Economy• LABOR

A Blessing, Not a Burden: The Economic Benefits of Refugee Workers

Debunking a range of pernicious myths about how refugees negatively affect their host countries.
Adam Jezard

In 1980, a remarkable incident took place that served to dispel many of the economic preconceptions that have for generations existed about refugees.

During the Mariel boatlift, as it became known, 125,000 mostly low-skilled Cuban refugees arrived in Miami over a few months. While there were the usual fears that allowing them in would drive wages down and cause job losses among natives, subsequent research found no rise in native unemployment. Instead, while the refugees' arrival meant the amount of workers with blue-collar skills in Miami rose by 20 percent in just three months, there was a modest rise in average low-skill wages.

The refugees have now become part of the fabric of American life. Speaking in 2010, Siro del Castillo, a human rights activist who helped the refugees, said, “After 30 years, the legacy of Mariel is everywhere in the Cuban community in the United States in all fields, economic, cultural, social. . . . Today they are assimilated into society, like all immigrant groups in the past. They are doctors, engineers, nurses, teachers, fully integrated.”

“The Mariel boatlift was a natural experiment,” says Cindy Huang, a researcher and senior policy fellow at the United States think tank the Center for Global Development (CGD), where her colleague Michael Clemens coauthored a recent review of the boatlift data. “A massive number of refugees came over a short period of time but there were no negative wage or employment effects for any group of American natives.”

Compared to current immigration to the US, which is 0.3 percent of the population each year, the Mariel Boatlift was an increase, relative to the Miami labor market at the time, of about 250 times overall current U.S. immigration.

Subsequent research from around the globe has regularly shown refugees and asylum seekers—those waiting to be officially classed as refugees—overwhelmingly contribute more to their host economies than they use in services. Despite this, populist politicians from Donald Trump in the U.S. to Viktor Orban in Hungary and Nigel Farage in the UK, and their supporting media, have worked hard to conflate refugees and migration in the public mind, building a picture of masses of incomers who are would-be terrorists, bringers of disease, or destroyers of white Christian culture—a picture unsupported by evidence.

“It’s a very harmful assumption that refugees are an inevitable burden,” says Alexander Betts, a professor of forced migration at Oxford University. “We tend to just look at them as either humanitarian victims who are passive and rely on indefinite development aid in the global south, or on social security systems in the global north. Or, even worse, we see them as a threat.

“Part of addressing that is to see them as a cross-section of society, many of whom are not migrating because they choose to but because they’re forced, and many [of whom] have capacities as well as vulnerabilities. If we give them the opportunity, they often have skills, talents, aspirations, and abilities to contribute to our societies. Recognizing those potential benefits is important for changing the narrative in how we collectively perceive them, and how policymakers and politicians design responses.”

Huang says, “I think people automatically believe that if we allow refugees greater access to the labor market, they’ll steal jobs and reduce wages. So, I think you have to start with a frame where you talk about the benefits refugees can bring to host communities.”

Migrants and refugees have different statuses under international law. Under the 1951 United Nations Refugee Convention and other legal texts, refugee rights include “safety from being returned to the dangers they have fled; access to asylum procedures that are fair and efficient; and measures to ensure that their basic human rights are respected to allow them to live in dignity and safety while helping them to find a longer-term solution.”

Non-refugee migrants, in contrast, choose to move and can “choose to return home, [where] they will continue to receive the protection of their government.”

Contrary to popular belief, studies show allowing refugees to work legally is less likely to drive down wages than stopping them from doing so. Restricting them to informal (i.e., untaxed and unregulated), low-skilled work gives employers the choice to pay lower wages and reduced benefits to refugees rather than hire native workers.

One of the positives of formal refugee employment on the native workforce is that refugees do often take on low-skilled, low-paid jobs, allowing native workers—particularly women—to take their skills and use them in better-paid jobs. “Policy choices can make a huge difference,” says Huang. “The big one, which has been a game changer in many countries, including the U.S., is people who come in as what we call low-skilled immigrant and refugee populations, who do things like child and elder care.” This, she says has enabled women to enter the labor force and add “many, many, points to GDP. But that does require breaking down the barriers when newcomers enter the labor force.” Refugee workers can also benefit from training and education programs targeted to their needs, which in turn realizes more benefits for the larger economy.

Huang notes that the presence of refugees can mask the fact that while some host community workers will be upgrading to better jobs, others will face greater competition for lower-paid work. She cautions that governments need to be honest about the costs as well as the fiscal advantages. “States do need to have some kind of safety net, because there will be some people who don’t manage to 'upskill,' which is why you need to look at what we mean when we say, ‘on average.’ Because it’s true that ‘on average’ the effects will be positive for economies, but at the same time you will have to look at those people who are not winning out.

“Around the world, we’re seeing that the concerns of people were not listened to and dismissed, because we were looking at these ‘average’ benefits, and I think that’s part of the political and policy story that governments hosting refuges need to be aware of. They need to be both compassionate and savvy.”

She argues in one recent cowritten paper that “migration is what you make it.” “No case study or academic paper can—ever—spell out what ‘the’ effect of ‘immigration’ is,” the paper says. “Asking this question has as little use as asking whether ‘taxes’ are inherently ‘good’ or ‘bad.’ The answer depends on what is taxed and what the revenue is spent on. Those choices make the policy harmful or beneficial. The same is true of migration.”

For example, a a study by the liberal advocacy group Center for American Progress found Somali, Burmese, and Hmong refugees from Asia who had lived in the U.S. for at least 10 years tended to move from mostly blue-collar and service jobs to white-collar positions. Nearly a quarter of the Burmese in the study became executives, administrators, doctors, lawyers, and engineers.

