationalistic claims as the refugee crisis continues. Reaching 2 million Syrian refugees in 2015, Europe is planning to accept an additional 1 million by the end of 2016, consequently increasing the EU’s population by 0.4%.The division on how to handle the challenges and drawbacks of the influx, are clearly observable among EU members. One of the positions is that represented by Socio-Democratic German Party’s head Sigmar Gabriel:

“We can handle the 1 million who came in 2015, but we won’t be able to handle it if another million come in 2016.”

In general terms refugees are said to be draining precious European resources, requiring accommodation, food supplies and basic facilities. Since 50% of the refugees are minors the provision of adequate educational systems also creates a vibrant discussion subject. Naturally, the spending pool is tightly connected with a host country and its so-called vision for immigrants’ future. Solely in 2015, Germany spent €10bn on arrival screenings, shelter provision, refugee camps and so forth. Nevertheless, the majority of the aforementioned amount was destined for individual benefits of approximately €12,000 annually per refugee and that on top of already provided facilities. This was a prime critique of a typical base salary German worker earning €2,183 monthly for 8-10 hours working days, shocked by the gratitude of financial support towards migrants.

Not only does Europe assist in fighting the Syrian crisis, neighbouring countries such as Jordan or Turkey have been accepting refugees since 2011, thus the influx effects can be gradually examined. With total number of 630,000 people, 35% of Jordan’s budget has been conducted towards refugees’ maintenance costs. Those included $81.4m for elementary education, $257m for university Syrian students’ aid, $167m for health services, $62m for additional infrastructure etc. Whilst the infrastructure could be considered as a domestic investment, the rest of annual rather fixed costs are a monetary shock for Jordan’s GDP and an obstacle for a national expansion. The example of Jordan provides just an epitome of seriousness of hidden spending linked to the flow of unskilled young migrants.

Contrary to this, in the long term perspective there are several valuable benefits of Syrian immigration that tend to be forgotten. In October 2015, EU Commission predicted a 0.2-0.5% increase in GDP growth as a consequence of migration. Understandably this will mainly affect Sweden, Germany and other generous hosting nations, rather than transit countries such as Hungary or Slovenia. From a purely economic viewpoint, the outward shift of a labour supply curve is likely to cause a fall in a domestic wages level, when considering a constant industry demand. While the argumentation of Syrians taking low-skilled jobs from natives, has recently arisen triggered by nationalistic political movements, this has never been proved in reality. Currently Syrians are said to look for the jobs that are unwanted by natives, rather than create a competition for them.

Equally important is the position of the German Chancellor,  Angela Merkel who has played a significant role in EU’s engagement in Syria’s crisis. Her long-term pro-migration vision corresponding to German demographic needs is critiqued by voters, declining Merkel’s popularity tremendously in recent months. The ageing German population is in great need for a young workforce, bringing the fiscal sustainability and balancing out the demographic pyramid.

According to immigration researcher Herbert Brücker:

“Around 1.5 million skilled immigrants are needed to sustain Germany’s state pension system”

By 2060, 2 workers will be needed for every retired person in Germany. So far very few companies have been involved in migrants’ assistance, usually claiming the poor language knowledge. Opposite to such, Bayer, the pharmaceutical company, has organised training for 20 refugees aiming for their adaptation to the industry. The concern is whether such small actions will ever be sufficient to ensure an assimilation of predicted 3m refugees in EU.

At the moment there is no consensus on the migration issue in Europe. The politicians remain divided with Left side satisfied for newcomers and Right concerned around European life standards. As German Deputy Finance Minister Jens Spahn said:

“We need a European solution to keep Europe together.”

Certainly there is a great need for practical outcome that would fulfil the moral outrage and ease the social concerns.

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