Germany can’t afford to turn its back on foreign workers

Germany became a magnet for those escaping conflict over the past decade. Now it needs to become a beacon for highly skilled professionals. Increasing public discomfort with immigration and the rise of the far-right could prevent the country rising to the challenge.

The nation’s future prosperity depends on attracting millions of economic migrants to fill gaps left by retiring baby boomers. But the domestic mood is grim following a spate of violent crimes allegedly perpetrated by foreigners. Last week, three people were killed and eight injured in a knife attack; the suspect was a Syrian asylum seeker and member of the Islamic State. Public alarm could help propel the far-right Alternative for Germany to first place in regional elections in eastern Germany this weekend. In Thuringia, for example, polls suggest the AfD could win around 30% of the vote.

Social Democrat Chancellor Olaf Scholz wants to accelerate deportations of those who don’t qualify to stay in Germany while encouraging skilled migration. But this balancing act is looking increasingly tricky.


Alice Weidel, the co-leader of the AfD, has called for a moratorium of at least five years on further immigration, while the leader of the opposition conservatives Friedrich Merz has urged the unpopular coalition government to stop accepting refugees from Afghanistan and Syria, and to reverse policies that made getting German citizenship easier.

It’s a far cry from the optimism shown in 2015 when former Christian Democrat Chancellor Angela Merkel famously declared “Wir schaffen das” (“We’ll manage this”) in response to around 900,000 asylum seekers showing up on Germany’s doorstep, mainly from Syria. They’ve since been joined by more than 1 million Ukrainian refugees, making Germany the fourth-biggest refugee host globally.

The country has made laudable efforts to integrate new arrivals, but it’s paid a big price for its humanitarianism: No other country’s citizens want their government to focus on reducing immigration more than Germany’s, which they now consider more important than fighting poverty, according to an international survey published in May. Even Joachim Gauck, a former pastor and German president during that tumultuous 2015-2016 period, has urged his country to adopter stricter asylum rules to keep fringe political parties at bay.

The government has a duty to protect its citizens, but Germany can’t afford to halt all migration. Deprived of cheap Russian gas and amid waning Chinese demand for its capital goods, the country has gone from powerhouse of the euro zone to laggard: The economy is expected to stagnate for a second year.

Potential economic growth has been estimated at just 0.4% a year for the remainder of the decade because productivity gains have slowed and the large baby-boomer generation is poised to retire. While the government is trying to make work more appealing — cutting taxes for overtime and offering financial incentives to delay retirement, for example — these efforts won’t suffice. UBS Group AG economists forecast Germany’s working age population will shrink by 8 million, or 0.6% per year, by 2050.

This will put increasing pressure on the budget as Germany has a pay-as-you-go pension system whereby current employees finance the incomes of today’s retirees. “Greater immigration could be a powerful force to counter these factors. However, prospects for this are uncertain,” notes the International Monetary Fund.

Around 1.6 million jobs are already unfilled out of a labor force of 46 million, with logistics, engineering and medicine among the worst-affected sectors. The coalition has announced several reforms to help attract the needed 400,000 skilled migrants a year, including issuing “Opportunity Cards” to people from outside the European Union so they can come to Germany to look for a job for 12 months, instead of requiring an employment contract to already be in place.

However, a government proposal last month to offer skilled foreign workers a temporary income tax cut during their first three years in Germany triggered a flood of criticism. While migrants would need to earn above a certain threshold to qualify and the incentives also won’t apply to very high incomes, opposition politicians and trade unions complained of discrimination because German taxpayers won’t enjoy the same treatment. High-profile Social Democrats also sounded circumspect, while a YouGov poll revealed 63% of the population are opposed to foreigners paying less.

With utmost respect to a country that generously granted this writer citizenship in 2018, these complaints are short-sighted and self-defeating. Allowing skilled migrants to pay less tax for a limited period is justifiable on the grounds the work simply wouldn’t get done otherwise, and economic growth and tax receipts would therefore be lower; several European neighbors already have similar incentives.

Germany has much besides money to offer foreigners, including respect for the rule of law, strong social safety nets, free public universities and family-friendly policies. But I doubt it’s top of the list for migrants wanting to advance their careers.

Germany dropped to 15th place from 12th last year in an Organisation for Economic Co-operation and Development ranking last year of rich countries’ attractiveness to highly qualified workers from abroad. A separate study ranked Germany 49th out of 53 countries for expat appeal, with a lack of friendliness, poor digital infrastructure, a tight housing market and excessive bureaucracy among the cited problems. Rising support for the AfD won’t help change their minds.

Germany stands a critical juncture in its postwar history. If it makes the wrong choices, both social cohesion and economic growth could suffer.