In April alone, the UK economy shrank by 20%, the largest monthly contraction on record. The Chancellor, Rishi Sunak, will have an overwhelming priority: enable a V-shaped recovery and prevent long-term damage to the economy. The fear is that as jobs are lost and businesses cease trading, workers will miss out on opportunities for career progression and won’t gain skills on the job. To avoid that bleak prospect, the government has rightly made a massive intervention into the economy, directly paying the wages of millions of workers and guaranteeing billions of pounds worth of loans.
Yet while the Chancellor uses every tool at his disposal to prevent economic scarring, his colleague the Home Secretary oversees a policy that inflicts it. Asylum seekers are banned from seeking work until they have been waiting for a decision on their asylum claim for over a year. Even then, they can only apply for jobs on the shortage occupation list.
As a result, asylum seekers are forced to rely on the modest benefits they qualify for. All the while, their skills decay through lack of practice and they miss out on the best possible opportunity to learn English and integrate.
A new study quantifies the impact of the ban. By exploiting the fact that different countries have imposed bans at different times and of different lengths, economists Francesco Fasani, Tommaso Frattini, and Luigi Minale are able to identify the long-term impacts of bans.
Their results are significant, if unsurprising. They find that the negative impacts of bans from working persist for a long time, with refugees less likely to be in work a decade on. They estimate that an asylum seeker work ban delays the integration process for refugees by 4 years. Their findings show that refugees exposed to bans are more likely to give up searching for a job altogether once they are allowed to work.
Refugees exposed to a ban are less likely to be proficient in the host country’s language, less likely to be in a permanent or high-skilled role, and more likely to be in receipt of benefits. The authors suggest “being placed on welfare immediately upon arrival may generate a culture of welfare reliance, leading to lower motivation to engage in the labour market.”
Adding up the negative long-run effects of employment bans across Europe, the authors estimate a GDP loss of around €4,100 per banned refugee per year. It’s worth noting this estimate undercounts the harm of employment bans, as it does not include the output loss in the initial year of forced idleness.
The case for ending the ban is overwhelming. That’s why over a year ago, we joined a coalition of 150 charities, faith groups, businesses and unions to support Refugee Action’s campaign to Lift the Ban. At the time, the then Home Secretary, Sajid Javid MP expressed interest in reviewing the ban. As Chancellor Rishi Sunak prepares to do whatever it takes to prevent long-term damage to the UK’s labour market, he should borrow a no-brainer from his predecessor.