Can refugees defuse the “ticking time bomb” SME labour shortage?

The ongoing global refugee movements stemming from countries like Afghanistan, Ukraine, Syria, and many others, have piqued the interest of business leaders at a time when they are struggling to find the right hires.

Notably, Tent Partnership for Refugees announced at their European Business Summit in Paris this year, that more than 40 companies have committed to training and hiring over 250,000 refugees in Europe. Moreover, German firms alone have 607,600 refugee employees this year, with a substantial 43% of them integrated into the workforce of SMEs. (data from April 2023). 

Diverse potential

Despite common perceptions of refugees as victims or potential burdens, recent research underscores their potential as economic contributors. It’s essential to remember that the term “refugee” encompasses a diverse group of people, varying in nationality, gender, education, age, and reasons for displacement. 

For instance, a young, highly skilled female refugee escaping conflict possesses other skills and faces different integration challenges compared to an elderly male refugee, experienced in his profession, and fleeing religious persecution. This simple comparison is just one example of the diversity of the refugee population, and it highlights the range of talent and experiences they bring.

Economic advantages

Refugees are increasingly seen by business leaders as a valuable talent pool capable of addressing labour shortages driven by ageing populations and demographic shifts. Despite the UK’s low unemployment rates, the country grapples with over a million job vacancies.  The British Chambers of Commerce has called the labour shortage as a “ticking time bomb”. Unfilled vacancies threaten growth plans creating huge pressures especially for SMEs to attract talent.

By employing refugees, SMEs not only tackle labour shortage but also gain access to a diverse talent pool that can contribute innovative solutions and fresh ideas to their operations. Different cultural backgrounds can spark creativity and foster new ways of problem-solving, ultimately enhancing the company’s competitive edge in the marketplace.

An illustrative case comes from my research involving a baker who bridged a staffing gap by employing a Pakistani refugee. The newly recruited individual expressed a keen interest in experimenting with recipes from his home country. Despite initial reservations, the proprietor encouraged his new employee to do so. Subsequently, a selection of these recipes has grown to become the bakery’s most sought-after offerings. The exchange of techniques and ideas improved the business’s product range. 

Refugees are also usually multilingual and possess a unique understanding of their home countries, making them valuable assets for SMEs with international aspirations. Employing refugees can enhance a company’s ability to communicate effectively with diverse clients and customers, thereby expanding its reach and appeal.

Managing workplace integration

While hiring refugees can yield substantial benefits, it’s not without challenges. Successful integration requires addressing legal complexities related to asylum, overcoming language barriers, and bridging disparities in education and knowledge. Furthermore, refugees may carry mental health burdens from past traumas.

As refugees often lack local support networks due to their families and friends remaining in their home countries, the journey of settling into a new country and job can be challenging. Based on my research and consulting experience, I have outlined practical guidelines for employers. These are most important ones:

1. Recognize diversity

Employers should avoid assuming that all refugees share the same needs. It is important to tailor support interventions to individual requirements. While one employee might benefit from language proficiency training, another might be primed for leadership development. The efficacy of a uniform solution is questionable, making a personalised approach a more viable option.

2. Skill alignment

Employers are advised to fill vacancies with refugees possessing the requisite skills or those showcasing the potential to cultivate them. Our research highlights instances where employers hired refugees out of altruism but without ensuring a match between refugees’ skills and the job requirements, ultimately leading to unfavourable outcomes for both the refugee employee and the employer. 

3. Extra efforts

Employers need to be aware that integrating refugees might necessitate a greater investment of time and resources compared to onboarding non-refugee employees. When considering this from a purely economic perspective, companies must carefully balance these additional efforts against the potential benefits. It’s crucial for businesses to assess the effectiveness of their workplace integration strategies. While workplace integration initiatives are often driven by good intentions, it’s important to recognize that not all well-intended actions yield universally positive results. Therefore, employers should evaluate the outcomes of their efforts. 

4. Ecosystem utilization

As SMEs face resource limitations to provide an extensive portfolio of workplace integration actions , they should be aware of the entire workplace integration ecosystem, involving governmental agencies, other refugee employees, non-profit organisations, volunteers etc. These actors have different expertise and provide helpful services. Therefore, it is important that SMEs know how to position themselves in these ecosystems and make use of complementarities across the different actors. 

Final thoughts

The decision to hire refugees can yield remarkable benefits for SMEs, from addressing labour shortages to fostering innovation. By embracing diversity and employing a personalised approach to integration, businesses can tap into a wellspring of talent that not only drives their success but also contributes positively to society.

Dr Robin Pesch - Professor of International Business at Northumbria University

Robin is a Professor of International Business at Northumbria University. His primary research emphasis lies in the successful integration of refugees into the workforce. In addition, he excels as a specialist in orchestrating global alliances and catalysing digital innovation. His impactful insights extend beyond academia, as he offers consultation to executives, HR managers, vocational trainers, non-profit organizations, and policymakers across Canada, Germany, and the UK. Robin is also a sought-after speaker, known for delivering compelling talks that shed light on the intersection of business, migration, and innovation.