Refugees are also coming to Latvia but what can we expect in economic terms from this influx?
Latvia does not have much recent experience in terms of refugees but my country of origin, Denmark, does and puts together all sorts of statistics about this issue in a publication called "Indvandrere i Danmark" (Immigrants in Denmark), inconveniently written in Danish and published by Danmarks Statistik, the Danish equivalent to the Central Statistical Bureau of Latvia.
This is not say that Denmark is necessarily representative for what can be expected from immigration into Latvia but I still think it is worth looking at the roughly 50 years of experience of immigration into that country.
The following is only about economics - some rough costs and benefits. Political issues, humanitarian aspects etc. I gladly leave to others to deal with.
Denmark is a rich country by EU standards and it is a typical Nordic welfare state in terms of a generous and wide-ranging benefit system funded by a high level of taxes and thus depending crucially on high participation in the labour market to help pay taxes for such a system. The Danish public sector spends 57% of GDP, much higher than Latvia's 37%.
And Danes do have a very high employment rate, see Figure 1. Looking at the 30 - 59 year olds is a smart measure: This is the core group for employment, old enough to be out of education, young enough not be pensioners. More than 80% of such Danes are employed with also very high rates for other EU countries (Latvia included) as well as Asian countries such as Vietnam and China whereas employment rates for various Middle Eastern and North African countries are disastrous; for Syrians just over 20%. This means that certain groups, including the ones representing current refugees, contribute very little to society in terms of employment and tax revenue.
Figure 1: Employment rates among 30 - 59 year olds for various nationals in Denmark, 2013
Source: Indvandrere i Danmark, Danmarks Statistik, page 44
Note: Estonia is not included since the original table is for the 40 countries with most nationals living in Denmark - and Estonia is not in this top 40.
With so many outside the labour market it is not surprising that they gobble up significant sums of welfare benefits (unemployment benefits, disability benefits, early retirement, income support etc.). Only 8% of Lithuanian men in Denmark of the age 30 - 59 years are on some sort of full-time benefits (thank you, Lithuanians!) while close to 20% of ethnic Danes are (and is a serious and costly problem). But for countries like Somalia, Lebanon and Iraq numbers are above 60%, reflecting high costs and an almost non-existent attachment to the labour market.
I do not provide numbers for women - they provide the same story but are even bigger as women are even less attached to the labour market in Denmark when coming from the Middle East.
Figure 2: Share of 30 - 59 year old men on full-time benefits, Denmark 2013
Source: Indvandrere i Danmark, Danmarks Statistik, page 95
Note: Based on the top 30 countries of nationals in Denmark. Unfortunately, Latvia (and Estonia) was not in the top 30 so no numbers for Latvians.
What can be expected in terms of future contributions to the labour market and thus to economic growth and prosperity? Figures 3 and 4 show the top educational background for men and women, respectively, when being ethnic Danish, being from the "West" (other EU countries, USA, Norway etc.) or being from non-Western countries (Middle East, Africa, Asia etc.). The numbers here for non-ethnic Danes are for the descendants of immigrants as data for the immigrants themselves are quite poor (see note below Figure 3). But it also makes sense to look at the descendants since they are the ones that will help form the future. Western immigrants are better educated than ethnic Danes while non-western ones are not (they have a higher share with primary school education as their highest level of education and a lower share with higher education background although non-western women are much better educated than non-western men). A further breakdown, e.g. in terms of grades received in school will show that such minorities as Vietnamese and Chinese get high grades whereas, again, the Middle East lags behind.
Given this, the future contribution to GDP from current refugees should cause some significant headache.
Figure 3: Top educational background for 25 - 64 year old men. For non-Danes this is not for immigrants but for the children of immigrants.
Source: Indvandrere i Danmark, Danmarks Statistik, page 56
Note: For the immigrants themselves a table makes little sense as up to 75% of the data show no record of educational background.
Figure 4: Top educational background for 25 - 64 year old women. For non-Danes this is not for immigrants but for the children of immigrants.
Source: Indvandrere i Danmark, Danmarks Statistik, page 57
And just one more graph this time around. Denmark has also experienced much higher crime rates among Middle Eastern/North African refugees and immigrants - even when adjusting for age (these are younger than ethnic Danes and younger persons are, on average, more prone to crime) and when adjusting for socio-economic background (they are poorer and poorer persons are also more prone to crime). Unadjusted numbers would thus be even higher but the way to read Figure 5 is to see that an average Lebanese man commits 150% more crime than men on average. Americans, others from the west but also persons from the Far East are the most law-abiding people in Denmark. Women have again been left out - sorry.... - but the picture is not too different than from men.
Figure 5: Crime index, 15 - 79 year old men, 2013. All men = 100. Adjusted for age differences and differences in socio-economic status.
Source: Indvandrere i Danmark, Danmarks Statistik, page 106
Altogether this paints a picture of quite a lot of trouble for Denmark, now and in the future: Too few immigrants from the Middle East/North Africa working, far too many on welfare, too poor educational background and far too high crime rates.
And then one can start to add the various social, political, cultural, religious and other problems related to this but, as mentioned at the beginning, I am happy to let that discussion be undertaken by others.
Lessons for Latvia? Hm..... Look closely at what the Danes have done in terms of integration of refugees and immigrants and then try to do something different.... If possible!
Morten Hansen is Head of Economics Department at Stockholm School of Economics in Riga and a member of the Fiscal Discipline Council of Latvia.