The Millions Yet to Come

The Eurozone is on the verge of implosion. The current economic downturn has driven millions more European workers into long-term unemployment. The welfare states of Europe are facing eventual bankruptcy. The European Union is pushing for an increase in its centralized soft-totalitarian power.

Yet, in the midst of all this doom-and-gloom, Germany remains an economic powerhouse. So what do ordinary Germans have to look forward to?

Millions and millions of new immigrants.

In the interview below, the head of the German research group Ifo talks about the additional waves of immigrants that can be expected in Germany in the coming years. Not all of them will be Muslims, and many of them will come from other parts of Europe.

Note: “Ifo” is an abbreviation for “Institut für Wirtschaftsforschung”. The acronym is formed from the words Information and Forschung (research).

Many thanks to JLH for translating the article from FOCUS:

“We are expecting millions of immigrants”

FOCUS editor, Nadia Matthes interviews Ifo head Hans-Werner Sinn

Since May 1, East Europeans have been allowed without limitation to work in Germany. Ifo head Hans-Werner Sinn explains why we cannot do without this immigration.

Workers from the EU countries of Estonia, Latvia, Lithuania, Poland, Slovakia, Slovenia, the Czech Republic and Hungary have had to wait seven years. How well prepared is Germany for the new job seekers?

Excellently! We are having an economic boom like nothing for 20 years. Because of the financial crisis, money from savings is no longer flowing out of the country, but is invested here. Investments are an internal thing and furthermore are creating work positions. And exports are flourishing. The situation could not be better for the opening of the borders.

How many immigrants will come to Germany?

We can count on millions of immigrants in the next ten years.

Can you be more exact?

No. Dependable prognoses are hardly possible. However, I expect many more than the 140,000 per year assumed by the federal employment agency. Such low predictions do not sufficiently allow for what is happening in financial markets and differential economic development in the Eurozone. You must take into consideration that a long-term economic lull is to be expected where the immigrants have been going until now, while Germany will boom because it is no longer sending its capital abroad.

But are the East Europeans really that mobile?

In just the past ten years, 2.3 million EU citizens have migrated to Spain, 650,000 to Ireland and over 600,000 workers plus dependents to England, etc. There is a potential of several million mobile people. And a considerable portion of them will come to Germany. In addition, our own citizens from the economically becalmed West European countries, as well as East Europeans who find it too long a way to Spain or Ireland, will immigrate to Germany.

With this forecast you are far beyond the assumptions of many politicians and jobs market researchers. What is driving people to us?

Ten years ago, most immigration experts expected that inside 10 to 15 years after establishment of freedom of movement 2 to 3 percent of the native populations would emigrate. In actual fact, however, within 4 years, without freedom of movement, 5 percent of Poles emigrated. A great many Romanians are also on the move. Migrations in Europe to date exceed the predictions by many factors. Several EU states opened their borders sooner than Germany. Now the immigrants will divide up anew.

The president of the Association of German Chambers of Industry and Commerce declared that Germany is possibly not attractive enough to draw many qualified job-seekers.

That is true for academics. But our wage rates for skilled workers are high and attractive enough to entice immigrants, if there are available positions.

Are these workers the German economy needs?

Yes. There are very many well-trained workers in East Europe who will come to Germany.

And what is the situation with engineers, who are in demand everywhere?

They will come too, even if in smaller numbers. There are no longer so many worldwide possibilities for highly qualified people. The times when academics went to America and got wonderful jobs there are over. In the USA, for example, there are hardly any more positions in the universities. When we advertise Ifo institute positions, we get applications from the USA.

That means that the lack of skilled workers in Germany will solve itself?

I consider the debate about the lack of workers to be a debate about nothing. When a German firm needs workers, it has to put an ad in a newspaper in East Europe. Then it can hire as many skilled workers as it wants. Soon there will be no shortage of skilled help.

Won’t these East European countries do something to hold on to their skilled workers?

I don’t know. To be sure, it does not help the local economies indirectly when skilled workers emigrate. But the emigrants usually send a great deal of money home and they themselves profit from the move. In Budapest, there are ads everywhere from Hungarian agencies who want to send skilled workers to Germany.

