Global Glance: October 11, 2016
A quick look at intriguing international stories
By John Bostwick, Managing Editor, Radius
The Refugee Crisis: Sharing Burdens and Understanding the Economic Effects on Host Countries
The Burden of Hosting Refugees is Unequally Distributed
Amnesty International released a 40-page report last week called Tackling the Global Refugee Crisis: From Shirking to Sharing Responsibility. The document begins by branding last month’s United Nations Summit for Refugees and Migrants a “spectacular” failure for the world’s 21 million refugees, a meeting that generated “empty words” and “no actual plan.”
The report explains that 12 million refugees are living in just 10 of the world’s 193 countries. Those 10 countries — which happen to be close geographically to war-ravaged countries like Syria and South Sudan — have a combined GDP of less than 2.5% of the world’s total, creating an “inherently unsustainable” situation. Amnesty International proposes that the burden for hosting refugees be spread out more equitably “based on reasonable criteria such as national wealth, population size and unemployment rate.”
The report anticipates objections to this plan with admirably direct language: “Those who do not want to take a fair share will find objections and cite reasons why it is unworkable. But that is a failure of leadership. It is also morally bankrupt and intellectually shoddy to fail to face up to reality.”
A graphic showing the top 10 refugee host countries appears below. The Amnesty International report indicates that many of Jordan’s refugees are Palestinians “who have lived in the country for decades.” Of the nearly 5 million people who have fled Syria since 2011, most “live in just five countries: Turkey, Lebanon, Jordan, Iraq and Egypt.” Afghanistan, Burundi, South Sudan, Somalia, Myanmar and Iraq have also produced significant numbers of refugees in recent years, most of whom are hosted by the countries listed below.
Most Developed Nations Aren’t Doing Their Bit
The report explains that “many of the world’s wealthiest nations host the fewest and do the least.” As an example, Amnesty International notes that “the UK has accepted approximately 8,000 Syrians since 2011, while Jordan — with a population almost 10 times smaller than the UK and just 1.2% of its GDP — hosts close to 650,000 refugees from Syria.” Both more money and a willingness by more nations to accept refugees are critical to resolving the crisis, according to the report. It praises Germany and Canada for their efforts to take on refugees, but adds that “the prevailing narrative in many countries is xenophobic, anti-migration, and driven by fears and concerns about security.”
In a related press release, Amnesty International Secretary General Salil Shetty places much of the blame on global political leaders. He says: “It is time for leaders to enter into a serious, constructive debate about how our societies are going to help people forced to leave their homes by war and persecution. They need to explain why the world can bail out banks, develop new technologies and fight wars, but cannot find safe homes for 21 million refugees, just 0.3% of the world’s population.”
UN Leaders Delay Refugee Pact to 2018
A Wall Street Journal article following the UN refugee summit explains that leadership “agreed to negotiate a global pact to share the burden of housing and educating refugees — but not before 2018,” noting the disappointment (if not rage) of human rights groups like Amnesty International over the UN’s unwillingness to provide immediate help to “the biggest population of refugees since World War II.”
The Journal notes that the decision to delay a deal until 2018 was fueled by a number of factors, including coming elections in the US, France and Germany, and a widespread reluctance on the part of many countries “to host migrants amid a surge in anti-immigrant sentiment, as well as security fears after a series of terror attacks in Europe in which some of the perpetrators posed as refugees when entering the continent.”
The Economic Effects of Refugees on Host Countries
A report on forced displacement by the United Nations High Commissioner for Refugees (UNHCR) reaches many of the same conclusions found in the Amnesty International report. A press release about UNHCR report, for example, asserts that because refugees tend to flee to neighboring countries, “the responsibility of hosting has not been shared evenly,” and that “about 15 countries have consistently been hosting the majority of refugees,” including Turkey, Lebanon, and Jordan, which together host over a quarter of the world’s refugees.
The UNHCR press release briefly mentions the contentious issue of the economic effects of refugees on host countries. World Bank Group President Jim Yong Kim is quoted as saying, “We’re committed to working with our partners to help the displaced overcome their ordeal and seize economic opportunities, while ensuring that host communities can also benefit and continue to pursue their own development.”