In the UK, economist Jonathan Portes, following a 2018 analysis of the effects of migration into the country for the Migration Advisory Committee, which advises the government, wrote that his work: “suggests that [immigration in general] has a substantial, positive and significant [impact] on productivity; an increase in the immigrant share of the labor force by 1 percentage point is associated with an increase in overall productivity of 2 to 3 percentage points.”

Data from countless studies, including by those by the UN's Organisation for Economic Co-operation and Development, have also repeatedly shown settled refugees, when able to work, contribute more to economies than they take out in terms of the taxes they pay and social benefits they receive in return.

One of the most common “migrant myths” is that all refugees want to come to the West. Betts says, “It’s important to recognize 85 percent of refugees are in low- and middle-income countries and most probably do not want to come to Europe or North America. Many of those host countries have a need to attract overseas development assistance to develop border locations that have lacked investment for a long time.

“Increasingly, many host governments in countries like Uganda, Ethiopia, Kenya, and even middle-income countries like Colombia and Turkey, are recognizing that, if refugees are incorporated into national development plans, both they and their host communities can benefit.”

Historically, many border locations have reaped benefits. Cases of this include the arrival of Guatemalan refugees in the Yucatán Peninsula, and Rwandan and Congolese refugees in southwest Uganda. “They benefited from the refugees in terms of additional labor and additional markets,” Betts says. “Of course, they all have cultural, ethnic, and linguistic commonalities with the host communities, but nevertheless, those kinds of contexts have demonstrated the potential of the contributions they can make to their host economies.”

Most Syrians, for example, constrained by finances, language barriers, family ties, and logistical problems, have relocated to nearby lands Turkey, Jordan, and Lebanon. Yet, while most want work, they can only find low-wage employment, a Rand Corporation survey found. Rand’s research highlights the problems in all three countries, including the fact that refugees are often not located where the job growth is. In addition, few Syrians have work permits, and vocational training programs have not been well coordinated with job placement, market needs, or Syrians’ skills.

Refugees in Jordan have an average income of just $98 per month, $44 of which is spent on food. The government now offers formal employment for Syrians, and more than 100,000 have been granted work permits thanks to the 2016 Jordan Compact. Under this deal, Jordan will “receive billions of dollars in grants, loans, and preferential trade agreements with the European Union," according to the UK think tank ODI. A similar agreement was made with Lebanon, and the U.S. think tank the Brookings Institution has proposed a like deal with Turkey to boost regional stability by helping to create jobs, particularly in agriculture, in return for funds and lower export barriers to EU countries for the goods refugees make.

But Jordan has not reached its target of 200,000 Syrian work permits. “Jordan still has a number of barriers,” says Huang, “so refugees can only work in certain sectors—they can’t be engineers or doctors, for example. There’s not a huge number of refugees who would take up those jobs, but they would make a big contribution if they did.”

Many of the permits are tied to industrial jobs in special economic zones, and refugees were not interested in them for “a perfect storm” of reasons, Huang says. “Most people in Jordan’s manufacturing sector are migrant workers, single men, who come and live on the premises. Syrian refugees would have to travel, so there will be a cost, despite schemes to subsidize that, and the jobs are a few hours away from the camps. People are wary of traveling far from family because they’re still traumatized, they think ‘what if something happens?’"

Many native workers in Turkey (34 percent in 2014 according to the World Bank) are also not in the formal economy. Huang says: “Turkey has increased formal labor market access, but most refugees still work in the informal market, because it’s still hard to get a permit, your employer has to sponsor you, and there’s a cost associated with it.”

An additional problem for governments is where to house refugees. Many are corralled in areas of existing economic deprivation or camps. Huang says such policies risk backfiring and limit the beneficial contribution refugees can provide. “You’re basically pitting marginalized people against each other. It’s a lost opportunity because there are a lot of studies that show people, when enabled, do make fantastic contributions, but if you’re fighting over cost-controlled housing, then all the attention gets diverted to other topics.”

“Refugee camps are the default humanitarian response in developing countries,” says Betts. “They’re a disaster. They’re designed for a short-term, emergency phase to provide food, clothing, and shelter, but they last for 5, 10, 15 and up to 20 years plus.

“When people don’t have the right to work and freedom of movement, with decent access to education, we’re effectively warehousing people, and it’s such a waste of human talent.”

Betts is working on an integrated development scheme in Kalobeyei, Kenya, which he hopes will provide a model that can be used elsewhere. Members of the host community and refugees will live and work alongside each other, share markets, and have high-quality health and education services. “It empowers refugees in the short term, allows them to interact with the hosts, benefits host citizens, and when refugees go home there will be a positive legacy. Natives will effectively get a new settlement with a vibrant economy and with investment.”

For richer parts of the world, he suggests that instead of merely sending refugees to economically deprived areas, they should instead be profiled along the lines of a dating service, so that those with farming skills go to rural areas and others like doctors and engineers go to urban ones.

Another pressing reason why developed nations in particular need to be more open to accepting refugees is because their populations are aging. Betts calls this demographic argument “the elephant in the room”: “Western economies need labor. They have aging populations . . . there is a pensions time bomb.

“The profile of the refugees who arrived in Europe in 2015–16 was overwhelmingly young men aged 18–30 with a willingness and a desire to work. And our businesses, in the UK and across Western Europe, are crying out for labor to fill jobs shortages—in retail, catering, hospitality. All of those sectors have huge labor shortages. In the case of the UK, these are going to be considerably worse post-Brexit. We’re clearing out all of the Central and Eastern European workers who have for ages filled low-skilled labor shortages.”

While any country’s primary obligation to refugees is humanitarian, Betts says that “we’re going to have to wake up to the demographic realities. One of the additional benefits of refugees could be that they fill some of these labor shortages.”