The Economic Impacts of Lifting Work Restrictions on People Seeking Asylum in Scotland

This project, commissioned by the Scottish Government, estimates the economic impacts that allowing asylum seekers to take up work, whilst waiting for a decision on their asylum claim, would bring to Scottish economy. This analysis forms part of a wider research exercise exploring the potential policy options and implications of Asylum Right to Work in Scotland being conducted by the Scottish Government’s independent Expert Advisory Group.

Hand reaching out with St Andrew's cross in the background

Summary & aims

This research aims to estimate the impact that granting the right to work to asylum seekers would have on Scotland’s economy, including the impact on GDP, tax revenue, government expenditure and inflation.

Methodology

The methodology for this analysis is two-step. Firstly, we estimate the costs associated with imposing right-to-work restrictions on asylum seekers and the potential gains to the economy from those individuals being able to work. Secondly, we apply those changes or ‘shocks’ to the Scotland version of the National Institute Global Econometric Model (NiGEM-S), to estimate the impact on the Scottish economy.

Findings and Recommendations

The primary impact of lifting the right-to-work restriction for Scotland’s labour market would come from a greater number of people who are able and willing to work entering it. Hence, in this way, such immigration system reform could contribute to addressing the needs of Scotland’s economy. This will, in part, depend on the skills profile of those claiming asylum. The evidence on the skills profile of asylum applicants is limited, making it is difficult to definitively state how their profiles may or may not align with the needs of the sectors currently experiencing labour shortages. However, of the limited evidence, we know that asylum applicants often display a wide variety of skills.

We project that granting the right to work to people seeking asylum in Scotland would add £30 million per year on average to the Scottish economy via nominal GDP if granted to all those seeking asylum in Scotland. If, like many other European nations, the right to work is granted only to those waiting longer than six months, the annual GDP impact would be lower, at around 16 million per year.

Therefore, lifting the right-to-work restriction on asylum applicants is likely to have a substantial contribution to Scotland’s economy. This policy change would therefore have scope to support multiple priorities of the Scottish Government, by not only supporting integration of refugees and asylum seekers from arrival, but also by benefitting local economic growth and communities.

Principal Investigator

The Economic Impacts of Lifting Work Restrictions on People Seeking Asylum in Scotland
Senior Economist

Co-Investigator

Ekaterina Aleynikova
Senior Social Researcher