A 2016 International Monetary Fund report more fully addresses the economic challenges of the refugee surge in Europe. It first explains the important difference between economic migrants (i.e., those who choose to immigrate to increase the chances of getting a job) and refugees (i.e., those who are forcibly displaced due to conflict, a lack of rights, etc.). The fiscal contribution of refugees, the IMF explains, “tends to be less favorable [to the host country] than that of economic immigrants.”
The report predicts that the infusion of refugees into Europe will likely lead to a “modest increase in GDP growth” due to an increase in labor supply and other factors, and that “medium and long-term growth depends on how they will be integrated in the labor market.” The report recommends facilitating the movement of refugees based on where worker demand is high. This kind of strategic relocation “can raise legitimate concerns among native workers that they will face lower wages and higher unemployment, [but] past experience indicates that any such adverse effects are limited and temporary.”
The IMF report is mostly sanguine about the potential long-term economic effects of refugees on host countries, provided the right local policies are implemented. In addition to lowering restrictions on geographic mobility, the report recommends minimizing red tape related to asylum applications, providing private-employer wage subsidies, and facilitating self-employment, among other initiatives.
A MarketWatch article on the IMF report notes that while the report indicates refugees may ultimately help Europe’s economy, the process could be “long and painful.” The report explains that an analysis of immigrants in Germany from the 1960s and 1990s, for example, “shows that immigrants earn 20 percent less than natives with similar characteristics when they arrive in the country. Initially, immigrant wages catch up by 1 percentage point per year, but the process slows over time and wages never fully converge.” Immigrants in Germany, the report concludes, “make substantial contributions to the economy but face considerable obstacles in the labor market that are overcome only gradually.”
The MarketWatch article points out that another survey, by the European Social Study, came to a conclusion similar to that of the IMF. The European Social Study survey covered “nearly 300,000 people across 36 countries from 2002 to 2012” and found that “the gap between native and immigrant employment, income and happiness all narrow, but not completely, in about 20 years’ time.”
The Economist addresses the economic effects of refugees in a piece titled “For Good or Ill.” It observes that refugees tend to spark host-country anxieties over wage decreases, rising unemployment and stretched public funds. On the first two issues, the article explains that immigration tends not to materially affect employment rates or wages, even for low-skilled laborers, and in some cases immigration has been shown to push “natives” into higher-skilled and higher paying jobs.
As for straining public budgets, The Economist explains that “the likely fiscal impact of refugees is murkier, as adding up the tax paid and benefits received by any individual or group is tricky.” Existing data suggest that immigrants do not tend to strain GDP, though “the experience of past immigrants may not be much use in assessing the impact of the new lot.” Relative to other immigrants, refugees from countries such as Syria, Afghanistan and Iraq “who have been in Europe for less than six years are 17 percentage points more likely to rely on benefits as their main source of income and 15 percentage points less likely to be employed.”
Even given these numbers, the public outlays required to support this “new lot” from Syria and elsewhere may turn into a positive in the long term for their European host countries. The immigrants will continue to integrate into the workforce, and because they are relatively young now they should “help (a little bit) to reverse the upward creep of the cost of state pensions as a share of GDP.”
On balance, then — and apart from any questions about the moral responsibility to host refugees — economic experts seem to agree that rumors of the catastrophic economic effects of refugees on host countries are greatly exaggerated, although all agree that the economic ramifications are complex, enduring and difficult to measure.
For more on the situation, read this PBS NewsHour interview with Jeffrey Sachs, director of the Earth Institute at Columbia University and a senior UN advisor. Here’s a final word form Sachs on the economic impact of refugees: “For the world, it’s positive, because people are leaving desperate situations and getting to economically better situations. For the US, on net, it’s positive, because there are gains when people come, add to the labor market, add skills and generally, earn less than what they can contribute to the society as a whole. So there are benefits, but there are distributional consequences that can be quite complicated.”