Marcel Fratzscher says benefits of absorbing refugees to offset demographic crisis will clearly outweigh the costs in five to 10 years

The long-term economic gains from the huge numbers of refugees arriving in Germany will far outweigh the massive costs of the crisis, a leading economist has told the Guardian.

Marcel Fratzscher, the head of the German Institute for Economic Research (DIW), has said the hundreds of thousands of newcomers this year as well as the hundreds of thousands more expected over the coming years, are a major opportunity for Germany and that its strong financial position makes it ideally placed to welcome them.

“In the long run the refugees are an incredible opportunity for Germany,” Fratzscher said. “Because of the surplus in the public budget, and a labour market that’s doing incredibly well, there’s probably never been a better moment in the last 70 years for Germany to deal with the challenge.”

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In a study to be published on Thursday, the DIW concludes that while the current situation – with thousands of refugees continuing to arrive on a daily basis – is a huge economic and social task, the benefits of giving a new home to the refugees will clearly start to outweigh the costs “within the next five to 10 years”.

The report offers a counterweight to the prevailing view that Germany is in danger of collapsing under the weight of the refugee crisis.

While recognising “the chaos and fears” in some parts of Germany and the “huge logistical challenge” the country faced, Fratzscher said Angela Merkel’s open-door policy would change the face of German society for the good.

Fratzscher is the leading voice of a growing number of key public policy advisers in Germany to argue that because of its imminent demographic crisis, and with businesses crying out for workers, there is clear potential for refugees to help German society.

In a recent report the Macroeconomic Policy Institute said the refugees would boost the German economy and “act almost like a stimulus programme”, by forcing long overdue investments in Germany’s weakened infrastructure.

David Folkerts-Landau, chief economist with Deutsche Bank, has also said the influx of refugees has “the potential not just to invigorate our economy but to protect prosperity for future generations”.

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The hopes lie largely in the very young age of most of the refugees. “Because the majority of them are under-25, there’s a lot of potential there,” Joachim Möller, head of the Institute for Employment Research, has said.

They have dismissed calls by other policymakers insisting on the necessity of introducing a special refugee tax or raising the pension age to cover the costs of the crisis.

“Such measures would be wrong and counterproductive, and would only help stoke unfounded fears in the population, that Germany can’t afford or manage these refugees, that they take money from us, steal our jobs and lower our wages,” Fratzscher said. He warned: “It’s clearly easier to gain political support at the moment by stoking fears.”

Fratzscher said he believed German economists were reluctant to talk of the refugee crisis in positive terms for fear of being accused of reducing it to its economic components and ignoring its humanitarian, political and cultural dimensions.

“Few people dare to speak out on this issue, because it’s highly emotional and whatever you say you will get criticised,” he said. “Until now the most prominent voices have been those that look exclusively at the government perspective, and focus on what the refugees cost now, which admittedly in the short term is enormous, rather than looking at what the refugees that come now provide to the country and the economy in the long run.”

It is estimated that each refugee costs the public purse around €12,000 a year until a decision is made on whether they can stay or not. The total cost to Germany this year has been about €10bn, around 0.3% of its GDP. But these are costs that Fratzscher insists Germany is capable of absorbing.

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“Because we have a surplus in the federal, state and local budgets of about €15bn this year, there’s enough money to bear those costs, and the same holds for next year,” Fratzscher said. “Financially, the government is in an incredibly unique position to shoulder that burden.”

He said that Germany’s pending demographic crisis, which without sufficient immigration would lead to a shrinking of its working population by around 4.5 million over the next decade, mean huge opportunities for new arrivals to be integrated into the workplace.

“There will be a lot more open positions. Companies are already looking for many skilled and unskilled workers and that problem is only set to intensify,” he said.

“The opportunity is for refugees to not only fill the gap, but as we know every person who finds a job and pays taxes makes a contribution to economic productivity and output. We will see that the benefits will outweigh the costs within five to 10 years. This is not me being an optimist, I’m just looking wider than this myopic, short-term perspective, that in the long run, refugees will be a net gain for the economy.”

Fratzscher admitted there were many unknowns, such as how many refugees would arrive and how quickly they could be integrated into society, which revolved around the key tasks of learning German, finding housing and gaining qualifications.

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The DIW’s study based its calculations on 1 million refugees arriving this year, a similar number next year, and half a million each year until the end of 2018. It assumes that 40% of those will end up staying for 20 years or longer.

“But even if they go back after four years, we should not think it’s bad to invest in people’s integration, education and training,” Fratzscher said. “There will be those who go back sooner, but we also have many Germans who do that. Lots of German doctors train here and then go to Switzerland where the salaries are better, and many qualified people from other European countries have come here with a good training, which didn’t cost Germany anything, so it goes both ways.”

He also stressed the boost to the German economy from the building boom, which would result from the construction of new kindergartens, schools and social housing, after years in which much German infrastructure – from schools to roads – had been sorely neglected, with money put into social welfare spending instead.

“It’s a wake-up call for a fundamental shift in the thinking about our economy and our country,” Fratzscher said. “We need to recognise that we must invest now in our future and that it will pay off in 10, 20 or 30 years’ time,” he said.