Sweden has earned 900 billion on immigration

Despite the large number of refugees in Sweden, immigration is still an economic surplus for the country

Published on dn.se 1st July 2015, translated from Swedish with permission.

Immigration has been a good business for Sweden. If it hadn’t been for the post-war era contributions from foreign-born tax payers, the state’s coffers would have been missing an average of 65 billion (Swedish kroner, ed.) a year. We wouldn’t have had the finances for quite as many roads and railways or as much research and defense. 

The profits today are markedly less than in the 1960’s and 1970’s, but the group of those with foreign backgrounds is still covering their own costs. This was demonstrated by a report from the think tank, Arena Idé, which Arena’s chief economist, Sandro Scocco, presented in Almedalen on July 1st

- It means that Sverigedemokraternes proposal to finance the costs of the army and to save care for the elderly through a reduction in immigration quite simply doesn’t add up, says Scocco.

Together with Lars Frederik Andersson, lecturer in economic history at Umeå University, he has worked out the cost and income related to immigration for each year since 1950, which resulted in an overall profit of 900 billion Swedish kroner. Without immigrants, Sweden’s current population would be 2.5 million less than it is today, and the country’s economy would be approximately one fifth smaller. 

The profit margins were naturally a good deal larger 40-50 years ago, as economic migrants from Europe filled the Swedish factories. 

- To put it simply, you could say that when seen in an historical perspective, it was immigration more than anything else which paid for the common investment in the military, infrastructure and basic research, says Sandro Scocco.

That immigration should continue to make economic sense – despite the relatively high unemployment rate among new immigrants and a large dependence on state support – is, according to Scocco and Andersson, supported by the fact that the 1.6 million strong group who were born abroad, have fewer elderly relations reliant on state support and greater numbers at an age suitable for working than the group born in Sweden. 

Therefore, foreign-born residents – despite a lower rate of employment – can finance society’s costs in terms of that group’s use of social services and financial benefits. If six out of 10 between the ages of 15-74 work and pay tax, it’s sufficient for the immigrant population to clear its costs. The rate of employment today is 59%. On the other hand, for the group of people born in Sweden to be financially able to pay for ‘their’ elderly dependents, seven out of ten must have employment and pay tax, in other words, an employment rate of 66-68%. In 2014, the rate of employment for native Swedes was at 66%. It is correct that immigration requires greater outlay in the beginning, but the authors of the report believe that all immigration should be seen as an investment. They make a comparison with children: they cost a great deal while growing up but pay it back again when they begin to work. 

- The central question is how to optimise investment and balance the start-up costs for education, initiatives to get them on the labour market and social investment with the anticipated future return, highlights Sandro Scocco.

- The key to successful integration is the state of the labour market. If we can maintain the tempo there, immigration will be a good investment, if not, then it won’t. 

Arena idé’s analysis:

Using SCB (Svensk Statistik, ed.) data as the starting point, Sweden’s population is divided into two groups: one with a foreign background and one that is wholly Swedish.

For each year since 1950, they have examined how many people in the respective groups there are in each age, and estimated costs for the average expenditure on each respective type of individual (social services, social benefits, collective goods as well as infrastructure and defense) as well as the average tax contribution to the state coffers for each type of individual.

For the group with foreign backgrounds, the higher average consumption of social benefits and other payments was taken into account, as well as the lower rate of employment (i.e. fewer taxpayers).

According to the report, there is a cumulative profit of 900 billion Swedish kroner since 1950. From the end of the 1970’s onwards, the profit margin falls considerably, but the cost of immigration has broken even every year, including during the crisis years of the 1990’s and today, demonstrates a small surplus.