Immigration costs Finland more on average than it produces
Most immigrants become taxpayers during their sixth year
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Immigration still costs Finland more on average than it produces, if the issue is looked at purely from an economic perspective during the first ten years a person spends in the country.
This finding comes from a new study commissioned by the Ministry of Labour that investigated the effects of immigration on Finland’s public finances.
Developments have been positive of late, as the employment situation of immigrants improved rapidly in the 1990s. The researchers followed the employment situation, income taxes, and income transfers of nearly 15,000 immigrants throughout the 1990s.
The study revealed that finding work becomes easier the longer an immigrant has lived in Finland. When newly employed immigrants begin to pay taxes and receive less social security payments, the balance of immigration turns positive as time goes by.
Landing a job is easier when an immigrant speaks Finnish, and especially if he or she has a Finnish degree.
"If we leave immigration for humanitarian reasons out of the calculations, immigrants pay more direct taxes than they receive direct benefits already during their sixth year in the country", explained Research Director Aki Kangasharju from the Government Institute for Economic Research.
When humanitarian immigration was included in the analysis, the effect immigration had on the public economy remained negative throughout the time period under study. The researchers calculated that the total costs of immigration may have been around 50 million euros over the course of ten years.
Kangasharju does not feel that this figure is very large: it amounts to one tenth of Finland’s annual development aid.
Those who arrived in Finland for humanitarian reasons have found it more difficult to find employment, so they are more dependent on social security benefits. This group mainly includes refugees from Iraq, Iran, Somalia, and the former Yugoslav republics.
After the fourth year in Finland, the share of paid taxes began to increase clearly for all immigrants on average. If the analysed period covered more than ten years, the overall balance might be positive.
"Based on these results, immigration benefits the Finnish society in the long run", commented Minister of Labour Tarja Filatov.
Kangasharju observed that immigrants should not be inspected as one group, as the purpose of humanitarian immigration differs clearly from other immigration.
Those immigrants who arrive from OECD nations pay more direct taxes during their first year in Finland than they receive benefits. Also, Estonians and Russians find work quickly.
Minister Filatov pointed out that the recession was partly to blame for the high unemployment rate among immigrants in the 1990s. Nearly half of all immigrants were unemployed back in 1997 and 1998, but the current unemployment rate is 29 percent.
Helsingin Sanomat
