A recent report by the Observatory of Immigration and Demography (OID), published in June 2025, has sparked intense debate about the economic impact of immigration in France. According to the report, far from delivering the promised economic benefits, immigration is costing France approximately 3.4% of its GDP annually due to a significant fiscal imbalance between the taxes immigrants contribute and the public services they consume. Here I explore the economic costs of migrant-based diversity in France, as outlined by the OID, and critically examines the broader implications for the nation's economy, social cohesion, and policy framework.
The OID report, cited by Le Figaro, estimates that immigration imposes a net cost equivalent to 3.4% of France's GDP, driven by a "budget deficit" where taxes collected from immigrants cover only 86% of their fiscal cost. This imbalance stems primarily from low employment rates among immigrants, with only 62.4% of working-age immigrants employed in 2023, compared to 69.5% for native-born French citizens, one of the lowest immigrant employment rates in the European Union, surpassed only by Belgium. If immigrants were employed at the same rate as natives, the OID argues, France's GDP would be 3.4% higher, and taxable income would increase by 1.5 percentage points.
This fiscal strain is exacerbated by the structure of France's immigration patterns. The report highlights family reunification, or chain migration, as a major driver, ranking familial ties over professional skills. Nicolas Pouvreau-Monti, OID's director, notes that "finding work is more difficult for an immigrant when professional integration is not at the root of the decision to emigrate to France." This leads to a reliance on low-skilled labour, often in sectors like hospitality, construction, and food service, which does little to drive innovation or economic growth. The report criticises this model, arguing that it creates a "vicious circle" that harms employment, degrades public finances, and penalises strategic sectors by necessitating higher taxes on businesses to offset the fiscal deficit.
The economic challenges extend beyond first-generation immigrants to their descendants. OECD data cited by the OID reveals that 24% of young people born in France to immigrant parents were not in employment, education, or training (NEET) during 2020–2021, the second-highest NEET rate in Europe and the Western world, behind only Belgium. This high rate of economic inactivity among second-generation immigrants suggests a failure of integration, which the OID links to increasing ethnic self-segregation. Such trends not only strain public resources but also contribute to social fragmentation, raising concerns about long-term economic and cultural cohesion.
The low employment rates and high NEET figures contrast sharply with earlier claims, such as a 2010 University of Lille study, which suggested that immigrants contributed €60.3 billion to the state budget against €47.9 billion in costs. However, the OID's more recent analysis challenges this narrative, emphasising that current immigration patterns, dominated by low-skilled workers and family reunification, do not replicate the economic contributions of earlier, more selective migration waves, such as those from Europe or Vietnam in the mid-20th century.
The OID's findings challenge the long-standing narrative, propagated by progressive think tanks like Terra Nova, that immigration is essential for sustaining France's social model, particularly its pay-as-you-go pension system. Terra Nova's 2025 report argued for admitting 250,000 to 310,000 immigrant workers annually to maintain the working-to-non-working population ratio. However, the OID counters that this assumption falsely equates immigrant and native employment rates, ignoring the 10-point gap in employment between non-EU immigrants and French nationals. This discrepancy undermines claims of economic necessity, as low-skilled immigration fails to deliver the anticipated fiscal benefits and instead increases dependency on public services.
Moreover, the economic drag from immigration compounds France's broader fiscal challenges. The European Commission's 2025 forecast projects a GDP growth slowdown to 0.6% in 2025, driven by fiscal adjustments and trade uncertainties, with public debt rising to 118.4% of GDP by 2026. The OID argues that immigration's fiscal burden exacerbates this, as higher taxes to cover welfare costs stifle business investment and innovation, further hampering growth.
The economic costs of migrant-based diversity are inseparable from their social and political ramifications. The OID links economic inactivity to rising ethnic sectarianism, particularly in areas like Seine-Saint-Denis, where high immigrant populations correlate with social tensions and billions in public funds spent on mitigating deterioration in living conditions. This dynamic fuels public discontent, as evidenced by a 2025 CSA Institute survey showing majority support for stricter asylum policies. The rise of far-Right parties, capitalising on immigration as a wedge issue, reflects growing scepticism about the economic benefits of mass migration, a sentiment echoed even by Britain's Labour Prime Minister Sir Keir Starmer, who warned against the assumption that immigration automatically drives growth.
However, proponents of immigration, including economists like Jean-Christophe Dumont of the OECD, argue that immigrants fill critical labour shortages in sectors like construction (27% of unskilled workers are immigrants) and domestic work (60% of home helpers in Île-de-France are immigrants). They also note that immigrants, being younger on average, contribute more in taxes over time than they consume, potentially supporting an aging population. Yet, these arguments often overlook the OID's point that low-skilled immigration, driven by family reunification rather than labour market needs, fails to maximise economic contributions and strains social cohesion.
Critics of the OID report, including Left-leaning groups, argue that it overstates immigration's costs by focusing narrowly on fiscal deficits and ignoring broader contributions, such as cultural diversity and labour market flexibility. The 2016 IMF estimate that a 1% increase in the immigrant population could boost GDP per capita by 2% suggests potential long-term benefits, particularly if integration policies improve. Additionally, sectors like hospitality and construction rely heavily on immigrant labour, and without it, as Paris restaurant owner Xavier Denamur noted, "restaurants don't work."
However, these counterarguments are weakened by the OID's data-driven critique of integration failures. The high NEET rates among second-generation immigrants and the low employment rates of non-EU immigrants indicate that current policies do not effectively harness these potential benefits. Moreover, the focus on low-skilled sectors risks perpetuating a cycle of economic dependency, as Pouvreau-Monti argues, rather than fostering innovation through high-skilled migration.
In conclusion, the OID's 2025 report paints a sobering picture of the economic costs of migrant-based diversity in France, estimating a 3.4% GDP loss due to low immigrant employment rates and high welfare consumption. This fiscal burden, driven by family reunification policies and a focus on low-skilled labor, challenges the narrative that immigration is an economic boon. The generational persistence of economic inactivity and rising social tensions further complicate the picture, suggesting that current immigration patterns undermine both economic growth and social cohesion. While proponents highlight immigrants' contributions to labour shortages and demographic renewal, the evidence suggests that without significant policy reforms, prioritising high-skilled migration and integration, France's "vicious circle" of economic strain and social fragmentation will persist.
https://www.zerohedge.com/markets/immigration-costing-france-34-its-gdp