Germany needs migrants as workforce dwindles, but must pay for them

Angela Merkel refused to put a cap on refugee numbers to a country where the population of around 82 million is set to shrink by 15 percent by 2050

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The influx of refugees into Germany is both a boon and a burden for the economy: it needs huge numbers of migrants to rejuvenate an aging workforce, but must financially support many for years until they learn the language and gain qualifications.

Chancellor Angela Merkel has refused to put a cap on refugee numbers to a country where the population of around 82 million is set to shrink by 15 percent by 2050, according to government forecasts, with the workforce falling by 30 percent.


The country needs about half a million migrants a year until 2050 to counter that fall in the workforce, a study by think-tank the Bertelsmann Foundation found.

But many of the people currently arriving from countries such as Syria do not speak German and have few formal qualifications, so it will take time and investment to reduce their dependence on state welfare and get them into work.

Syrian refugee Tamam is proud of his knowledge of German grammar, which he has been learning since he arrived in the country more than a year, but frustrated that he still can’t speak the language well enough to land a job.

“You can’t find a job without German but you can’t learn the language properly without a job,” said the 41-year-old, who declined to give his surname because he fears for the safety of relatives he left behind in Aleppo, once Syria’s commercial hub.

Each unemployed refugee costs taxpayers 12,000 euros ($13,000) a year, government figures show. Only 8 percent find work in the first year and most rely on the state for everything from food and housing to language courses.

But the costs will be offset within five to 10 years as more and more refugees start working and paying taxes, according to a study by the German Institute for Economic Research (DIW).

The study forecast that rising migrant employment would gradually drive up German national output, with per capita income increasing by 0.5 percent by 2030. Deutsche Bank has published similar findings on the effect of migrants on German national output.

“The refugees pose major financial, organizational and logistical costs in the short term,” said DIW president Marcel Fratzscher. “But the refugees certainly will make an important contribution to the needs that Germany has in terms of its labor market and demographic developments.”

Many under 25

The number of asylum-seekers arriving in Germany this year is expected to top 1 million, many are from war-torn countries like Syria and Afghanistan, up from around 200,000 in 2014.

A major advantage is that more than half of the new arrivals are young: 55 percent of the 414,000 asylum seekers registered in the first eight months of the year were under 25, according to official figures. By comparison, 24 percent of the German population is under 25.

Their age makes it easier to integrate them into a labor market that is suffering from chronic shortages in almost all sectors as more baby boomers retire.

Europe’s largest economy, which is expected to post a budget surplus this year, has the capacity and means to accommodate the refugees. It enjoys the lowest unemployment rate since reunification in 1990, at 6.4 percent in September, and has 600,000 unfilled jobs.

The government says it is currently focusing efforts on processing asylum applications, but steps it has taken include modifying employment rules for asylum seekers so that those deemed to have a good chance of being granted permission to stay in the country can work three months after registration rather than waiting until asylum approval.

They can fill any available position if the employment agency cannot find a German or EU candidate within 14 days.

The government employment agency says 54 percent of refugees registered as unemployed left school before completing their final exams. Eight percent have no schooling at all.

To tackle a lack of formal qualifications or schooling, an extra 30,000 teachers are needed for refugees and their children to boost their chances in the labor market, according to the Cologne Institute for Economic Research.

But areas that could offer opportunities for lower-skilled workers include the social services and healthcare sectors, which have generated more than 900,000 new jobs since the end of 2007, and the catering and hotel industry which has created 200,000.

Such job creation has prompted a rise in the employment rate among non-Germans. UniCredit said in a recent report that for every additional unemployed foreigner in Germany there are seven others who found a new job.

This offers hope for refugees like Tamam, who wants to work as a graphic designer in the printing industry and dreams of setting up his own publication business, just like in Aleppo.

To reach that goal he contacted two Christian charities that are trying to find him unpaid work in a printing business so he can learn German on the job.

“What can I do?” he said. “I have no other choice.”

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