The refugee crisis is not a ’German problem’, it is a European opportunity

Friday, 18. September 2015
Niklas Helwig
Senior Research Fellow - The European Union research programme

Providing shelter for refugees is the moral and legal obligation for every European, but apart from that… it’s the economy, stupid!

A couple of years back the local football club SV Blau-Weiß Ascherode was in deep trouble. After more than 60 years of existence the sports club of the small village of 250 people in the middle of Germany struggled to get a team together to compete in the regional football league. Just before the club had to withdraw from the competition, the team was unexpectedly reinforced. Several refugee families moved into the village, with young men eager to demonstrate their football talent. The new arrivals saved the local football club, which is alive and kicking ever since.

The story of Ascherode is only one example, of how refugees are an opportunity for German social and economic life. The situation in the German countryside is especially severe, as young people move to urban areas after graduating from school. Those who stay are often not numerous enough to sustain the old structures. Football clubs are not the only examples, of how people fleeing to Germany enrich local communities. Rural primary schools can sustain and even widen their programs, as young children move to the neighborhoods. Struggling small shops can keep up their business, as they gain new customers. This is the daily reality that many Germans have already experienced.

Of course, the integration of refugees is not easy. As the recent reintroduction of controls on the southern borders of Germany showed, the current massive flows of people are especially demanding. Once refugees arrive at a destination in Germany, the sometimes frustrating challenge of integration begins. More often than not, children just enrolled in school or signed up for the football team suddenly move away, as their families seek ‘better’ lives in big German cities. Moving into permanent housing, learning German and finding a job or apprenticeship require patience, counseling and a lot of good will on both sides. Despite the pictures of recent weeks of Germans applauding refugees at train stations, xenophobia remains a problem as well, though it has not yet surfaced as violently as it had during the last refugee wave in the 1990s.

However, looking at the bigger picture, the influx of people to Germany is a huge opportunity for the country. Mercedes-Benz boss, Dieter Zetsche, hit it home when speaking at the opening of the Frankfurt Motor Show this month: "Taking in more than 800,000 people who need our help is undoubtedly a herculean task for Germany. But in the best-case scenario, it can also be a foundation for the next German economic miracle... Just like the millions of guest workers were for our economic miracle of the 50s and 60s”. Yes, providing shelter for refugees is the moral and legal obligation for every European, but apart from that… it’s the economy, stupid!

Ever since WWII, Germany has been an immigration country. This allowed Germany to be today’s European economic powerhouse. During the post-war boom, between 1955 and 1973, Germany opened its doors for millions of so-called ‘guest workers’, mainly from Italy and Turkey. The workers were badly needed to fill the gaps in the industry and to keep the German economic miracle afloat. When Germany stopped the recruitment of foreign workers in the 1970s, around 4 million foreigners had acquired residence permits and decided to stay.

Immigration to Germany did not stop. In the 80s and 90s millions of ethnic Germans returned to Germany mainly from Poland, Romania and the territory of the former Soviet Union. The wars in the Western Balkans brought the first massive refugee influx 20 years ago at a time when Germany’s economy had to struggle with the challenges of reunification and was not in an ideal condition to integrate the waves of people. The refugee inflow peeked in 1992 with 440,000 asylum seekers coming to Germany and the numbers stayed around 100,000 people per year until the end of the decade, according to the government agency responsible for migration. 15 million non-ethnic Germans are now living in the country, making up 19 per cent of the population.

The economy of Germany would look different were it not for decades of immigration. According to the German government 600,000 people with a foreign background founded a business in Germany. These employ 2 Million people. Studies show that immigrants pay much more into the public budget, than what they cost, contributing to the fiscal consolidation of Germany. Especially in rural areas, expensive public infrastructure, such as electricity and water supply, can be used more cost-efficiently if more people settle there. In fact already in the short run the increased public spending to manage the refugee influx even means a slight stimulus for the German economy of 0.17 per cent to the GDP in 2015.

The need for immigration in Germany and elsewhere in Europe becomes even more striking when looking into the future. The head of the German Institute of Economic Research, Hans-Werner Sinn (a man known for his sober economic thinking, rather than moral arguments) wrote in early 2015 that 200,000 thousand immigrants per year would not be enough to bring the aging German population into balance. Germany needs a total of 32 million immigrants, if it wants to keep pensions and welfare contributions on the current level when the baby-boomer generation reaches retirement-age in 2035. "There is no alternative to mass immigration”, Sinn concludes.

The experiences of the immigration country Germany portray an alternative outcome of the current refugee crisis. Germany’s success is based on the people that choose the country as their home. At no point in history was the integration of foreigners easy, but it turned out to be a success. Thus, when speaking of the current refugee crisis as a "German problem”, Victor Orbán misses the point. While the refugee crisis poses challenges, it is primarily a European opportunity. It is time that Europe with its aging populations and shrinking workforce realizes the potentials of the current migration flows. I am sure that my local football club would agree.

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This text is part of a series of FIIA Columns on the refugee situation.

Texts reflect the opinions of the individual authors