16 October 2015

Sweden’s unsuccessful immigration strategy at breaking point


As I wrote in a previous column for CapX Sweden is far from successful when it comes to integrating immigrants on its labour market. The Swedish model, characterized by high taxes, rigid labour laws and generous public benefit systems, is quite bad at creating jobs and quite good at trapping immigrants in long-term welfare dependency.

Currently however, something else has been going on in Sweden. The country has – as far as I can judge as the first nation ever– begun to combine nearly free immigration with a welfare state system. The effects are, let’s say, interesting.

The shift towards free immigration begun when the anti-immigration Sweden Democrats in 2010 gained enough votes to enter the parliament. Sweden’s then center-right Prime Minister Fredrik Reinfeldt reacted by signing a deal with the opposition environmental party, opening up the borders. Reinfeld has later explained that his ambition was to isolate the Sweden Democrats from power, and therefore chose to enact a policy in the opposite direction.

Some intellectuals warned that free immigration might not be the best idea. There is support for this notion, since integration is far from successful in Sweden. The median refugee granted asylum in Sweden during 2004 merely earned £880 a month ten years later. Amongst family immigrants of refugees the level was as low as £360. This of course points to many living of various forms of public support. At the same time, the costs for various social programs, health care etc. are high for all residents in the Swedish welfare state.

Another relevant issue is the welfare magnet effect. This theory explains that countries with large welfare systems and correspondingly high taxes are likely to attract many low-skilled immigrants, since these individuals rationally value welfare services more. The same countries might not be good in attracting skilled migrants. The reason is that skilled immigrants rationally expect to have high incomes, thus shunning from high taxes. Since Sweden has amongst the lowest shares of simple jobs amongst the European Union, it doesn’t really have the right conditions to integrate large numbers of immigrants who come with limited skill and knowledge.

Although reasonable enough, cautionary warnings did not prove popular. A post-modern perspective begun dominating the public exchange, wherein those voicing criticism towards free immigration amongst the right were often personally attacked. Amongst the left such views were almost entirely silenced. The prevailing attitude was that Sweden would benefit from large rates of inflows, and that voicing concern was equal with disliking immigrants (or worse).

Over time however, somewhat of an immigration crises has occurred in Sweden. The country has during the 1990s and the early 2000s received around 100 immigrants a week. This is a fairly high number for a small country with below 10 million in population, situated in the cold Nordics far from the countries from which immigrants come. The brutal civil-war in Syria, increased migration across Europe, and a growing realisation amongst refugees that Sweden is the most welcoming country for them in the continent have all increased flows. The numbers have continued to climb up, breaking record after record. Last week around 10 000 immigrants arrived to Sweden.

The Swedish population have shown great openness to this wave of immigrants. Many have volunteered to welcome them and help them reside in the country; many more have donated clothing and other necessities. Almost all municipalities in the country have accepted migrants. However, even meeting the basic needs of refugees has proven a major constrain on the municipalities. A recent government survey finds that 40 per cent of municipalities answer that the pressure on social services and schools is critical on the short term. Fully 74 per cent give the same answer for the long term.

In southern Sweden the situation has gone so far that all availiable mattresses are reported to have run out. Next week the first 75 tents, which can accomodate 375 migrants, will be set up. Many more tents will be needed, and of course there is reason to question using tents in a cold country such as Sweden when the long winter season is beginning. By using tents and allocating public places such as public school gymnasiums as refugee centers the government hopes to grant housing to 150 000 immigrants this year.

The majority of the migrants are not actually from Syria. During the recent weeks, as many have come from Afghanistan. Many immigrants from Afghanistan are youths without adult companionship. Likely the practice of sending away young adults and sometimes children is based on the information that underage individuals are much more likely to receive permanent residence. During the last week close to 2 400 youths without adult companionship came to Sweden as migrants. (These figures are from my brother Tino Sanandaji, the most prominant critique of the current policies).

The challenge isn’t only to integrate those who are coming to Sweden – given the lack of housing, the lack of simple jobs and so on – but also that the immediate costs associated with refugee intake are skyrocketing. Under the current policies, the cost of giving support to a single youth who comes without adult companionship, is annually around € 100 000. This translates to a cost of  € 240 million per week for recent arrivals. Continuing the current volumes, under the current policies, are nearly impossible.

The policies of Sweden will likely have to change, and change fast, to allow for better labour integration as well create a gate-keeping mechanism to adjust the intake of refugees to what the welfare services actually are able to handle, and the public sector can pay for.

Quite astonishingly, the government has been quite paralyzed by the situation so far. This is likely to change within the coming days, since alarms about the situation getting out of hand are pouring in by the day. Less than a year ago those who raised the issue of migration volumes were branded as leaning towards racism. Slowly but surely the realization is setting in that open borders and a generous welfare state isn’t a realistic combination. I would be surprised if what is happening in Sweden right now didn’t influence the global debate about open borders, welfare policy and the openness to foreigners.

Dr. Nima Sanandaji is a research fellow at CPS, and the author of Scandinavian Unexceptionalism. The entire book is available through the Institute of Economic Affairs (IEA) which has published it. The IEA has also published "A U-turn on the Road to Serfdom" (2014) where Nima first wrote about Nacka's voucher reforms.