Brussels Needs to Respond

Germany is currently experiencing a major wave of immigration. As many as one million migrants are expected to arrive this year, and next year could see a similar number. What are the economic consequences of immigration and how should political leaders respond in Germany and Europe?

First of all, it is important to distinguish between two reasons for migration: first, to escape war and political persecution, and second, emigration for economic reasons. Individuals who are persecuted in their homelands have a legal right to seek asylum in Germany. This does not relate to the question whether Germany can gain economic benefits from immigration. The aim is to help these individuals, even if it costs money. At the same time, it is clear that even if the right to asylum is not defined by quantitative limits, the practical possibilities for absorption are nevertheless limited.

The right to asylum is not designed to address immigrants motivated by economic reasons. For these individuals, there are other legal options along with other limitations for immigration to Germany. In regulating this type of immigration, it is completely customary for the interests of the host nation to play a key role. When people emigrate because they hope to achieve higher working income in other countries, this results in increased prosperity for both the immigrants and the host country, since its labour force is more effectively utilised.

It is a different story when social transfers and other public services are the main reason for migration. In this case, emigration is subsidised and the host country experiences an economic disadvantage. In Germany, the government provides a broad range of public services in addition to social security, ranging from transport infrastructure to schools and kindergartens. In order for migration to Germany to prove economically beneficial, immigrants have to pay taxes and fees that are as high, on average, as those paid by the existing population – perhaps not right away, but in the long term. In order to achieve this, Germany needs to insist, first off, that economically motivated immigrants have a job, and second, that they arrive with the necessary occupational skills to earn an adequate income.

When it comes to asylum seekers, the question of occupational skills plays no role, yet for this group as well, the goal should be to integrate them into the labour market as quickly as possible. For immigrants with low skill levels, the guaranteed minimum wage can become an obstacle. However, waiving the minimum wage for migrants is a risky move, as it undercuts domestic job applicants. Therefore, it is important not to go beyond temporary exceptions of the kind that are in place concerning the long-term unemployed. What would be more effective would be a general decrease in the minimum wage level or, at least, avoiding any increases.

In practice, differentiating between politically persecuted refugees and economically motivated migrants is just as difficult as controlling immigration overall. When hundreds of thousands of persons migrate to the EU without visas and when many of them end up camping under disastrous conditions in "transit countries" such as Croatia or Slovenia, it becomes virtually impossible to implement a rational immigration policy. For this reason, it is critical that political leaders do a better job of regulating migration at the European level and also address its underlying causes. This starts out with improving the living conditions in refugee camps in Turkey and Jordan, and taking steps to end the civil war in Syria.

In addition, the EU members urgently need to improve coordination of their asylum policies and distribute the burdens of acceptance among themselves in a spirit of solidarity. Until now, European nations have placed national egotism and solo efforts above their common interests. However, it is not too late to turn in the direction of a common European policy.