Reforming Germany’s migration policy: fairer, more humane, economy-oriented

_ Yuri Kofner, junior economist, MIWI Institute for Market Integration and Economic Research. Munich, 18 May 2021.

Status quo

According to data from the Federal Office for Migration and Refugees, a total of 2 million asylum applications were submitted in Germany between 2014 and 2019. That is more than five times as much compared to the period 2008-2013.[16] In addition, between 2014 and 2019 the German authorities issued 560 thousand visas for family reunification.[17]

The main donor countries of asylum seekers in Germany are Syria, Afghanistan, Iraq, Turkey, Nigeria, Somalia, Iran and Eritrea. It is noteworthy that the United States carried out military interventions, regime change operations or sanctions against most of these countries.

A striking study by the Watson Institute concluded that US military interventions in Africa and the Middle East have forcibly displaced over 8 million refugees since 2001 (even 37 million if one includes internally displaced persons).[18]

Unfortunately, the German government supports precisely this destructive US foreign policy within the framework of NATO and the common sanctions policy.

The majority of the resulting refugee flows go to the European Union (5.1 million asylum seekers over 2014-2019), with Germany being the main final destination for asylum seekers. According to Eurostat, 40 percent of all asylum applications made in the EU during the study period, were made in Germany.[19]

And this, despite the fact that there are several safe countries between the migration donor countries and Germany, which does not preclude the conclusion that the relatively benign German social system is an important attraction factor for asylum seekers from the MENA region. According to a study by the United Nations on the reasons for migration from Africa to Europe, for 60 percent of those surveyed “sending money home” was the most important reason for going north.[20]

At least half of the so-called refugees coming to Germany are not actually refugees, since they are not fleeing from war or persecution, but are mainly looking for a better life in Germany for socio-economic reasons. According to official statistics, the right of asylum was not recognized for less than 1 of the 2 million asylum seekers. However, only 12.6 percent (127 thousand people) of those who were obliged to leave the country were de facto deported.[21]

According to the compilation of the AfD parliamentary group in the Hessian state parliament[22], the average fiscal costs for the accommodation and integration of asylum seekers amounted to 27.4 bln euros per year, or even 35.6 bln euros if one takes the average for 2016-2019. Again, that is more than the combined annual federal expenditure on education, research, and health in 2019.

Accordingly, supporting the refugees costs each German taxpayer an average of 743 euros per year (or almost 1,000 euros on average for 2016-2019).

It must be stated here that these are still conservative assessments, as they only take into account the cumulative expenditure of the federal and state governments, but not the expenditure by the municipalities, unemployment and child benefits, and other social benefits for the asylum seekers living in Germany. As stated by the Federal Employment Agency, around 40 percent of the asylum seekers living in Germany were unemployed between 2015 and 2019.[23]

A widespread narrative claims that, as a developed industrial country with a shrinking and aging population, Germany absolutely needs immigration to maintain its labour supply and economic growth.[24] Although this argument is partly plausible, it does not apply to most asylum seekers. Several relevant studies show that the mainly poorly educated refugees (86 percent of the refugees coming to Germany have no vocational or university education degree, 41 percent do not even have a school leaving certificate)[25], even if they integrate into the labour market, over the course of their lives still have a negative net effect on the national budget.

A 2013 study by the OECD estimated the net fiscal impact of immigrants in Germany to be between minus 1.1 and minus 2.3 percent of GDP.[26]

Using the methodology of a study by the Swedish Ministry of Finance[27], the author was able to calculate that the lifelong net fiscal costs of refugees living in Germany since 2014 amount to 0.5 percent of GDP.

Research by the ifo Institute concludes that the 2015 immigration wave has widened the implicit long-term debt burden, i.e., including future pensions, by almost 10 percent of GDP. According to this, every admitted refugee costs the budget around 225 thousand euros over the course of her or his entire life.[28]

Policy recommendations

Lifting of all sanctions

Official Berlin should terminate its participation in all international sanctions.

Thus, not only would the welfare costs of the sanctions policy fall from 0.2 to 0 percent of Germany’s GDP – a gain of 6.8 bln euros or 82 euros per citizen – but the lifting of the sanctions spiral would also stimulate economic growth in the main source countries of the refugees coming to Germany.

A gravity simulation by the author shows that in such a scenario the real gross domestic product of Syria would increase by 0.2 percent, Iran by 0.3 percent, Afghanistan by 0.8 percent, Somalia by 1.6 percent, Eritrea by 1.7 percent and of Libya by 2 percent.

