Germany’s refugees are starting to pay off

By Leonid Bershidsky  /  Bloomberg Opinion

Tue, Sep 10, 2019 - Page 9

The tidal wave of asylum seekers that hit Europe in 2015 is often stereotyped as an invasion of poorly qualified migrants destined to be charity cases in the receiving countries, but research shows that this is not true. Germany, which welcomed the immigrants and almost immediately regretted it, is likely to end up profiting from German Chancellor Angela Merkel’s decision to let them in, especially if it keeps taking steps to ease these immigrants’ path to employment.

For a paper published earlier this year, Cevat Giray Aksoy from the European Bank for Reconstruction and Development and Panu Poutvaara from the Leibniz Institute for Economic Research surveyed immigrants from the refugee crisis about their reasons for leaving their home countries.

Their sample was constructed to mirror the geographic and demographic patterns of migration across the Mediterranean Sea during the crisis, as recorded by the International Migration Organization.

They discovered that 77 percent of respondents — those from Afghanistan, Iraq, Somalia, Sudan and Syria — fled war and persecution, while the rest, mostly from Algeria, Morocco and several African countries, came for economic reasons.

This in itself is not surprising: Most of the immigrants in 2015 to 2016 were fleeing armed conflicts.

However, Aksoy and Poutvaara made a more intriguing finding: Better-educated people are significantly more likely to try to escape war and persecution than their less-educated compatriots.

Those escaping conflict are, to a greater degree than economic migrants, a self-selected group of people with decent job qualifications. In poor North African countries, economic returns to education and skills are high enough for people to stick around rather than make a dangerous journey to Europe, but in Iraq or Somalia, it is the best-trained workers who suffer the biggest relative losses and thus have the greatest impetus to leave.

Moreover, these educated asylum seekers tend to choose destination countries with higher returns to skills — that is, those with relatively higher inequality: Germany, France and Italy over Sweden, the Netherlands and Austria. The less qualified tend to look for nations with quicker application processing and better social safety nets.

Obviously, European countries’ immigration policies played a role in determining the destinations, but Germany ended up, all in all, with a positively self-selected group of undocumented immigrants. These people, government statistics show, are anything but hopeless — Germany just needs to sort out how their qualifications correspond to its labor market needs.

That is the principal bottleneck. German is one of the tougher European languages to master, and the country’s rules complicate the recognition of diplomas and vocational training certificates issued outside the EU.

Last year, just 36,400 foreign professional degrees were recognized in Germany, even though that is 20 percent more than in 2017. That is a laughable number given Germany’s status as a major landing place for immigrants — it added 500,000 to its population last year.

However, despite this high barrier for entering the German labor market, the refugees are increasingly finding work. According to the German Federal Employment Agency, 35 percent of the refugees who arrived in 2015 were employed in October last year — up from 20 percent a year earlier.

According to the German labor union DGB, 81 percent of college-educated refugees and 45 percent of those with a vocational qualification work below their skill level, and the wages they receive are significantly lower than the national average. Still, it is a testament to the refugees’ tenacity that, just three years after arriving, and likely without any knowledge of German, more than a third of them are gainfully employed.

Although Merkel’s open-door policy was highly unpopular, the German Bundestag in June passed a law making it easier to work in Germany with a foreign qualification. Among other changes, it lifts the requirement for employers to prove that no German or European worker could be found to fill the job. This should help any newcomers, including the refugees already in Germany.

It is hard to expect immigrants, many of whom went through unimaginable hardship, to adapt to life in a new country within the first few years, but given the self-selection described by Aksoy and Poutvaara, Germany can expect its generosity to pay off.

Integration programs are expensive — Germany spent 15.1 billion euros (US$16.7 billion) on them last year — but they are not more expensive than bringing up children and training them to take up the same jobs. Germany’s population would have been decreasing without immigration, anyway.

Germany and other European countries just need to ease the newcomers’ access to the labor market a little more. A quicker, more automatic process for recognizing qualifications would almost certainly pay off. After all, many of the refugees came in the hope of applying their existing skills in the new country, and showing so little trust in these skills is bad policy.

Leonid Bershidsky is Bloomberg Opinion’s Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion Web site Slon.ru. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.