Introduction Measures for Newly-Arrived Migrants

9. How can governments meet their integration goals in a cost-effective way?

Why is this an issue?

As integration budgets have increased, the question of how to ensure these funds are used efficiently and effectively has become more important. The government has an interest in ensuring that public funds are used well, but the methods of benchmarking may not always tell us if integration improvements are tied to expenditures.

The cost of introduction measures can be considered from a variety of perspectives. There is, first and foremost, the question of whether integration courses should be offered as a public good or whether migrants themselves should bear the costs. Where fees are required, certain migrants may find the costs difficult to sustain, particularly if the measure lasts several months or years during which the migrant may not be able to work full time. In general, countries need to approach financing for integration according to principles of equality and non-discrimination. Introduction measures such as language programmes and skills assessments should be attainable by all eligible migrants, independent of their financial means. While this does not mean that they are necessarily free of charge to migrants, it requires governments to assess how to run and fund these programmes without placing an undue burden on migrants.

There is the question of which level of government funds the programme and how to organise cost-sharing. The role of the state in terms of funding service provision has varied, but tends to be related to the country’s understanding of integration. In Australia, Canada, France, Germany, and Korea, the federal government plays a comparatively large role in funding organisations or service providers to deliver introduction measures on its behalf. Italy and Spain, and Poland are highly decentralised. In the United States, with the exception of support to refugees, government funding for integration is limited. While there is some funding from State Governments for integration services, non-profit organisations do not rely solely on this funding to guarantee operations. In the United Kingdom, some local authorities and/or national governments, such as Scotland, have stepped in to create their own immigrant integration programs.

There is also the question of return on investment: are the measures giving the result that a government is looking for, and how can the country leverage its expenditure toward a desired result? Some countries have reorganised their integration service provision to deal with this question internally, whereas others increasingly look to encourage innovation and support from the private sector.

It is not possible to create a roadmap for all countries to follow to the answer to these questions. Not only do governments approach integration from varying philosophical perspectives, countries also face specific budgetary constraints, and their strategy is influenced by the composition of their migrant population. As elsewhere in this publication, the approaches discussed in this context should thus be viewed as considerations in the design process.

How to approach it

Offer essential introduction measures as a public good

Offering certain introduction measures as a public good stems from the recognition of the fact that integration is an investment in the future. This is especially true for categories of migrants that are unlikely to depart the country, such as refugees. Offering introduction measures free of charge to all who are eligible may help countries reach more migrants. New arrivals who are not working often have access to financial support and subsidies, but those who are employed are often ineligible, even when working below skill level. In these cases, fees may discourage upskilling or retraining that could help these individuals reach their potential and increase output in the economy.

Recognising that the burden of paying for introduction measures may be insurmountable for humanitarian migrants immediately after arrival, most countries fully subsidise courses for this group (Annex Table 9.A.1). For other categories of migrants, fewer countries offer introduction measures free of charge. Some have chosen to provide a more limited offering without fee to these new arrivals. In Lithuania, Switzerland, the United Kingdom, and the United States, the extent of these offerings may vary. Luxembourg provides its civic integration course free of charge to all migrants, and the Czech Republic and Sweden cover the cost of language courses only. A recent change in Norway entitles non-humanitarian migrants who are motivated to learn Norwegian to a voucher for language courses worth NOK 10 000.

There is no clear-cut answer to whether introduction measures should be free of charge. In some cases, budgeting constraints make offering free integration impossible (Box 9.1). Determining whether there is sufficient return on investment to offer measures as a public good is more difficult for some indicators than for others. It is also less clear how to determine whether there is sufficient return on investment for countries that have large populations of migrants who are in the country only temporarily, and thus likely to depart. Belgium, Croatia, Denmark, Germany, Israel, Japan, Lithuania, the Netherlands, New Zealand, Norway and Romania charge a fee for labour migrants and their families to access integration courses, while humanitarian migrants and their families are exempt in most of these countries.

Requiring migrants to make some up-front investment may provide an incentive to complete a course. For language outcomes, this is particularly important. However, countries should consider how to introduce this investment need in a way that actually furthers their desired result. Australia, which provides introduction measures free of charge, imposes a higher visa fee for spouses and dependents lacking functional English. New Zealand’s approach is similar, with applicants who do not meet minimum language requirements required to pre‑purchase English tuition. In both of these cases, once the money is paid, it could potentially be perceived as a sunk cost. A deposit system allows governments to offer a public good while also promoting migrant commitment to the programme. Denmark has taken an innovative approach in its fee structure for language courses. Migrants who are ineligible for free courses pay an initial deposit of DNK 2 000 per module. Upon completion of the learning module, the migrant has an option to put the existing deposit toward a new module. If the migrant has completed the desired integration trajectory successfully, the deposit is reimbursed. Germany will reimburse 50% of language course costs if migrants pass the end-of-course examination within two years. Austria does the same for migrants able to certify A2‑level German within 18 months.