According to the author’s own calculations based on the results of regression models by the Kiel Institute[41], this economic growth would reduce the cumulative emigration rate from these countries to Germany by 0.5 percent.

More development aid

Germany should actually increase its expenditure on official development assistance from 0.6 to 1 percent of GDP.

Cleverly oriented and effectively managed development aid is not only an advantageous instrument for strengthening bilateral economic relations and one’s own soft power in the region. It also leads to sustainable welfare effects, which can reduce the pressure to emigrate from the developing countries.

A relevant regression analysis by the Kiel Institute for the World Economy has shown that an increase in “late-impact” development aid (e.g., in schools, hospitals and governance) from the OECD countries to the donor countries by 10 percent reduces their annual emigration rate by about 1.5 percent.[42]

According to a rough estimation by the author, assuming a proportional transmission mechanism, an increase in German development aid to 1 percent of GDP could thus reduce the pressure to immigrate from the Middle East and Africa to Germany by around 10 percent.

Reform of the asylum and migration policy policy

The entire migration policy of the Federal Republic urgently needs to be reformed. As a result, expenditure on asylum management needs to be halved from 0.8 to 0.4 percent of GDP.

Rothfuß (2020) worked out a good concept for the ID parliamentary group in the European Parliament, which is based on the “primacy of proximity” principle.[43] The key elements of this concept are as follows:

As much as possible, Berlin should strictly prevent illegal immigration as well as dangerous long distance irregular migration. Asylum applications may only be made in Germany’s diplomatic representations abroad in the non-EU countries, e.g., in Turkey, Afghanistan or Libya, and also online.

The humanitarian right of asylum should be granted only for real refugees, while all other asylum seekers for whom no right of asylum was proven should be consistently deported. That alone would halve the number of illegal immigrants staying in Germany, i.e., by almost 150,000 per year.

Asylum seekers living in Germany, which have committed a crime, have forfeited their right for protection and are therefore to be deported. According to the Federal Criminal Police Office[44], in the period from 2014 to 2019 there were a total of 832 thousand asylum seekers, who were suspected of having committed a crime. That is an average of almost 140,000 suspect asylum seekers per year. If one assumes that all 127 thousand deported asylum seekers have committed criminal acts, which, of course, is not the case, then that would mean that at least a total of 706 thousand criminal asylum seekers were still living in Germany by 2020. That would be 118,000 criminal asylum seekers per year who should have been deported but were not.

As part of a “coalition of the willing”, Germany should create and implement a comprehensive remigration agenda, which, of course, would have to meet all human rights requirements. This coalition should include interested migration recipient countries, as well as the most important migration donor countries.

According to the above-mentioned principle of proximity, the key point of this remigration policy, and the new refugee policy as a whole, is that local help, i.e. the creation of a safe, sustainable and dignified quality of life on site, is many times better than accepting, or even promoting dangerous irregular long distance migration, which mainly only brings disadvantages for both sides.

In order to fulfil this task, Germany should not participate in military interventions, regime change operations and sanctions against these countries and should increase its “late impact” development aid the Near Eastern and African region. Here one can see how the policy recommendations proposed above in the areas of defence, sanctions and ODA match with the tasks of such an innovated migration policy.

As already estimated, the lifting of sanctions and the proposed increase in ODA in relation to the main donor countries for migration would reduce the pressure to emigrate from those regions to Germany by 10.5 percent. If other European countries were to participate in such an approach, the potential effect would of course be greater. If all EU member states were to lift their sanctions against these countries, this alone would reduce the yearly emigration rate from Syria, Afghanistan, Iran, etc. to Germany by 2.4 percent.

Such a new approach would also include official cooperation with the legitimate governments of the refugee donor countries. E.g., instead of financially supporting subversive terrorist groups, such as in the Syrian city of Idlib[45], the German Federal Government should recognize the rightful government in Damascus and work with it on a peaceful solution to end the civil war as quickly as possible and thus enable the safe return of Syrian refugees. It was precisely on this topic that Syrian President Bashar-Al-Assad organized an international high-level conference in November 2020. Unfortunately, the European Commission declined his invitation.[46]

Together with other willing states, Germany should actively support the post-war economic and infrastructural reconstruction of Syria and thus also strive for a preferential long-term investment partnership with Damascus.

