IMF - Pay Refugees Less

The International Monetary Fund has released a report urging the European countries accepting a majority of refugees to "temporarily" pay them less than minimum wage.  The IMF recommended implementing a short-term differentiation between asylum seekers and EU citizens, by way of "temporary and limited derogations of the minimum wage for refugees." This would entail giving wage subsidies to companies to employ individuals migrating to Europe to escape war, poverty, and state violence from the Middle East and North Africa, or adopting "temporary exceptions to minimum or entry level wages" for those already hired. "International experience with economic immigrants suggests that migrants have lower employment rates and wages than natives, though these differences diminish over time," the report, ‘The Refugee Surge in Europe: Economic Challenges’, states.

The IMF claims that the measure would help mitigate the cost of accepting refugees and allow them to find work faster. "Indeed," the report argues, "the sooner the refugees gain employment, the more they will help the public finances by paying income tax and social security contributions." The IMF suggested that high entry wages and stable living situations are actually a barrier to integration, writing, "Low education and poor linguistic skills likely limit the attractiveness of refugees on the job market....Easing restrictions on the geographic mobility of refugees could also allow them to go where labor market prospects are more favorable."

Jordi Angusto, an economist with the European Progressive Economists Network (Euro-PEN) and Spain's Econonuestra explains that he outcomes put forth in the report are unrealistic. He said. "Most probably, the first effect should be a workers substitution (more expensive for less expensive ones), thus increasing the xenophobia amongst substituted and at risk of substitution workers; the second effect, an aggregate decrease of salaries as GDP %, increasing profits and global inequality," Angusto said. "From the demand side, lower salaries should mean less demand than supply; a lack of demand that, if compensated by exports, should imply a beggar-thy-neighbour strategy, adding pressure to cut wages in third countries."

Tiffany Williams, associate director at the Institute for Policy Studies, added: "In my field of human trafficking, which shares many similarities with forced migration caused by conflict, advocates know that safe, paid work is one of the keys to helping displaced people rebuild their lives. It is important that the IMF is acknowledging that access to work is crucial. But creating a second class of workers who will be pit against the existing low wage workforce is a risky move which might fuel a deeper anti-immigrant backlash, undercutting efforts to humanely resettle vulnerable families."

In Germany, which took in more than one million migrants and refugees in 2015, the current minimum wage is 8.50 euros ($9.1). The IMF's report follows a similar call by the German Council of Economic Experts which in November said, "The minimum wage is likely to pose a barrier to entry into the job market for many refugees. Considering the growing supply of low-wage labor the minimum wage should under no circumstance be raised."

In contrast to this view Angusto said "Public help to migrants/refugees until they find a 'regular' job, seems to be fairer and a worthwhile investment in the medium/long term."

Williams agreed, "Instead of lowering standards toward a race to the bottom, countries should make it easier for them to work legally, and invest in programs that help them integrate into their new homes and economies. Austerity measures that lower standards for public services, working conditions, and living conditions will never be the pathway to building an equitable global economy."

In the view of the Socialist Party we cannot conceive of any benefit to a two tiered system of compensation for labor. Such a system would be divisive in the extreme. Existing workers who are doing the menial and lower paying jobs would be competing with newcomers who would work for whatever the bosses could get away with. It means that refugees will be kept in poverty. history is rife with the abusive labor practices waged against migrants and refugees. The resentment would lead not only to personal attacks but also to riotsand a resurgence of the right-wing. There should not a single trade union that would tolerate such proposals of a first and second class work-force (although indeed many unions have been forced to accept such measures in wage negotiations).

Given that the EU’s direct involvement in BREAKING Iraq, Syria and  the war profiteers should pay for what they broke through jobs and half-decent wages and conditions.