Europe’s Refugee Surge Protective Seal
The IMF circulated a paper at the World Economic Forum in Davos weighing in on the Syrian asylum seeker debate with evidence of a short-term GDP growth boost from refugee influx despite fiscal costs, and recommendations for labor market and financial services integration for longer-run positive effects. It cited the UN figure of 60 million displaced globally, one-quarter officially refugees found to flee persecution and violence, from the Middle East as well as Africa and the Balkans. In 2015 around 1 million applicants requested EU safe haven, twice the number from the previous year, with the fastest buildup in Germany, Hungary and Sweden. Syrians accounted for one-quarter, and Balkan citizens from Kosovo and elsewhere for 15 percent, with the latter mostly rejected as economic migrants. Other countries with high acceptance rates were Afghanistan, Iraq and Eritrea, with arrivals often first landing in Turkey, Greece and Italy. Lebanon and Jordan have dozens of times more inflows per population than Europe, which last experienced such waves after the end of Communism and implosion of Yugoslavia in the 1990s. The original system of free entry and shared resettlement under the Dublin and Schengen approaches has been replaced by unilateral admission restrictions and border checks, including in Austria and Scandinavia joining early refusing members in Central Europe. With the process breakdown governments have agreed to build and underwrite temporary “hot spots” in gateway locations, and to send EUR 3 billion in aid to Turkey for frontline management, after it has spent over double that amount hosting Syrian escapees the past five years.
The IMF estimates an increased average budget burden of 0.1 percent of GDP this year, including in Croatia and Serbia, but the Stability and Growth Pact allows debt waivers for “unusual events outside state control.” Brussels is offering EUR 9 billion in central support for the Frontex border patrol and other purposes, and simulations show that output could be lifted by the same degree in individual countries as the additional expense. The medium-term impact in leading destinations Austria, Germany and Sweden could be a 1 percent gain by end-decade with good employment absorption, which is usually slow due to language, skills and gender disparities, according to the report. German immigrant data reveal double the level of joblessness and lower wages than natives, and the waves prior to 2015 with an average high school education. By contrast, 20 percent of recent Syrian arrivals went to college, and other policies on minimum salary and hiring flexibility could facilitate placement. Sweden runs a custom “introduction program” to match background and interests, and Austria provides a range of specialized apprenticeship and training. Start-up business loans should be considered, as with the International Rescue Committee’s expanding micro-finance push, the Fund suggests.
Banking and housing will come under pressure, and may need more innovation for affordability. Building codes can be modified for emergency construction, and financial literacy should be an orientation component. In the EU immigrants are as likely to have checking accounts as other citizens, but overdrafts are more common. Almost one-fifth of micro-credit went to non-native borrowers in Europe as of the latest 2013 statistics, but success relies on a gamut of complementary services from business planning to legal advice. In any event existing worker displacement should be “small and short-lived” even if current refugees’ net fiscal contribution is “difficult to predict” along with the survival strategies of the Assad regime, the review concludes.
