The refugee crisis has been one of the most important problems that Europe has to solve since the financial crisis of 2008. What is happening is a social, economic and politic crisis and that is the distinctive feature of that event. That is why this post will deal with an article from The Financial Times entitled “German system creaks under the weight or refuge influx”. (1)
This article emphasizes the German difficulty in receiving such number of refugees in a short time. The German system is not prepared for that: the asylum process takes 5 months instead of 3, there is not enough accommodation for refugees and some of them have to sleep outside in tents while, everyday, they are hundreds (mothers with babies included) to wait in front of the Office for Health and Social Care. Facing this situation, the government is adapting his social system and looking for a solution which could be to share this reception with all the countries of the EU.
It leads us to wonder: is this arrival of migrants a burden for the European countries social system ? Let’s try to answer the question and bring the effects on public finance out.
This crisis is hard to manage and it can be seen like a weight. The lack of infrastructures implies government’s expenditures. As regards economic migrants, the countries from the EU have spent more than 11.3 billion euros since 2000 (2) in order to send them back to their country of origin. Expenditures to receive asylum-seekers also are important and the budget for 2015 amount to 480.5 million dollars. (3) All of these expenditures are not really well perceived because they are funded by taxes paid by the ratepayers.
This crisis is all the more complicated since it does not concern all the European countries on the same way. The reception centres of the first countries of arrivals, like Italy and Greece for instance, are gridlocked and it also the case for Germany while other countries part of the EU are not receiving people. As it is obvious that following Dublin Regulation is not possible, A.Merkel proposed to redistribute migrants in all the other countries of the EU by quotas.
These quotas would enable each country to receive migrants in a best way and with dignity. It also gives rise to analyse the advantages of these migration. Indeed, in the medium term, welcoming refugees does not have a negative impact on public finance because this population use to pay more taxes than others while they receive less social aids. (4) This table from The economist shows how there is not impact on pubic finances.
Moreover, I believe that receiving these refugees has a positive impact on the European economy because when they will enter the labour market they will become taxpayers and consumers that will boost the economy. (5) This is also why A.Merkel want them to come to Germany: young workers are needed to overcome the demographic aging and boost consumption. (6)
In my opinion, long-term benefits are higher than short-term expenditures. Moreover, I think the EU needs them to boost consumption, public investments… in a word, the economy. After World War II migrants enabled Europe to ride out the crisis it was facing, maybe today’s refugees will make us know again what prosperity is.