Sweden's welfare programmes hinder Iraqi integration

By emphasizing welfare programmes over work and entrepreneurship, Sweden makes it harder for Iraqi immigrants to achieve success in their new country, argues Nima Sanandaji of the Captus think tank.

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The US Congress recently invited Anders Lago, the mayor of Södertälje, to speak about immigration and integration. Lago was invited following several media reports, including a lengthy Washington Post story, explaining that the small Swedish city of Södertälje had taken in the same number of Iraqi refugees in 2007 as entire United States.

Sweden has a more generous policy towards immigrants from Iraq. But at the same time, Sweden’s equally generous welfare programmes hinder integration. The same groups that prosper on one side of the Atlantic become dependent on welfare rather than work on the other.

Last year over 18,500 asylum seekers from Iraq entered Sweden, more than twice the number arriving in 2006. Close to 11,000 refugees as well as over 5,000 relatives of Iraqi’s who had previously immigrated to Sweden were granted permanent residency. Södertälje, which has only 83,000 inhabitants, accepted more than 1,000 Iraqi refugees who were granted permanent residency.

Lago explains that the city is today home to some 6,000 Iraqi immigrants: “Those Iraqis who choose to come to Södertälje are almost all Christians who originally started coming here since there city already hosted Christian communities from the Middle East.”

The concentration of Iraqi immigrants in Södertälje has been far from easy to handle and have resulted in a plethora of social problems. The mayor says that extensively programmes are in place aimed at introducing the immigrants to the Swedish society.

Yet problems arise when it comes to arranging daycare, schooling and housing: “In Södertälje we can have up to 15 Iraqi refugees living in a two-room apartment. A few weeks ago our fire department broke down the door to a bomb shelter without windows where eight people were living on the floor,” said the town’s mayor.

According to Lago, over 40 percent of the adult Iraqi refugees to Södertälje have an academic education whilst approximately additional 40 percent have backgrounds in traditional craftsmanship. But despite Södertälje’s extensive offering of labour market programmes, labour market integration remains poor.

Yves Zenou, professor in economics at the University of Stockholm and a researcher at the Research Institute of Industrial Economics, explains that integration difficulties facing Södertälje are due to high number of immigrants in the city:

“I have myself visited Södertälje and it is obvious that the Iraqi immigrants living there are not entering the labour market in a proper way. Newly arrived immigrants in the city often end up in environments where there is little contact with the Swedish society and the Swedish language and where the opportunities to finding employment are limited.”

But the high concentration of immigrants is not the whole explanation for why newly-arrived Iraqis end up marginalized. Integration difficulties are found not only in Södertälje, but throughout the Swedish society. Since the middle of the 20th century Sweden has gone from being a society that successfully integrated immigrants to one where immigrants to a large degree become dependent on welfare rather than work.

Sweden has accepted more than 80,000 asylum seekers from Iraq since 1984. Last year’s flow of 18,500 asylum seekers is a uniquely large figure in this perspective. But research shows that Sweden also previously has shown an inability to integrate Iraqi refugees, even when the flow of immigrants was more even and much lower compared to today.

For example, economist Kirk Scott has demonstrated that the employment rate amongst men born in Iraq in 1990 was half of that compared to native born Swedes. That same year, Iraqis working full time had an annual income less than 60 percent of that earned by workers born in Sweden. Scott also found that the situation for immigrants does not clearly change for the better the longer one stays in the country.

In his research, Dan-Olof Rooth looks at the labour market situation for Iraqi immigrants who were granted permanent residency between 1987 and 1991. He finds that only 13 percent of the women and 23 percent of the men in this group were employed in 1995.

This is highly paradoxical when one considers that the Iraqi immigrants who came to Sweden during this time were much more highly educated compared to Swedes. At the time of their arrival, the percentage of Iraqi immigrants with at least three years of higher education was 2.3 times greater in comparison to native Swedes. And the share of those holding PhD degrees was almost ten times higher amongst Iraqi immigrants who arrived before 1975 compared to native Swedes.

Sadly, marginalization is common for Middle Eastern immigrants living in Sweden. Amongst those who were granted permanent residency between 1987 and 1991, only 29 percent of the Iranian and 21 percent of the Lebanese immigrants were employed in 1995.

But in the US the situation is quite different.

Helen Samham is the Executive Director of the Arab American Institute Foundation in Washington, D.C. She has studied the position of the Arabic minority in the US for the past 30 years and explains that many Arab-Americans have achieved success through work and entrepreneurship.

This view is confirmed by the 2000 US Census, which shows that Americans born in Iraq had an average income only seven percent lower than that of citizens born in the US. And other Middle Eastern groups actually performed better than US-born Americans when it came to yearly income. On average, Americans born in Turkey earned 14 percent more than native born Americans, those born in Lebanon earned 28 percent more, and Iranian-born brought home had an average annual income that was a full 36 percent higher than that of native born Americans.

The unemployment rate was slightly higher for those born in Iraq compared to native born Americans, lower for Turks, Iranians and Lebanese. The statistics are remarkable when contrasted with those from Sweden, where Middle Eastern immigrants to a large degree feel excluded from the labour market.

So why has Sweden failed in integrating even the previous waves of highly educated Iraqis and why is the situation clearly better in the US?

Since the end of the 1960s, Sweden has gone from being a free economy with low taxes and high growth to a high-tax system with mediocre growth. Generous welfare benefits have, in combination with a rigid labour market and high taxes on work, led to many immigrants becoming dependent on welfare rather than work.

Welfare systems created to alleviate economic poverty have led to many developing a long term dependency on government programmes. Social poverty then emerges as many adults in immigrant-rich neighborhoods are unemployed. Many young immigrants grow up lacking role models and thus do not have a strong belief in achieving success in life through work and education.

When newly arrived immigrants seek their first jobs they are forced to accept lower wages, since they have limited language skills and lack experience in the Swedish labour market. But since the wages in Sweden are often not allowed to vary due to the strong unionization of the Swedish labour market, immigrants often find it difficult to enter the labour market at all.

At a time where Sweden is accepting more Iraqi immigrants than at any time in its history, it is vital to think about how the previous failed integration policies can be transformed to the better.

In the same manor as the US Congress showed a willingness to learn from Anders Lago, the Swedish Riksdag would be wise to draw lessons from the more successful routes to integration within the US system, where a stronger emphasis on work and entrepreneurship has made it possible for Iraqi immigrants to enter the working place and societal life.

Nima Sanandaji is president of the Swedish free market think tank Captus. He has conducted research in various fields within the natural sciences at Chalmers University of Technology, the University of Cambridge and The Royal School of Technology.