Refugees impact on EU economy

Nowadays, the problem of refugees crisis is very significant and relevance for Europe. The refugees’ crisis is not a recent phenomenon for World but for Europe it is. The refugees’ crisis is especially pertinent to Europe, where there are a huge number of migrants, mostly from the nations such as Afghanistan, Iraq and Syria.

There are a lot of reasons why refugees are leaving their country, such as civil war, political instability, violence and others. The wave of refugees arriving at the borders of the European Union has form political discussion all around Europe on how to control it, and what the influence will be on the European economies.

Many Europeans worried on the refugees impact the increase of domestic terrorism and the economic burden imposed on their countries. Additionally, many Europeans believe refugees are a problem to the society and are a burden because they take jobs and social benefits that would be available to citizens.

The growing potential of terrorism in the country can have a negative effect on the country’s economy. First of all, the most measurable impact of terrorism is physical destruction, because they destroy transportation system, machines, and public buildings or places, where there are so many people, such as hospital, schools. The impact of terrorism is always negative for the economy, because most often the resources are destroyed. Second of all, terrorism decreases the international trade. It can be due to unavoidable danger, such as damaged routes or distribution system. Moreover, when the countries have a high probability of terrorism, Foreign Direct Investment (FDI) decreases, especially in unstable countries. It means that economy growth can stop or decrease. By the way, terrorism can result in higher taxes, higher government deficits and higher inflation.

On the other hand, the wave of refugees can be a potential boost to the European economy. There are plenty of economic benefits of refugees for host countries. In the short term, regarding the refugees’ influx, it is likely that there will be a slight increase in GDP growth. It is because of the expansion of labor supply and, additionally, money spent by governments to support the refugees.  In the medium and longer terms, impact will depend on how well refugees are integrated. Otherwise, major countries are worried about the probability of the replacement effect of native workers and fear that the wave of lower-skilled refugees may be harmful for native workers, who get a lower wages.

That can have a significant result on high unemployment rates in countries and has a huge impact on economy. For example, unemployment financial costs increase, because the government has to pay social benefits. Also, the spending power of an unemployed person decreases drastically, which affects the economy adversely. Furthermore, with the increased rates of unemployment, other economy factors are significantly affected too, such as the income per person, health costs, quality of health-care, standard of living and poverty.

To sum up, the refugees’ crisis has a huge impact on Europe countries’ economies. In this case, it affects them more negative than positive. In order to protect countries’ economy from possible impact of refugees’ crisis, countries government have to apply some policies, which would protect native workers and, at the same time, the refugees. Also, governments have to try to help refugees to better integrate in the society.  

Gintarė Volskytė

[artigo de opinião produzido no âmbito da unidade curricular “Economia Portuguesa e Europeia” do 3º ano do curso de Economia (1º ciclo) da EEG/UMinho]