Thereis no doubt that the war in the Middle East and other conflict areashas resulted to dislocation of people which has had significantramifications across many nations in Europe and beyond(Rowntree, Lewis, Price & Wyckoff, 2015).In 2015, the European nations received the highest asylumapplication, which has superseded the number of refugees that enteredthis community in the last 30 years (Tasche,2016).That surge raised questions about the preparedness of the EuropeanUnion (EU) to effectively integrate refugees into the economy and thesociety, and the efficiency of the asylum policy. Also, there havebeen political, social and security concerns. This has resulted inmany nations in EU building up fences to control the rate at whichthey are absorbing refugees(Tasche, 2016).Thus, this paper critically analyses, the social and economic impactof refugee and the ability of the EU to deal with the issue.
Therehave been political and economic concerns about the increase ofrefugees. To begin with economic, the short-term macroeconomic impactwould be an increase in expenditure as these countries that areabsorbing refugees will be forced to provide necessities and supportservices such as food, housing, health, and education, this will inturn increase aggregate demand (Aiyaret al., 2016).Furthermore, additional spending has resulted out of the need tobuild fences in an effort to avoid illegal immigration.
Moreover,monetary supportive policy together with fiscal expansion, will helpin compensating for downward pressure on inflation and wages that arecharacterized by the increase of refugees in the labor market. Butthe effects in midterm or the long run will depend on the speed ofintegration in the labor market and the extent with which therefugees’ expertise substitute those of natives and influence theallocation of resources, product technology, and product mix (Aiyaret al., 2016).
Assumingthat the labor market integration is slow, there would be an increasein unemployment rate and government debt due to excessive spending(Rowntreeet al., 2015).The opposite result would be a reduction in the rate of unemploymentas refugees are assimilated in the market. Consequently, there wouldbe an increase in GDP because they will contribute to theproductivity of the nation. This might have adverse effect such asreduction in wage rate and increase in rental fees as a result ofincreased demand in those social amenities (Rowntreeet al., 2015).Consequently, there is fear that some refugees are terrorists whohave disguised themselves.
InEU, in the short run, the effect of increase in refugees will resultin a high unemployment rate and lower participation in economicactivities, but with time these levels plummet as refugees learn thehost nation language and become assimilated in the labor market, butfor female counterparts the outcome is usually worse. Thus, the issueof EU collapsing is not determined by the rate of refugees, but howthis community responds politically to the issue. Currently, Ibelieve the crisis will be pushed(Paul, 2016).This is because as long as refugees are trickling into the communitythere is no definite solution to the issue not unless peace prevailsin those nations where they are migrating from and asylum policiesare streamlined.
Toassess the impact of immigration, you need to compare the cost ofservices and benefits that they have received against taxes and theother fiscal contribution they made. For instance, a negative impactof refugee influx would result in an increase in the unemploymentrate of the natives or lower wages resulting to low tax rates andunemployment benefits (Rowntreeet al., 2015).It is important to note that the refugees receive welfare benefits,which are borne by the host nation that might strain its budgethaving in mind that they give nothing in return until such time whenthey can legally work.
Accordingto Eurostat projection, by 2055 the population of Britain willconsist majorly of people with 55 years and above due to low birthrates resulting in the burden on pensions, public finances, healthcare provisions and benefit schemes as the working age is relativelylow, assuming that no immigrants are absorbed, but when you factorrefugees, the issues is solved as they fill the gap of the workingclass countering the economic impact of transition(Aiyar et al., 2016).This would be true if the rate of immigration were checked as theexcess number would result in high inequality levels between therefugees and the natives thus, leading to unfair wealth distribution(Yglesias, 2014).
Thereis no doubt that EU faces a lot of social problems as a result of theinflux of refugee rates, which has been overwhelming. There is theneed to make policies that favor these nations and at the same time,they consider the issue of refugees collectively for the survival ofEU or else the community will collapse. These policies need to take acooperative and harmonized approach that is necessary to achieve aworkable border management system and asylum. The short run effect ofrefugees will be an increase in public spending, but those of thelong run will depend on the speed of integration in the labor market,which can be positive or negative. Positive would be expansion in thelabor market and economy while the adverse would be high poverty andwealth inequality levels coupled with a rise cost of living due lowrates of wages and increase in household rents(Yglesias, 2014).
Aiyar,S.et al., (2016). The refugee surge in Europe: economic challenges.IMFSAFFdiscussion note,1-50.
Paul, K.(2016). Europe the unready. ReportInformation from ProQuest,1-5.
Rowntree, L.,Lewis, M., Price, M., & Wyckoff, W. (2015).DiversityAmid Globalization(6th ed.). MA: Pearson Learning Solutions.
Tasche,B. (2016). Map of border fences and controls across Europe – BusinessInsider. Retrieved fromhttp://www.businessinsider.com/map-refugees-europe-migrants-2016-2?r=UK&IR=T
Yglesias,M. (2014). The short guide to Capital in the 21st Century – Vox.Retrieved fromhttp://www.vox.com/2014/4/8/5592198/the-short-guide-to-capital-in-the-21st-century