17 March 2015

Swedish welfare model traps immigrants in poverty


During recent years, Sweden has had an unusually open policy towards refugee and family immigrants. The Swedish Migration Agency estimates that around 105,000 individuals will apply for asylum only this year, corresponding to over one percent of Sweden’s entire population. In addition, many family migrants are annually united with their relatives. But the open attitude towards granting immigrants asylum is not matched by good opportunities on the labor market. An in-depth study by the daily paper Dagens Nyheter shows that many migrants struggle to find decent work even ten years after entering the country.

Dagens Nyheter has used public records to track all 24,567 individuals who were granted residence permit in Sweden in 2004. Ten years later, 15,740 of these individuals were of working age and residing in the country. The median income for the refugees in the group was found to be as low as £880 a month. The family immigrants of refugees earned even less. Ten years after arriving in the country, their median income was merely £360 a month. These very low figures suggest that a large segment of the group is still relying on welfare payments. Dagens Nyheter can show that at least four out of ten refugees ten years after arrival are supported by welfare. The paper acknowledges that this is likely an underestimation, since some municipalities have not sent the paperwork required to match individuals to welfare receipts.

In theory, one could expect the Nordic welfare states to excel at integration. After all, the public sectors provide a range of goods such as tax-financed education including university studies, as well as tax-financed health care. Such programs can encourage up-ward mobility for marginalized groups such as immigrants. But there is also another side to the coin. The combination of generous benefits, high taxes and rigid labour regulations reduce the incentives and possibilities to find work. Entrapment in welfare dependency is therefore extensive, in particular amongst immigrants. Studies have previously shown that even highly educated groups of foreign descent struggle to become self-dependent in countries such as Norway and Sweden. Many working age individuals from immigrant backgrounds are either in open unemployment, or in hidden unemployment through programs such as early retirement. It remains to be seen if these challenges can be traversed in Sweden or not. So far the answer unfortunately seems to be no. If the combination of a high rate of immigration and a failure to integrate continues, the long-term finances of the Swedish welfare model could be at risk. The high-spending model is simply not fit to cope with the challenges of integration.

Dr. Nima Sanandaji has previously co-authored “SuperEntrepreneurs – and how your country can get them” for the Centre for Policy Studies. He recently contributed to the Spending Plan, a landmark report by the Taxpayers Alliance about how exactly government spending can be reduced in the UK.