Letting asylum seekers work uninhibited could add billions to Dutch economy

Letting asylum seekers work unhindered will generate almost 2 billion euros in additional prosperity for the Dutch economy in ten years, according to calculations by SEO Amsterdam Economics, a research institute at the University of Amsterdam. There are hardly any additional social costs to giving asylum seekers access to the labor market, and the government could save a lot in social assistance benefits. Working people also have more to spend, generating additional VAT income, the researchers said in a report published on Friday, NRC reports.

“The labor potential of asylum seekers remains untapped,” said SEO labor economist Arjan Heyma. “And this at a time of great staff shortages.” The SEO calculated what would happen if the 50,000 people who applied for asylum or family reunification in the Netherlands last year got the same access to the labor market as Ukrainian refugees, who could start working without restrictions upon their arrival in the Netherlands.

Unlike Ukrainian refugees, other asylum seekers have limited access to the Dutch labor market. They’re only allowed to work after their asylum application has been pending for at least six months and only with a work permit applied for by their employer. After about two years in the Netherlands, only 2 percent of asylum seekers have jobs, mainly minimum wage jobs in the catering industry, cleaning, or distribution centers. Of the Ukrainians who fled to the Netherlands after Russia invaded their home country two years ago, about half have a paid job.

Giving asylum seekers full access to the labor market is a politically sensitive topic, with anti-immigration parties raising concerns about Dutch workers being displaced and more asylum seekers coming to the Netherlands. According to the SEO, these concerns are unfounded. The Netherlands has widespread staff shortages - there is enough work for everyone. And there is scientific evidence that family and friends, not the asylum policy, are the main reasons people flee to the Netherlands.

Letting asylum seekers work more easily will also benefit the government, the SEO said. Working asylum seekers pay part of their salary to the Central Agency for the Reception of Asylum Seekers (COA), contributing to their reception costs. The costs for social assistance will also decrease if more asylum seekers get access to work. According to the SEO, the government will save 1 billion euros in welfare benefits in ten years on the annual influx of asylum seekers.

According to SEO labor economist Heyma, there are also a host of other benefits that are challenging to express in euros. For example, working asylum seekers integrate more quickly. The actual returns for a milder labor regime for asylum seekers may, therefore, be higher than 2 billion euros in ten years.