Introduction

The migrant crisis caused by the civil war in Syria has been reported as causing a migration crisis for Europe (Troianovski, 2015; BBC News, 2015). It is forecast that in 2015, Germany, a country which has a compassionate history of welcoming refugees, will receive 1.5 million asylum applications, double the 2014 level (BBC News, 2015). With a record influx, the government has made a commitment to spend an additional €6 billion to support the refugees; €3 billion to aid with housing and a further €3 billion for other expenses such as welfare benefits (The Guardian, 2015). These costs are being incurred while Germanys economy is in recovery following a recession and period of stagnation (Kollewe and Wearden, 2014), and critics are arguing that the refugees are a drain on the German economy (Froden, 2015; Scally, 2014). There is little doubt there are ongoing short term costs incurred providing for refuges; in addition to the 2015 refugee spending, the government has committed to provide an additional €4 billion in 2016, allocating regional states €670 per month for each refugee received (Reuters, 2015a). However, with initial estimates indicating only 450,000 expected arrivals (Reuters, 2015b), and economic forecasts indicating Germany could sustain an influx of up to 500,000 a year (Groden, 2015), the question becomes whether the support of the refugees is economically sustainable. In this context sustainability refers to the ability of the German government to continue with the current polices at the same level.

Short Term Sustainability

There are significant short term economic costs; in addition to the €670 per refugee per month supplied by the Federal Government for 2016 there are the addition local costs (Reuters, 2015a). The refugees arrive with little or no personal possessions and many may need medical attention after a long and arduous journey, as well as accommodation (DW, 2015). The German municipalities receiving the refugees already faced a housing deficit; a recent report indicated at least 400,000 houses needed to be built each year (EurActiv, 2015). The increase in refugee arrivals exacerbates the existing deficit (EurActiv, 2015). Therefore, a significant short term cost is associated with the provision of emergency housing needs (Wagstyl, 2015). There are also welfare payments, education, and the costs of processing claims. A recent assessment has indicated the total cost for municipalities was approximately €12,000 – €13,000 per refugee per annum, including the direct and indirect costs such as housing, healthcare, and administration (CW, 2015). This appears to be a significant drain on the short term resources, and intervention of the Federal government with further aid indicates that the costs are not sustainable at municipal level (Reuters, 2015a).

The concept of the short term sustainability may also be impacted by public opinion, as the money provided comes from the public purse. In 2012 a survey of German nationals indicated that two thirds believe that migrants were a strain on the economy (Scally, 2014). This is often accompanied by local residents’ fears that migrants will take jobs from locals, driving down wages, as well as increased pressure on the public purse due to lower taxes, and increased demand for welfare payments to supplement low wages (Kerr and Kerr, 2013; Migration and Integration Research Department, (MIRD), 2005). If these perceptions are correct, then it would appear the current German policy towards refugees is unsustainable. However, the perceptions are not necessarily accurate. Therefore, it is necessary to look at the longer term economic impact of the refugees on Germany.