Box 9.1. National Budgets for Introduction Measures Vary Significantly

Comparing national budgets for integration measures is complicated not only by the difference in economy size and the size of the migrant population served, but also by the fact that countries approach budgeting in a variety of ways. Some rely on outside funds, such as AMIF. Many countries do not specifically account for measures for new arrivals in their integration budget, but rather aggregate all migrants regardless of time of arrival. Austria, for example, has a budget in the Federal Chancellery for essential integration measures of EUR 103 million, but does not distinguish a specific amount for new arrivals. The same is true for the CZK 450 million (EUR 18.2 million) budget of the Czech Republic and for the proposed 2012‑23 allocation of HRK 82 million (EUR 10.8 million) in Croatia. On the other hand, in Norway, NOK 9.1 billion (EUR 960 million) of the budget in FY 2021 can be directly attributed to integration of new arrivals.

Examining integration budgets requires an understanding of division of responsibility in government. The state or regional budget may be both important and difficult to quantify. The German Government budgeted EUR 1.2 billion for integration in FY 2021, the bulk of which is dedicated to language courses. This number does not include state‑level budgets for integration measures. Switzerland estimates that while the federal budget is CHF 231 million (EUR 225 million), the budget on the cantonal level is EUR 77 million. In 2021‑22, the Canadian Government allocated CAD 885.6 million (EUR 642 million) to support integration of newcomers (outside Quebec, which has its own budget). Federally-funded services are available to permanent residents and protected persons, but provinces and territories provide separate supports outside of the federal budget to temporary residents. Some projects are co-funded.

In other cases, identifying an overall budget is more straightforward. Estonia, for example, has a budget of EUR 2.2 million for integration, of which EUR 1.6 million is allocated to language for new arrivals. In Korea, the central government’s 2021 budget for integration is KRW 30.4 billion (EUR 23 million), of which the KIIP comprises KRW 10.1 billion (EUR 7.5 million). In France, the Ministry of Interior in charge of integration budgets EUR 272 million (including EUR 100 million for the CIR). The budget for other ministries totals EUR 292 million. In Japan, the overall budget of EUR 2.8 million is divided across the Ministry of Foreign Affairs, the Ministry of Health, Labour and Welfare, and the Agency for Cultural Affairs, who manage their own expenditures. For cross-departmental measures, such as language courses, an exact budget cannot be identified.

Mainstream supports for integration, which are not necessarily accounted for in the integration budget, are much more important in certain countries. In the United States, specific funding is allocated to support resettlement and integration of refugees. In FY 2021, the Office of Refugee Resettlement issued approximately USD 189 million (EUR 172 million) to states and resettlement agencies to support social engagement, employability and health measures, and integration assistance for refugee children, youth, and elderly. Other measures, such as language for adult migrants, are available to a larger group and are mainstreamed into the budget of other departments (in the case of language, the Department of Education).

Avoid placing undue burden on migrants

Some countries take the position that charging at least some money for courses may lead to new arrivals placing greater value on them than they otherwise would. If measures are provided free of charge, they may be perceived as being of lesser quality.1 At the same time, countries must be careful not to price introduction measures so high that fees disincentivise participation. An alternative to offering integration as a public good is to provide a means-tested opportunity where migrants pay only what they can. In Germany, recipients of basic security benefits are exempt from the need to pay for the integration course. For vocational courses, those who earn lower than EUR 20 000 (or EUR 40 000 assessed income for a couple) are exempt from the requirement to pay. The Germany Government subsidises all courses, covering half of the cost of the integration course. Additionally, Germany provides federal funding to state governments and municipalities to further adapt their services to meet the needs of new arrivals. Luxembourg subsidises the first three language courses taken by non-humanitarian migrants, but other measures and further pursuit of language proficiency are funded by the migrants themselves. Australia, Canada, and Israel subsidise the substantial costs of training and taking exams that are associated with bridging programmes.

