Migrants – Threat to the global economy

The migrants have become the world’s biggest problem, as they keep being mentioned in the media and their struggle is not going unnoticed. Several deaths have been caused as they take the sea route and the death of the small boy, Aylan Kurdi has caused immense sorrow across the world. How far is the crisis going to inflict injuries and economic restlessness?

Migration crisis occurred before, but this one is being deemed as the worst since world war two. Emergency summits are being organised to find quick remedies but the crisis threatens to worsen in the future. People devastated by the civil war in Syria, have taken refuge in countries, which happen to be their immediate neighbors. But the quest of finding a shelter along with a better life, has impacted the world on a considerable scale. Countries such as Turkey, Lebanon, Jordan and Iraq, today account for 3 million refugees who fled their country due to the civil war which broke out since March 2011.

Refugees, the asylum-seekers and the European Union

Over 800,000 now await to be put up by the European Union as some have already fled to Germany and other European countries. There is much turmoil being provoked as both refugees and asylum-seekers have invaded the European countries. This has further led to an unwanted confusion, as there is no control on who’s in and who’s out. Migration officers are having a hard time classifying data of these people and processing papers of asylum-seekers. Analysts and policy makers are gauging the situation and have concluded that economic repercussions might provoke severe sanctions but on the other hand, if remedies are found, the situation might as well be carefully handled.

The task of the European Union now is to devise ways to make things work out through legal ways. The influx of refugees was unexpected and most of them head for Germany, France or England. German Chancellor, Angela Merkel, announced that Germany would accept as many refugees who wanted to come. But later, the same thing threatened to disrupt the current economic status and way of life. As host countries decide who to let in, the European Union meets to decide on a coherent common policy to deal with the crisis this week.


The Economic Impact

Refugees and migrants have had to cross over borders of several countries (schengen and non-schengen countries). They have reached Greece, Italy and now head towards north in order to reach more affluent nations such as Germany. Thus, many countries are trying to shun the excess of refugees by blocking the flow and border. This procedure will require the use of broad and concrete legal methods in order to put false claimants away and look for ways to settle refugees already in Europe. At the same time, it will be necessary to strengthen EU’s external border controls. However, some economic setbacks have been calculated by experts and they say the incoming of refugees might be seen as a bad thing but could as well have a nice outcome. All depends on what kind of measures are adopted while taking refugees in.

Recently, President Obama announced that United-States will take in around 10,000 Syrian refugees. The news came in as a relief and at the same time raised questions about the pressing need of caring for the basic necessities of the refugees. The situation is alarming and demands an urgent action, but let us have a look at the short-term effects that most migrants have on economies of their host countries:

1. One disadvantage for host countries is often that they need to increase their social spending with migrants, since they will need to provide houses and education to them. It is the responsibility of host countries to figure out ways to render the migrants productive members of their society.

2. On the other hand, studies show that, many times migrants may end up taking jobs that locals may often reject and thus become more productive than them. This later may lead to unemployment for the locals, as this is not the only danger. Another threat, is that the migrants may even try to compete in business offering services or products at a lower price to gain confidence. Such an act may lead to creating gross competition on the market.

3. On the other hand, refugees increase the total demand on market, as they are potential consumers of existing and new services. Though some may see it as a disadvantage, but they can also give their input in real income and GDP of a country. In this way they contribute to the society by engaging themselves in all types of work. Back in 1990 and 2007, an increase of around 6.6 percent to 9.9 percent in increase of wages per worker was noted in the United-States, with the coming of refugees.

However, the rising economic concern remains an issue in Europe, as recent media attention has been turned to this specific area only. Many migrants want to shift into a flourishing country where they will not have to face other dilemmas. Germany being the most influential economy of the Eurozone, comprises of a stable economy as well as a peaceful country. Migrants will definitely have a preference for such a country.

Since a few years now, Lebanon and Jordan are the countries which received the bulk of most Syrian and Iraqi refugees. On the contrary, now the attention is fully diverted to Europe, as 800,000 refugees await to be accommodated in the area. Previously the influx of refugees in a country like Jordan, has had negative repercussions since the country’s annual growth decreased. Furthermore, exports dropped, home prices and imports have rocketed to the sky while inflation rose due to a demand which does not tally with overall production.

The same effect was seen in Lebanon, whereby the demand for electricity soared to 27 percent in only one-and-a-half year. Syrians migration to the country was deemed as the most disastrous step for Lebanon and host countries are now fearing the same sort. Now that all eyes are turned to Germany, as there are some issues which need to be tackled while migrants look for a place to stay.

So yes, Germany is the destination migrants look forward to. Germany happens to be the most expensive European country to build houses. Thanks to its rigid and energy-efficiency rules, Germany is the most strict European country in the field of housing. The rules are the main roadblocks to building enough homes so as to accommodate the expected 800,000 refugees, who are eager to settle in Germany. Germany’s complex regulations makes its complicated and expensive to afford building new homes. However, Germany needs 350,000 apartments within a year to be able to make place for refugees, as last year, 220,000 houses were built for the intake of refugees. Now local governments are looking for ways to boost construction as most of the burden will fall on this sector only.

The bottom line

The situation seems critical and undoubtedly if more European countries are pondering over letting more refugees in, wise steps will need to be taken. But on the other side, study shows that by the end of World War II, Sweden agreed to put up 80,000 survivors of the Nazi camps. However, the country’s economy is in good shape and in 1970, Sweden adopted a policy of active labor immigration. Today, the country inhabits a huge population of foreign-born workers and is one of the richest countries of the world. The declining unemployment rate and a progressive social security system, is what Sweden stands for today. Thus, if measures are properly taken, the migrant issue could be used as a boon to boom the economic situation of a country.

Warren Tancredi By: Warren Tancredi
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