Unlocking the economic potential of refugees across Europe and Central Asia

Every June 20^th, World Refugee Day shines a spotlight on the millions of people around the world who fled their countries to escape conflict, violence, or persecution. Across Europe and Central Asia, the number of internationally displaced people rose from 2 to 14 million in 2023, largely as a result of the war in Syria and more recently Russia’s invasion of Ukraine, which generated major humanitarian crises.

Currently, the region hosts 40% of the global population of refugees and asylum seekers. The vast majority of migrants to the region, however, remain economic migrants: 1 out of 7 migrants to Europe and Central Asia and the European Union are refugees.

A large and sudden influx of refugees can be challenging for host countries, at times overcrowding public services. The early years that followed the Syrian refugees’ arrival in Türkiye have shown that in the absence of formal employment opportunities, refugees concentrate on informal economic activities, which can result in employment losses for local residents in specific sectors.

For these reasons, refugees are sometimes perceived as a “burden,” draining host countries’ economies and taking jobs away from locals.

But this narrative is misleading. In reality, when policies are in place to unlock their economic potential, refugees can be assets for the countries that welcome them and contribute to economic growth.

Refugees bring skills that can be very valuable, especially for countries in the European Union and the emerging market and developing economies of Europe and Central Asia, which face an ageing crisis and labor shortages in some sectors. One of the reasons why Ukrainian refugees were well received was their perceived ability to fill labor market shortages, for example in Poland. Over time, the presence of refugees also facilitates the transition of local workers towards higher-skilled occupations.

Lessons learned from past refugee waves in Europe and Central Asia

Recent refugee waves in Europe and Central Asia have highlighted the importance of creating responsibility-sharing mechanisms across countries to mitigate the impacts of sudden inflows. Although increasingly traveling long distances, refugees still disproportionately move to neighboring countries, as is the case for Syrian refugees into Türkiye or Ukrainian refugees into Poland.

Refugees typically remain displaced for long periods: more than 13 years after the outbreak of the Syrian war, for example, many refugees cannot yet return safely. In this context, facilitating the use of refugees’ skills can not only improve their capacity to sustain their livelihoods in the longer term, but also increase the potential for economic gains and reduce the associated costs in host countries..

Several measures have emerged as best practices to assist this process:

• Developing and strengthening institutional and governance frameworks to support refugees. Türkiye developed a national strategy to support displaced Syrians in the country in 2014 and established the Presidency of Migration Management to oversee the humanitarian response.
• Facilitiating refugees' early access to services and support. This can be achieved by rapidly granting temporary protection status, establishing one-stop-shop reception centers that can assess refugees’ characteristics and needs as well as coordinate the provision of support and services, and introducing cash transfer programs that allow refugees to meet their essential needs.
• Investing in refugees’ integration early on. By providing legal pathways to employment, host countries can help refugees sustain livelihoods and contribute to economic growth, while also reducing public costs. Employment rates for Ukrainian refugees, for example, were higher than in previous refugee waves thanks to a March 2022 EU directive, which facilitated their access to housing, health, education, and labor market. The Nordic countries and Germany have invested in language training for refugees while also conducting early assessment of their skills and certifications. This prevents occupational downgrade and ensures displaced people can deploy their full potential in the labor market. These countries also identified regions where demand for labor was higher, and helped refugees settle in these locations.
• Granting vulnerable local populations access to support programs. Making assistance initiatives available to local people in need can help mitigate the adverse impacts of refugee inflows while also improving social cohesion. In Türkiye, host communities are eligible for labor market programs introduced to enhance the employability of Syrian refugees and improve employment outcomes.

On World Refugee Day, countries across the region need to reflect on these lessons learned and accelerate efforts to develop their own refugee integration frameworks. Doing so will not only support millions of vulnerable refugees across Europe and Central Asia, but also help build more inclusive and resilient economies that can meet the challenges the region faces.