The Strategist

German business society: Refugees are not ready for the labor market

09/14/2016 - 12:42

The largest companies in Germany will have to explain to Angela Merkel why they have recruited just 100 thousand refugees, while about 1 million of them arrived into the country in the past year, reports Reuters.

Mstyslav Chernov
Mstyslav Chernov
It is known that the German chancellor is now struggling to continue her open door policy for refugees from the Middle East and Africa. To solve the problem of refugees and their engagement in the labor force, Merkel has invited Heads of major German companies in Berlin.

The German business society itself believes that majority of migrants do not know the German language, and do not have appropriate qualifications. In addition, the situation is aggravated by uncertainty regarding permission to stay in the country, due to which it becomes unclear how long the refugees are allowed to stay in Germany.

Reuters’ poll of 30 companies from the German stock market index DAX found that they have recruited a total of only 63 refugees. Some companies, however, refused to provide information on employed workers, since it is unethical.

Of the 63 employed workers, 50 were hired by postal service DHL to sort and deliver letters and parcels. According to a representative of DHL, the company reckoned that about 80% of the refugees are not qualified, so they were offered a job that does not require technical skills or interaction in German.

In this situation, it is becoming increasingly clear that early optimistic forecasts that the refugee wave could stimulate economic growth and help ease shortage of qualified personnel, have not come true.

How much money is spent on reception and allowance of refugees in Germany?

All leading German economic research institutes tried to answer this question using different methods. Precise data are not available, it all depends on what and how to count. In most studies, cost of annual supporting of a refugee is estimated at 12 000 - 20 000 euros.

Basing on these estimates and its own calculations, the Ministry of Finance of Germany included additional 99.8 billion euros in its medium-term planning for 2016 - 2020 years. Thus, we are talking about approximately 20 billion euros per year from the federal treasury.

Land and local authorities bear direct costs for reception and allowance of refugees. In 2016, support of them will become the largest item of expenditure (6.9 billion euros). As applicants will be officially granted asylum, the cost structure will change.

The trick is that a migrant, if he has not found work, he is eligible for numerous social benefits (apartment, health insurance, school for children, etc.). The German Ministry of Finance assumes that 8.2 billion out of 20 billion will go just for social support of refugees in 2020.

Will refugees contribute to growth of unemployment?

Yes. The German government assumes that by 2020 number of unemployed will increase from current 2.7 million to more than 3 million people. In some cases, however, the flow of asylum seekers led to creation of new jobs and employment growth – for example, number of staff in BAMF (Office for Migration and Refugees) doubled from 3000 to 6000 for the year.