Where courses are mandatory and charge a fee, migrants would benefit from some sense of the value and their likelihood of translating success in these programmes to acquisition of a credential or employment. In Belgium (Flanders), from September 2022, all migrants will be expected to pay EUR 360 for introduction measures (EUR 90 for each language and civics course and EUR 90 per each examination). Previously, these measures were offered free of charge in every region of Belgium. The Flemish Government continues to offset the full cost of integration, valued at EUR 4 500 per individual. The decision was justified on the grounds that Flanders has increased its integration offering, providing each migrant who participates with an individualised pathway, intervention by the Flemish employment and vocational training services, and 40 hours of “buddy” mentoring. It remains to be seen what impact this will have on participation rates for those who do so on a voluntary basis, and in some cases, these migrants will be exempted from the fees. No distinction is made between categories of migrants – in principle, every immigrant must pay the fees. The possibility to pay fees through voluntary work is still being discussed, and it is expected that Public Social Welfare Centres may also contribute if the migrant lacks financial resources to pay. Notably, in Brussels, where migrants may choose between French and Dutch programmes, Flemish integration programmes remain available free of charge. The Netherlands also instituted changes to its integration offerings in 2022, but has shifted in the opposite direction. The municipality now covers the cost of integration courses (and the first two attempts on the integration exam, if taken at the level specified in the integration plan) for humanitarian migrants. Other migrants are able to borrow the money for approved courses from the Education Implementation Service (DUO), with the loan amount calculated based on income. The transition to municipal implementation is intended to provide a more individualised offering to boost the migrant’s chances of success.

Consider innovative financing measures

To relieve some of the pressure on national budgets for integration, expansion of sustainable programmes can be supported through the pursuit of innovative financing models. One such model is to employ results-based financing, designing reimbursement schemes for service providers that incentivise them to reach as many migrants as possible while meeting or exceeding defined performance standards. In Denmark, providers are paid half of their fee prior to the course and half after the individual migrant has passed the course exam. This model, combined with reimbursing migrants upon course completion, helps ensure that the government only pays for integration when it observes a tangible benefit in terms of efficient delivery (Ramboll, 2007[62]). Spain, Romania, and Canada determine future funding of programmes by looking at their past results. Certain projects in Canada, such as the Community Employment Loan Program in Ontario, use a pay-for-performance model. Sweden also previously used a results-based financing system, but has since returned to per-migrant funding of service providers. The majority of OECD and EU countries still pay for services by number of expected hours or per migrant.

Results-based financing is not without risk. In the context of an audit of its programmes, Sweden noted that a results-based bonus paid to mentors helping refugees find employment were open to manipulation – because refugees could choose their mentor, providers often offered financial incentives to the migrant to work with them. The bonus was also inefficient, as it was paid whether the refugee was highly skilled and found employment easily or whether the migrant required additional support (Swedish National Audit Office, 2014[63]). One solution is to scale funding for the service provider according to how likely they are to require more intense support. Beyond results-based financing, a scaling approach can incentivise mainstream service providers such as the public employment service to take on more challenging migrant cases. A sliding scale, as opposed to reimbursement on a per-client or “expected number of hours per client” basis, ensures that slower learners or those with more needs are not lost in the system. It can also increase flexibility in response to changes in the composition of the migrant population. Migrants can also be asked to take some responsibility in case they need additional services, as long as attention is paid to ensuring the burden is reasonable. Subject to the aforementioned income thresholds, Germany requires a higher contribution from the migrant themselves if additional course hours will be required (typically if a literacy course is needed).

Another financing option is to match government resources with private funds. Employers could similarly be approached for cost sharing of integration expenses for their employees. Professional bodies could also contribute to financing advanced and occupation-specific training. The private sector has demonstrated increasing interest in investing with a “migrant lens,” or considering the impacts of their lending and investment decision-making on the migrant community to identify new sources of risk and opportunity.2 Mobilising private‑sector investments can help governments address urgent issues around integration. Public-private partnerships allow the government to promote consistency of service delivery while allowing for flexibility. Social impact bonds (SIB), which innovate by combining a payment-by-result system with cost savings for the public sector, private financing, and outsourcing of social actions to non-public organisations, have garnered increased attention in recent years. SIBs have been piloted in Belgium (DUO for a Job), Finland (Koto-SIB), and the United States (Massachusetts Pathways to Economic Advancement). The United Kingdom has focused on providing capital to intermediaries for purposes of capacity building. The Centre for Social Impact Bonds, in the Cabinet Office, provides tools and support for the development of additional social impact bonds, and the UK Social Outcomes Fund provides capital to regional governments that initiate new social impact bonds. In all of these cases, the government has an important oversight role to play in ensuring that competition fostered by a public-private system does not hinder effective co‑ordination and delivery.

