Fact of the week : Refugee Crisis: A cloud with a silver lining?

The low total numbers of refugees accepted by the European Union member states illustrates the lack of political will to take responsibility for the humanitarian crisis. One of the fundamental arguments against offering more help is the detrimental economic effects that the extension of generous humanitarian aid could have. Upward pressure on infrastructure, coupled with downward pressure on wages, not to mention the divisive effect of cultural difference, are all arguments found in the more radical right-wing factions across the continent.  This lack of political will is further evidenced by the scramble of European leaders to strike a controversial deal with Turkish Prime Minister Erdogan, who senses an opportunity to leverage himself into a position of power against the EU, by pushing for Turkish accession to the Schengen zone by waving the carrot of a reduced flow of refugees to Europe.

But what if refugees were an economic solution, rather than a problem? That is what a new study by the Open Political Economy Network  finds. The net gains of one euro invested in refugees ‘can yield nearly two euros within five years’. While it is true that in the short term, refugees might place a burden on public funds, the study finds that refugees often go on to become net contributors. Indeed, in countries with depressed demand, such as countries who have recently experienced economic recession, refugees can provide a demand dividend. Once refugees begin working, the initial investment provides further dividends – what Phillippe Legrain refers to as the 4D effect – refugees do dirty, difficult, dangerous and dull jobs that locals often baulk at, and for which there is higher demand than supply. Refugees can also provide a ‘deftness dividend’ – with high skills that prove complementary to their host nations’ economic needs – for example carers of the elderly in ageing nations. Another dividend, the ‘debt dividend’ refers to the contributions that young, healthy, working refugees can make in the form of taxes and national security in order to restore the widening imbalance in many western states between the working and the dependent population. This can lead to a reduction in public debt as the deficit between public spending and tax receipts is reduced. Finally, the refugees offer a development dividend – for themselves, as well as their country of origin. The study cites the example of Liberia – where 18.5% of GDP is made up of remittances from the migrated population back to their home country.

While the findings of the study serve to shed new, substantive light on what has been a politically and emotionally charged topic up to now, the findings also show a steep learning curve for the EU member states, who to this point provide little help to refugees, and high barriers to employment. An attitudinal shift perceptions of refugees from intolerance and fear to welcoming and hope must in turn precipitate a policy shift from blocking refugees’ entrance to a country to aiding their access to the job market.