The above-mentioned rethinking of the national refugee policy in no way means a principal opposition to the immigration of foreigners to Germany per se. On the contrary.

A recent study by the IW Cologne predicts that due to demographic change, the domestic labour market will lack between 3.1 and 4.2 million qualified skilled workers by 2040.[47]

Among other things, an important solution to this problem would be measures that would make the return of emigrated German skilled workers attractive.

According to surveys by the Federal Statistical Office, no less than 1.3 million German nationals left Germany between 2014 and 2019. That is an average of 225.000 German emigrants per year.[48]

Most of the people who leave are the so much needed skilled workers at their prime working age. This is shown by a representative study by the Federal Institute for Population Research, according to which 70 percent of German emigrants are academics and the majority are between 20 and 40 years old. The majority of expats leave Germany to advance their own careers and improve their standard of living. After leaving, their personal monthly net earnings increase by an average of almost 1200 euros.[49]

The question of how best to encourage the return of emigrated German skilled workers is a complex one that cannot be solved by any single measure, because ultimately it affects the competitiveness of Germany as location for business and living. But the above-mentioned study suggests that high tax levies are a significant deterrent for attracting high-skilled workers. According to the OECD, Germany has the second-highest tax burden on labour in the world at 49.4 percent of gross wages on average. Therefore, Berlin could consider reducing the average wage tax burden to the level of the USA and the United Kingdom of around 30 percent.[50]

Even if it were possible to partially stop and reverse the ongoing brain drain, this would not be enough to remedy the shortage of skilled workers. That is why the immigration of trained specialists from abroad is also necessary.

In this regard, the ifo Institute has developed a good design proposal for a new immigration concept for foreign skilled workers. The new system consists of a market-based immigration channel, which guarantees that immigrant workers are net contributors to the welfare state, and a potential-oriented points system based on the Canadian and Australian immigration models, which grants potential immigrants who meet certain criteria (language skills, educational level, etc.) with a temporary residence and work permit. Another component is the recognition of foreign educational certificates for certain professions, e.g. in the MINT area. According to the researchers, the new system should be set up as an online portal that provides extensive information for potential applicants and is used to process applications.[51]

Taken together, if Germany were to lift its sanctions against – and increase its development aid for the main migration donor countries in Africa and the Middle East, their emigration rate to Germany would decrease by 10.5 percent, which would save every German taxpayer almost 100 euros per annum.

 

Notes

[16] BAMF (2020). Das Bundesamt in Zahlen 2020. Asyl. URL: https://www.bamf.de/SharedDocs/Anlagen/DE/Statistik/BundesamtinZahlen/bundesamt-in-zahlen-2020-asyl.pdf?__blob=publicationFile&v=3

[17] BAMF (2019). Migrationsbericht der Bundesregierung 2019. URL: https://www.bamf.de/SharedDocs/Anlagen/DE/Forschung/Migrationsberichte/migrationsbericht-2019.pdf?__blob=publicationFile&v=13

[18] Vine D. (2020). Creating Refugees: Displacement Caused by the United States’ Post 9/11 Wars. Brown University. URL: https://watson.brown.edu/costsofwar/files/cow/imce/papers/2020/Displacement_Vine%20et%20al_Costs%20of%20War%202020%2009%2008.pdf

[19] Eurostat (2021). Asylum and first time asylum applicants. URL: https://ec.europa.eu/eurostat/databrowser/view/migr_asyappctza/default/table?lang=en

[20] UNDP (2019). Scaling Fences: Voices of Irregular African Migrants to Europe. URL: https://www.undp.org/content/undp/en/home/librarypage/democratic-governance/ScalingFences.html

[21] Author’s calculations using statistics by the Federal Office for Migration and Refugees and: Deutscher Bundestag (2020). Antwort der Bundesregierung auf die Kleine Anfrage der Fraktion DIE LINKE. Drucksache 19/17096. URL: https://dip21.bundestag.de/dip21/btd/19/182/1918201.pdf

[22] AfD-Fraktion im Hessischen Landtag (2020). Wie es wirklich um Deutschland steht. Fakten statt Fake News. URL: https://www.afd-fraktion-hessen.de/faktensammlung

[23] BA (2020). Auswirkungen der Migration auf den deutschen Arbeitsmarkt. URL: https://statistik.arbeitsagentur.de/DE/Navigation/Statistiken/Statistiken-Nav.html

