Refugees in The Economy: Boon or Bane?
Refugees in The Economy: Boon or Bane?
Written by: Evangeline Zhang Jielin
Some of us are privileged to stay in our home countries without any fear while others may be forced to leave their countries to escape war or violence. These individuals are also known as refugees. The refugee crisis has caught the attention of many around the world ever since the Syrian Civil War in 2015. It has tested the humanity of the international community and its portrayal by media outlets. Refugees are often mixed up with illegal immigrants, however, they are not the same. Refugees are driven by circumstances beyond their control such as war, persecution or natural disaster to escape to another country (Kelsey, 2019). On the other hand, illegal immigrants are people who migrate to another country in violation of the immigration laws of that country (Illegal Immigration, 2020). With the reported estimation of 25.9 million refugees in the world today (United Nations, 2019), this article explores the potential burdens and opportunities of refugees in the economy.
Many countries that host refugees are tackling a similar problem – overpopulation. Refugees enter the host countries in large numbers and they may become a substantial proportion of the local, if not national population (United Nations, 1997). For example, in Malawi, a refugee influx which began in 1986, had led, by 1993, to 1,000,000 Mozambican refugees in the country, some 10% of the national population (United Nations, 1997). Due to the large concentrations of refugees entering the country in one go, they compete with the local population for scarce resources such as land, housing and medical services. According to “An Essay on the Principle of Population” (Malthus, 1798), Thomas Malthus famously argued that population growth would depress living standards (Fox and Dyson, 2017). Not only does overpopulation put a strain on local administration, but it also becomes an impediment to the development of the country.
Increase in Unemployment
With the influx of refugees into the economy, deep concerns have arisen within the community. One of the most common concerns heard would be unemployment. In countries where employment is already competitive, more refugees entering the country would only further strain the labour market. According to Robert Chambers (Chambers, 1986), refugees are likely to reduce the employment of locals by driving down wages and thus putting locals out of a source of income (Fakih and Ibrahim, 2016). A rise in unemployment occurs when the demand for jobs outweighs the supply for jobs as there will be lesser job vacancies to support a large number of people. Considering how employment can be easily affected by economic factors, with more refugees entering the country, it is natural for people to be worried about competition for jobs in the labour market.
Contribute to Host Country
Refugees can bring skills and knowledge that may be beneficial to the host country. Contrary to fears that they steal jobs, refugees and the locals tend to have a different set of skills and compete for different types of jobs. Refugees mostly took jobs that natives could not do or did not want to do such as factory workers, farmers or caregivers. For example, a Syrian family moved to Lebanon as refugees and are now working as rose farmers. They use the delicate petals to make their own sticky-sweet rose syrups, jams and fragrant rose water, which they sell locally. They also supply dried flowers in bulk to local factories that produce rose tea (Cherri, 2019). Utilising the knowledge, skills and training that refugees bring with them can help fill gaps in the labour market (Beste, 2015).
Boost Rate of Entrepreneurship
Refugees engage in entrepreneurship at much higher rates than the locals. Some refugees start a business out of necessity, while others spot opportunities that locals have missed (Legrain, 2019). Being forced to leave their homes, refugees are determined to rebuild their lives. They reflect determination, resilience and strength, which are all key attributes of entrepreneurship. For example, Muna Abdi who fled civil war as a teenager in Somaliland in 1989, arrived in Britain with her mother and younger brother. Today, she co-owns a thriving home care agency in Bristol, which employs 70 mostly full-time staff (Beard, 2019). Not only do refugees create employment opportunities for themselves, but also for the locals in the host country. In addition, refugee entrepreneurs are able to build connections and give back to the society that has welcomed them. One such example would be Al Rjula who spent two years in a refugee camp in the Netherlands. His startup, Tykn uses blockchain to give stateless people a form of virtual identity. Now, Tykn is working with a major humanitarian organization to create a technology that helps them provide stateless people a way to financial inclusion (Primo, 2019). This shows that entrepreneurs can bring about social change and create new business for the economy.
People usually have negative perceptions of refugees, but in fact, refugees make many contributions to their host country and the local economy. Although the intake of refugees can cause detrimental short-term effects on the economy of the host country, it impacts the economy positively in the long run. Weighing both the burdens and opportunities refugees bring, we should be strategic in our views on this issue. Hopefully, people may have a change of heart, from viewing refugees as a financial and social burden, to seeing them as a source of vitality, spurring economic growth and job creation (Gillett and Kelterborn, 2019). With more understanding on the refugees issue, we can expect more integration and acceptance of refugees in future.
Kelsey, R. (2019). Asylum seekers, migrants or refugees: Which word is correct? Retrieved from https://www.bbc.com/news/newsbeat-46747502
Wikipedia. (2020). Illegal Immigration. Retrieved from https://en.wikipedia.org/wiki/Illegal_immigration
United Nations. (2019). Figures at a Glance. Retrieved from https://www.unhcr.org/figures-at-a-glance.html
United Nations. (1997). Social and economic impact of large refugee populations on host developing countries. Retrieved from https://www.unhcr.org/excom/standcom/3ae68d0e10/social-economic-impact-large-refugee-populations-host-developing-countries.html
Malthus, T. (1798). An Essay on the Principle of Population. Retrieved from http://www.gutenberg.org/files/4239/4239-h/4239-h.htm
Fox, S & Dyson, T. (2017). Is population growth good or bad for economic development? - IGC Blog. Retrieved from https://www.theigc.org/blog/is-population-growth-good-or-bad-for-economic-development/
Chambers, R. (1986). “Hidden losers? The impact of rural refugees and refugee programs on poorer hosts.” International Migration Review 20 (2): 245–263.
Fakih, A. & Ibrahim, M. (2016). The Impact of Syrian Refugees on the Labor Market in Neighboring Countries: Empirical Evidence from Jordan. Retrieved from http://ftp.iza.org/dp9667
Cherri , R. (2019). Syrian rose farmer uses skills to graft new life in Lebanon. Retrieved from https://www.unhcr.org/news/stories/2019/12/5e01c9164.html
Beste, A. (2015). The Contributions of Refugees: Lifting Barriers to Inclusion. Retrieved from https://ourworld.unu.edu/en/the-contributions-of-refugees-lifting-barriers-to-inclusion
Legrain, P. (2019). The potential of refugee entrepreneurs is huge. But they need our help. Retrieved from https://www.theguardian.com/commentisfree/2019/apr/11/the-potential-of-refugee-entrepreneurs-is-huge-but-they-need-our-help
Beard, S. (2019). Why refugees make great entrepreneurs. Retrieved from https://www.marketplace.org/2019/08/07/why-refugees-make-great-entrepreneurs/
Primo, V. (2019). He Created his Blockchain Startup at the Refugee Camp. Now He's on a Mission to Help the World's "Invisible Children". Retrieved from https://startupswb.com/he-created-his-blockchain-startup-at-the-refugee-camp-now-hes-on-a-mission-to-help-the-worlds-invisible-children.html
Gillett, A. & Kelterborn, K. B. (2019). When Failure is Not an Option: Understanding – And Accelerating – the Success of Refugee Entrepreneurs. Retrieved from https://nextbillion.net/understanding-and-accelerating-refugee-entrepreneurs/