The Most Closed-Off Nordic Nation Is Yearning for Immigrants

Danish data show the fiscal benefits of employing foreigners
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A protest in support of refugees in Copenhagen, Denmark on Aug. 26, 2015

Photographer: Recep Yasar/Anadolu Agency via Getty Images

Under pressure from nationalists, successive Danish governments have been keeping a tight lid on immigration. 

But now, faced with potential labor shortages, the Finance Ministry of the country that made global headlines by confiscating valuables from refugees is trying to make the case that more foreign workers are needed.

The ministry’s number crunching, based on vast amounts of welfare data, seeks to provide hard facts to an often emotional debate that’s been playing a key role in election campaigns across Europe, the U.S. and the Middle East.

Denmark’s conclusion is pretty simple: Even the lowest paid of full-time jobs is enough to turn an unskilled refugee into a friend of the tax office. The break-even point in Denmark is reached when a migrant starts earning an annual salary of 200,000 kroner ($28,540) -- easily achieved by working for 40 hours a week on the minimum wage.

Here are some of the Danish findings in three charts:

The blue bar of the first chart shows average individual contributions to the budget made in 2014 by "western" and "non-western" migrants (Denmark’s statistics office defines "western" as any person originating from the European Union, North America or Australia).

Unlike economic migrants or asylum seekers fleeing conflict, foreigners from other advanced economies tend to be net contributors from the start since they generally move having already secured a job in Denmark.

But the ministry took the data one step further and made a series of projections based on a) what migrants would contribute if they were as integrated into the labor market as the natives; and b) what the contributions would look like assuming a similar set of skills. As the red and black bars show, the effects for non-westerners are dramatic.

"Roughly speaking, immigration from western countries helps government finances while immigration from non-westerners imposes costs," Finance Minister Kristian Jensen said in a recent interview in Copenhagen. "But it’s not a question of preferring one group or another. What we should strive for is getting all immigrants a job."

According to ministry calculations, raising immigrants’ labor participation rates and skill levels to be on par with Danes could add as much as 20 billion kroner ($3 billion) a year to the state coffers. To put that in perspective, that’s almost equal to Denmark’s net borrowing requirement this year.

The second chart provides a breakdown according to the nationality of non-EU citizens. What’s important to note, the ministry says, is that the main factor determining how much a particular group adds or subtracts is how long they’ve been in the country. As foreigners gradually integrate into the labor market, they turn from beneficiaries to contributors. Asylum seekers tend to have a bigger impact on public finances since they require housing, job training and language classes. That helps explain why Syrians, whose numbers have increased dramatically since 2014, cost so much.  

The third chart shows the proportion of asylum seekers in employment after having been in the country for one year or two years. In the first quarter of 2014, only 6.9 percent of refugees who had been in the country for 12 months had found a job. That percentage had risen to 14.2 percent by the end of 2016.

The Finance Ministry says it show its policies are working.

Since assuming office in June 2015, Prime Minister Lars Lokke Rasmussen’s minority government, which relies on the parliamentary support of the anti-immigration Danish People’s Party, has tightened its asylum policies. It has also cut benefits for new arrivals, pushing up employment numbers, and has made permanent residence permits dependent on applicants having a job and speaking Danish.

New arrivals have plummeted, much to the delight of the country’s integration minister, Inger Stojberg, who caused a social media storm last month by celebrating the government’s 50th immigration tightening measure by posting a photo of a sponge cake topped by a Danish flag.

However, with the economy now facing the prospect of full employment, the government is taking a hard-business approach by exploring ways of attracting more skilled workers.

“Immigration can be good business for government finances as long as people want to work,” Jensen said. “If immigration doesn’t involve the labor market, it’s bad business.” 

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