[24] E.g. Hagelüken A. (2019). Deutschland braucht die Flüchtlinge. Süddeutsche Zeitung. URL: https://www.sueddeutsche.de/politik/fluechtlinge-integration-arbeitsmarkt-1.4587212

[25] Brücker H. (2017). Integration in Arbeitsmarkt und Bildungssystem macht weitere Fortschritte. IAB. URL: http://doku.iab.de/kurzber/2020/kb0420.pdf

[26] OECD (2013). The fiscal impact of immigration in OECD countries. URL: http://www.oecd.org/els/mig/IMO-2013-chap3-fiscal-impact-of-immigration.pdf

[27] Ruist J. (2019). The fiscal lifetime cost of receiving refugees. CREAM. URL: https://www.cream-migration.org/publ_uploads/CDP_02_19.pdf

[28] Raffelhüschen, B. (2018). Offene Grenzen oder generöser Sozialstaat: Beides geht nicht. ifo Institut. URL: http://www.cesifo-group.de/DocDL/sd-2018-18-chiemsee-konferenz-raffelhueschen.pdf

[41] Bencek D., Schneiderheinze C. (2019). More development, less emigration to OECD countries – Identifying inconsistencies between cross-sectional and time-series estimates of the migration hump. IfW Kiel. URL: https://www.ifw-kiel.de/fileadmin/Dateiverwaltung/IfW-Publications/Claas_Schneiderheinze/KWP_2145.pdf

[42] Lanati M., Thiele R. (2018). Foreign assistance and migration choices: Disentangling the channels. Economics Letters 172. URL: https://www.sciencedirect.com/science/article/abs/pii/S016517651830380X

[43] Rothfuß R. (2020). Wege aus der Migrationskrise. Leitlinien für ein exterritoriales Schutz- und Entwicklungskonzept und eine Remigrationsagenda für Europa. ID Fraktion im Europäischen Parlament. URL: https://www.id-afd.eu/wp-content/uploads/2021/02/ROTHFUSS_2020_Wege-aus-der-Migrationskrise.pdf

[44] BKA (2021). Kriminalität im Kontext von Zuwanderung. URL: https://www.bka.de/DE/AktuelleInformationen/StatistikenLagebilder/Lagebilder/KriminalitaetImKontextVonZuwanderung/KriminalitaetImKontextVonZuwanderung_node.html

[45] Heine H. (2018). Bundesregierung hilft Idlib-Rebellen in Syrien. Der Tagesspiegel. URL: https://www.tagesspiegel.de/politik/49-millionen-euro-fuer-assad-gegner-bundesregierung-hilft-idlib-rebellen-in-syrien/23247768.html

[46] Die Presse (2020). Der Westen hält Flüchtlinge von der Rückkehr nach Syrien ab. URL: https://www.diepresse.com/5895916/der-westen-halt-fluchtlinge-von-der-ruckkehr-nach-syrien-ab

[47] Geis-Thöne W. (2021). Mögliche Entwicklungen des Fachkräfteangebots bis zum Jahr 2040. IW Köln. URL: https://www.iwkoeln.de/fileadmin/user_upload/Studien/Report/PDF/2021/IW-Report_2021-Fachkraefteangebot-2040.pdf

[48] Statistisches Bundesamt (2020). Wanderungen zwischen Deutschland und dem Ausland, Zugezogene, Fortgezogene und Saldo. URL: https://www.destatis.de/DE/Themen/Gesellschaft-Umwelt/Bevoelkerung/Wanderungen/Tabellen/wanderungen-alle.html

[49] BIB (2019). Gewinner der Globalisierung Individuelle Konsequenzen von Auslandsaufenthalten und internationaler Mobilität. URL: V https://www.bib.bund.de/Publikation/2019/pdf/Policy-Brief-Gewinner-der-Globalisierung.pdf

[50] OECD (2020). Taxing Wages. URL: https://www.oecd.org/tax/tax-policy/taxing-wages-brochure.pdf

[51] Poutvaara P. et al. (2018). Qualifizierte Zuwanderung in Deutschland. Vorschlag für ein neues Zuwanderungskonzept für Fachkräfte auf Basis internationaler Erfahrungen. ifo Institut. URL: https://www.ifo.de/DocDL/ifo_Studie_Qualifizierte_Zuwanderung_IHK_Impulse.pdf

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