But skilled workers are also in demand there, for example, in the auto industry, and not badly paid, measured against the cost of living.

Nonetheless, these countries will not succeed in stopping the flow of emigration. For now, their capacity is not so high that the businesses there can offer salaries that are comparable to those in Germany. But conditions will adjust. Until now, much capital flowed from Germany to East Europe, because pay was lower there. Now, the people are allowed to come to us. That is an exchange in the reverse direction. Together, the two things will lead, in the next 10-20 years, to a new balance with similar pay in the East and West.

To what extent is that true for such poor countries as Romania and Bulgaria, for whom Germany’s borders will be open at the latest in 2014?

Certain differences will remain, but in the long term they will not be as great as between regions of West Europe. Here too, there are weak areas whose economic capacity is only one-half of Germany’s.

German unions and workers are afraid of an adjustment downward and greater pressure on pay and working conditions. Is that justified?

In principle, yes. Normally, immigration means falling wages in the country people are immigrating into. The good thing now is that we do not have to fear this normal situation, because we are experiencing such a strong economic upswing on account of the redirection of savings. If people and capital come here together, there will be no lowering of wages. We can hope for that today, more than would have been the case at another time of opening the borders.

Is that true in all areas? How is it, for instance, with caregiving, which is in demand in Germany, but not especially well remunerated?

Foreign caregivers are inexpensive. We can be happy about that. The need for caregiving in Germany is often ameliorated by using the most diverse ruses to fetch caregivers from the East for a few weeks.

So the caregivers from the East have already been here for some time?

Yes, and they have naturally held down the wages of caregivers in Germany. But they have also often been responsible for the possibility of care. Here too is an all-clear signal for those affected. When the economy booms, people also pay more dues, so that more money is available in the social system to pay higher wages to caregivers.

So much for theory. And what do you say to the Brandenburgers who are afraid that Polish workers will work for very little money in Germany during the day and go home in the evening?

Wage competition cannot be denied, but, as I said, it will be headed off by the favorable economic development at the time. I find the immigration of dependents of the state more problematic than wage competition.

So we have to expect a wave of immigrants who do not want to work at all?

Anyone who does not or cannot work, could also come. Any EU citizen who has resided in another EU country for five years has a permanent right of residence. That is also one reason the French last summer so energetically expelled the Gypsies. In the course of this decade, we will have more and more social migration to Germany.

What are the consequences of that?

An immigrant can receive just as many social benefits as the natives. After five years, he has absolute claim to that without having paid anything in. Many people do not understand that . And it is also not yet clear to the immigrants. but they will learn it and pass it on. The new rule has been in effect since January 5, 2005. Anyone who immigrated at that time was eligible for social benefits for the first time last year.

Is the German social system that attractive?

Social benefits including living expenses normally amount to over €700 for a single person. Free medical insurance is also worth €100-200. That is more than the standard wage in some East European countries.

But living is more expensive here than in East Europe.

Yes, but not that much more expensive. Besides, they can always vacation in their less expensive home country. No one can keep track of how often someone registered here is away and still collecting benefits.

Then why isn’t this country of residence principle being reconsidered in the EU?

People will not give this principle up. It is a sacred cow in the EU. We will never get out of it.

And what does all this mean in the final analysis?

The welfare state will erode, because it must treat natives and immigrants the same and that becomes very expensive. The needy always go where the benefits are more generous. Since taxpayers also look for the country where it is better for them, they will avoid welfare states. Together, these two effects make the benefits impossible to finance. The EU’s idea was to entrench benefits. In truth, they have dug the grave of the welfare state.

So are we putting our social security at risk with our generosity?

I see this danger in welfare with the country-of-residence. It would be better to introduce a homeland principle. Each needy EU citizen would have claim on social benefits at home. Where he spends them would be left to him. But that is not the leading theme at this time. What is really new is that, beginning in May, we will get a migration in work conditions. And that is good news, because it is about people who pay taxes and social dues.

What prevails then: opportunity or risk?

Germany needs more people. Among the OECD countries, we are the one with the smallest number of children relative to the population. We will not manage without immigration. This is the best possible time in a long while for the borders to open.