The National Bank of Belgium published a report entitled 'The Economic Impact of Immigration in Belgium'.

At the request of the Minister of Finance Johan Van Overtveldt (2018), this report provides an overview of the economic impact - in terms of transfers to and from the State - of immigration in Belgium, relying on statistical analysis.

The authors draw on various national and international studies, as well as data from the Crossroads Bank for Social Security (CBSS) that include all individuals officially registered in Belgium over the period 2009 - 2016. They distinguish between first and second generation immigrants, and between immigrants with EU and non-EU origins. The study also tackles issues relating to migration channels, such as refugee status or family reunification.

This report takes place in a Belgian context where migration is a central demographic issue: 16.5% of the country's residents are first-generation immigrants and 13.7% have at least one migrant parent (second generation).

The report is divided into three main sections:

• Overview of the transfers to the government depending on people’s origins

The first section reviews pensions and family allowances, unemployment benefits and social assistance, sickness benefits and healthcare in kind - income taxes and social contributions, taxes on consumption.

The overview shows disparities between natives, the first- and the second generation of migrants. The authors point out the influence of age on these results.

• Analysis of the integration of immigrants to the labour market

Compared to other EU countries, Belgium performs poorly regarding the integration of immigrants to the labour market. Discrimination remains a reality for people of foreign origin when applying for a job, despite the legal framework.

While activation policies prove more effective on natives, targeted policies tend to be more efficient in improving labour market outcomes of immigrants. However, such targeted policies are scarce in Belgium, and anti-discrimination measures are more beneficial to EU than to non-EU migrants. As for residence status, 'policies designed to encourage immigrants to stay in the country for a longer period tend to reduce the employment and labour market participation gaps with respect to natives. In that respect, the most powerful tool is easier access to permanent residence'.

Access to education is strongly and positively correlated to the integration (all types thereof) of immigrants into the labour market. Children of immigrants tend to do significantly better in terms of employment rates, but they do not have the same education opportunities as natives. Belgium displays a low level of equity in terms of origins in the educational system; it has one of the lowest levels among OECD countries.

Acquisition of Belgian citizenship, proficiency in one of the national languages, ethnic discrimination, official recognition of qualifications and diplomas and education opportunities are the main factors that influence the integration of immigrants into the labour market.

• General model for the evaluation of the economic impact of recent migration in Belgium

'To assess the impact of immigration, the baseline scenario is constructed by taking the situation in the same year after removing immigrants who arrived in Belgium in the last five years.' The baseline equilibrium is based on the economic situation in 2017.

The model shows that immigration inflows over the last five years had a positive impact on GDP, increasing it by 3.5% (2% and 1.5% for EU and non-EU immigrants, respectively). A larger increase in GDP is associated with a higher employment rate. No negative effects of immigration have been found for natives regarding employment, income or welfare, while already-established immigrants might suffer from being easily replaced by newcomers.

General conclusion

One of the major results is that increasing the employment rate of immigrants (and their descendants) is essential in order to increase their contribution to public finances.

Migration positively contributes to Belgium’s GDP. This contribution could nevertheless be significantly increased, considering the importance of immigration on the national demographic situation, which has led some commentators to state that Belgium is missing out on an economic opportunity.

Relying on an OECD study (2013), the authors explain: 'Belgium is singled out as the country where raising the employment rate of immigrants has the biggest impact on public finances (this rate being particularly low there). Employment explains roughly three-quarters of the difference in contribution between immigrants and natives. And this is even more so for women, owing to the importance of the family reunification channel which mainly concerns them.'

Integration policies appear as an effective tool to improve this. Language teaching, anti-discrimination measures, targeted activation initiatives and facilitating access to longer-stay permits are pathways towards improving the contribution of immigrants to the national GDP.