The Costs of Refugees

The number of refugees is on the rise globally. There are worries in Western countries about the future cost of hosting and resettling these people. We wonder: What proportion of its GDP does the United States spend on refugees annually?

A. 1.0%
B. 0.35%
C. 0.03%
D. 0.003%

A. 1.0% is not correct.

Sweden, not the United States, is expected to spend 1% of its GDP on refugees this year – up from 0.5% in 2015 – according to IMF estimates for a broad number of European countries.

Sweden volunteered to resettle a large number of Syrians earlier during the civil war, which has now raged since early 2011 without signs of ending.

On a worldwide basis, more than one in five externally displaced persons are from Syria alone, as of 2015.

21.3 million people have been displaced across an international border from their homes (as of the end of 2015) and are officially registered as refugees with the United Nations.

Sweden’s rationale to resettle refugees was to gain some skilled labor. However, only one in three recent refugees making a new home in Sweden is a college graduate.

In earlier resettlements, there was a similar mismatch of incoming new residents and available jobs. Only a quarter of working-age Somali refugees in Sweden had found work in 2010, compared to 57% of Somali refugees in the United States at the time.

Another challenge is transitioning refugees to a stable resettlement quickly so that they can begin working, instead of staying in limbo. To address this, Sweden allows asylum seekers to work while their application is being processed.

B. 0.35% is not correct.

Germany’s federal and state governments are expected to spend 0.35% of its GDP – — on refugees this year – a considerable increase over 2015. That year also saw a major increase over 2014 figures.

The IMF report only assessed the budgetary expenses in each country, but did not account for non-governmental funding sources such as charity organizations.

Germany’s spending level is also nearly double the average across the European Union, which was 0.19%. Germany’s government said resettlement spending by federal and state authorities amounted to 16.1 billion euros in 2015.

As a share of the national economy, Germany’s spending on refugees is similar to neighboring Austria. The latter, a much smaller country than Germany, found itself overwhelmed last year with sudden arrivals on its borders of refugees who had been turned away by other countries.

Greece, which is battling severe budgetary problems, has played host to a large number of people seeking to escape the war in Syria. This is due to its geographic location and its many islands near the Turkish coast. Greek spending on refugees is roughly in line with the EU average – at 0.17% of Greek GDP last year.

C. 0.03% is not correct.

Spain is expected to spend just 1/3000th of its GDP – or 0.03% – on supporting refugees (people temporarily fleeing war) and new asylum-seekers (people requesting permanent resettlement to avoid persecution).

During the Brexit debate in the United Kingdom, hardline Leave advocates claimed that a wave of refugees and asylum-seekers would strain the UK budget. In reality, the UK spends about 0.016% — or about 1/6000th — of its GDP on these costs.

The IMF observed, as well, that – aside from longer-term costs for housing, training training, job training and counseling – cash transfers to refugees and asylum-seekers may have a short-term stimulative effect on the local and national economies of host countries, partially offsetting the proportional cost burden.

Emphasizing and expanding educational opportunities for the new residents, particularly young children, is also key to smoothly integrating everyone into the social fabric and the economy.

D. 0.003% is correct.

The United States spends 0.003% — or 1/30,000th — of its $16.77 trillion GDP on its annual budget for refugee resettlement, according to estimates by the Open Political Economy Network (OPEN). (Some U.S. government estimates put the share even lower at 0.006%.)

In absolute terms, the U.S. federal government allocates only $582 million on resettlement budgeting annually as of 2014, according to the National Conference of State Legislatures.

The country spends very little on this in part because it admits so few refugees each year, after an extensive vetting process.

In 2016, just 85,000 refugee resettlement slots were allotted for the fiscal year in a country that is home to more than 320 million people. (Asylum, beyond refugee resettlement, was granted to only about 25,000 people in 2013 – a fairly typical year – as well.) Those 110,000 people equal 0.03% of the U.S. population.

For comparison, more than one million people fleeing various crises entered Europe in 2015, seeking temporary or permanent shelter. During World War II, in 1944, the United States admitted 442,000 refugees in a single year.

The low U.S. spending on refugees is very close to the 0.0% expected this year from EU member country Hungary. The right-wing government there has erected border fences and pushed refugees to secondary or tertiary countries, such as Austria and Germany.

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