While still a relatively new tool, countries can encourage migrant-lens investments by co‑investing or engaging in de‑risking activities. While governments typically possess significant information on the risks and opportunities in the integration sector, private investors often view social finance opportunities as riskier than they actually are. Countries can reduce this perceived risk by providing first lost capital – grants for first loss reserves, guarantees, and subordinated debt. Most social funds provide credits or return enhancements. In the UK, the Social Investment Tax Relief programme (recently extended until 2023) offers individual investors a 30% tax credit for investing in a social enterprise.

Beyond these innovations, governments can also improve their internal systems to finance integration more efficiently. Centralisation can help countries achieve economies of scale where measures to not require substantial innovation or local adaptation (i.e. for basic services that every provider should deliver). Financial flexibility is another important issue in integration funding, as this is a necessary lever allowing organisations to pivot in times of stress. Canada noted that flexibility of eligible expenditures under contribution agreements was essential in allowing service providers to license new technologies and focus on staff-retention measures during the COVID‑19 pandemic. The Canadian Government allocates specific funding within the Settlement Program to invest in projects offering insights on programme design (Service Delivery Improvements) to improve programme efficiency and effectiveness.

Annex 9.A. Additional information on financing

Annex Table 9.A.1. Fees paid by migrants for introduction measures

	Free for Humanitarian Migrants	Free for Other Migrants	Additional Information
Australia	X	X
Austria	X	X	Civics and integration course is free, language courses may charge a fee
Belgium (Flanders)			EUR 90 for the language and civics course and EUR 90 for the tests, to total EUR 360 (beginning in 2022)
Canada	X	X
Croatia	X
Czech Republic	Language	Language	Adaptation and integration course are fee based (CZK 1 500, but may be partially subsidised in some cases)
Denmark	X		For non-humanitarian migrants, deposit system (DNK 2000, refundable upon completion) is in place
Estonia	X	X
Finland	X	X
France	X	X	For those who sign CIR
Germany			Integration course is EUR 2.20 per unit or approximately EUR 1 540 per immigrant. Vocational language course is EUR 2.32 per unit or approximately 928 per immigrant. Fees are based on an income threshold of EUR 20 000 (EUR 40 000 for couples), with an exemption for benefits recipients, and partial reimbursement is possible upon completion. Higher contribution if the participant needs more hours (i.e. for literacy courses)
Israel			Ulpan is subsidised, others may be partially subsidised but not systematically
Japan	X
Korea	X	X
Latvia	X	X
Lithuania	X		Free and paid options exist
Luxembourg	X	Civics	First three sessions of language (240 hours) are subsidised for non-humanitarian migrants, costing the migrant EUR 10 per session
Malta	X	X
Netherlands	X		From 1 January 2022, the integration exam costs EUR 250 for non-humanitarian migrants. Asylum-seekers now have their course and exam costs covered. Course costs vary but DUO continues to provide loans for exams and courses at approved schools
New Zealand	X		Non-humanitarian migrants must pre‑pay language training and pay for non-language measures that are not mainstream
Norway	X	X	Voucher programme for non-humanitarian migrants covers NOK 10 000 worth of language courses. Free for family migrants to humanitarian migrants and Norwegian and Nordic citizens.
Poland	Not systematically	Not systematically	This is determined on a local basis, though language courses are provided free of charge for migrant children in school
Portugal	X	X
Romania	X		Cost to be set by Education Ministry
Slovak Republic	X	X	In May 2023, the Slovak Republic will move away from provision of free civics and language courses to a model that requires co-financing of 50% by the migrant.
Spain	X	X
Sweden	X	Language
Switzerland	X		Varies by canton
United Kingdom	X		ESOL (English for Speakers of Other Languages) for Integration Fund (EFIF) courses are free to those who qualify for education (residency requirement). Other services vary by municipality
United States	X		Varies by location – adult education courses are funded by the Department of Education and may be free of charge

Source: OECD questionnaire on introduction measures for new arrivals 2021.

Notes

← 1.  At the same time, significant research exists to support the theory that people take greater advantage of free offerings. The issue is complicated, but likely depends on other factors that lead individuals to value the product or service being offered. See, e.g. Shampanier, Mazar and Ariely (2007[90])).

← 2.  Investors increasingly note that exclusion of migrants from economic, social and financial opportunities, such as access to affordable finance, leads to missed opportunities for the investor’s portfolio. Micro-finance of migrant-owned or – serving businesses has emerged as a popular low-risk entry point to migrant-lens investment (Hachigian, 2016[87]).