By Elena Ajluni
In the past decade, Europe has received an increasingly large amount of migrants and refugees from its surrounding regions. The year 2015 has seen a soaring rate of people requesting refugee status on the European continent. The period is now known as Europe’s Refugee Crisis or Migrant Crisis.
A variety of hardships led up to this period, including civil wars, political persecution, an increasing need to relocate to find work and education access, fleeing impoverishment, political unrest, gang violence, and natural disasters. These events resulted in many citizens needing to flee from their homes. This migration influx led to many economic effects and some misconceptions; however, migration has been economically very beneficial for the European Union.
Circumstances of Migration
The majority of people arriving in the European Union in 2015 were coming from Syria, Afghanistan, and Iraq. First time applicants to the EU in 2015 totaled to 350,000 from Syria, 170,000 from Afghanistan, and 120,000 from Iraq. Of all the people arriving in Europe during this time, 97% came by the Mediterranean Sea. This is an extremely dangerous journey that results in many deaths. Over 3,770 died in the sea during the summer of 2015. The majority of these deaths were due to boats capsizing from overcrowding. This demonstrates the severity and urgency of the situation.
Germany answers the call to receive migrants
In 2015, Germany received the largest number of asylum applicants, which resulted in many social, political and economic impacts. This increase in population created some political tension within the country as well as some hostility toward new migrants. One of the main concerns among Germans was that migrants will abuse the system and won’t earn their right to acquire German citizenship.
Are these concerns valid? How has the Refugee Crisis impacted Germany’s economy and labor market? Migrant integration at this scale is bound to have an effect on the labor market. The 2015 crisis demonstrated some costs to the economy; however, these costs have been mostly recovered and have proven to be a strong benefit to the labor force and Germany’s economy. Just two years after the beginning of the crisis, Germany’s GDP increased by 2.2% demonstrating its short-term growth.
Tensions arise in the EU
The migration crisis has brought a lot of tension and conflict to the European Union taken as a whole. Some member states began to receive significantly more applications than others, causing them to feel that this distribution was unjust. Hungary, Austria, Sweden, Italy, and France are some countries that have received high influxes of migrants – with Germany receiving the highest amount of claims at 476,000. When the Migrant Crisis hit Germany, the Chancellor, Angela Merkel, responded with a very bold stance known as an “Open-door Policy”. Merkel allowed over 800,000 refugees to enter Germany in the summer of 2015, and over 1 million by the end of the same year. However, this was a very controversial decision and it drew criticisms across the nation and the European Union. Challenges arose following the implementation of Merkel’s open-door policy, and led to a surge in the far-right Alternative for Germany party (AfD).
Nonetheless, as the recipient of the highest number of applicants in Europe, Germany took the initiative to start the refugees welcome program, which many other EU countries followed then. This program contained five steps beginning right before migrants’ arrival into Germany and following through until they are active participants in society. This plan aimed to promote civic education for migrants, equality in media, sports and culture, and combat discrimination.
This integration process, however, was not always easy to accept by a part of the population, and created some political tension and economic costs such as the cost of housing, language training, and health care. Germany spent over 20 billion euros toward costs such as these, including approximately 670 euros per refugee per month. This can be a very high cost for a country to take on as an initial investment. However, the refugees that entered proved to be very beneficial to Germany’s economy in the long term, especially as an addition to the country’s declining labor force. A few years after integration, refugees have generated the revenue to make up for the initial cost. There’s one simple fact that comes into play here: Germany needs immigrants, and these costs do not outweigh the benefits.
Benefits of Migration
While there are always some costs, and the integration of migrants during this time had some hiccups, the integration of migrants has left a positive impact on Germany’s economy. Some of these benefits include an increase in the country’s GDP and a successful addition to Germany’s labor force and supplement to its declining labor force.
The German Institute for Economic Research discovered that the immigration to the EU increased Germany’s GDP by over 1% every year. Following the crisis, Germany experienced an economic boom and an inflow of labor. Another strong effect on the economy was an increase to the consumer pool and the demand for products. Germany is facing a decline in its population, and therefore its workforce. It needs immigrants. As a matter of comparison, in Germany, Europe and around the world, women are becoming more educated, and there has been an increase in sex education as well as contraceptive use. In addition to this, it has become more common for women to choose to focus on work over having children or before having children. In Germany, in 1970, women had 2.37 children, while in 1995 they had 1.25 only. An increase in life expectancy along with this decrease in population is resulting in a workforce that is too small to support its retired population. Economists predict that the workforce in Germany will decline by 40% by 2060 if they don’t receive a high number of immigrants – approximately 400,000 a year. In 1970, women had about 6.73 children and in 1995, women had about 3.87. As a result, the MENA region has a large population that can add to Germany’s economy. While birth rates in countries that many refugees come from are also decreasing, their birth rates were initially much higher such as in the Middle East and North Africa region.
Adding to the workforce can be a bit of a gamble and depends highly on the host country’s ability to successfully integrate migrant populations into society and workforce. Economist Oliver Reynolds summarizes this saying: “the more refugees who find jobs, and the better paid these jobs are, the greater the positive impact on labor supply, the public coffers and economic growth”. There can be many conflicts and uncertainty to integration such as language barriers and unrecognized qualifications and certifications. In Germany, by 2017, only about 12% of refugees had found unemployment; the integration process can take time and consume resources. However, when done efficiently and effectively, it can be extremely beneficial to a country’s economy. As of October 2020, about 50% of refugees in Germany were employed. Germany is now facing lower interest rates, declining unemployment, and stronger foreign demand. It took time and effort, but Germany is the example of a country that is seeing many economic successes due to the successful integration of refugees into the workforce.
Europe’s Migration Crisis has improved Germany’s overall economy and contributed to its prosperity. The integration of refugees has added positively to the country’s declining population and labor market. Since the beginning of the crisis, about half of the refugees that have entered Germany have found work and have improved the country’s declining unemployment. This same strategy can be applied in many different countries in Europe and across the world in order to help grow economies as well as and protect those in need.
Elena Ajluni is a Master’s student of Political Science and International Relations at Saint Louis University – Madrid Campus.
To quote this article, please use the following reference: E. Ajluni (2022), “Germany’s Migration Crisis” https://crisesobservatory.es/Germany’s Migration Crisis /
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