Germany Scores an Own Goal on Immigration
Migration helps us build a more integrated, dynamic Continental economy.
SEPTEMBER 15, 2009, 10:02 A.M. ET.
By KLAUS F. ZIMMERMANN
Until just a few years ago, the German Bundesliga used to be quite a boring affair. But recently, the excitement factor – and reputation – of the football league has risen significantly, largely thanks to an impressive number of foreign players from Central and Eastern Europe manning the teams these days.
It's a clear indication to Germans how beneficial open migration can be in the modern world. Unfortunately, when faced with the choice of allowing open migration from the populations of the eight countries that joined the European Union in 2004, the German government, was not so open-minded. Along with neighboring Austria, Germany has chose not to open its labor market to immigrants from those countries.
This of course has not stopped the flow of foreign workers into Germany. All the restrictions have done is to cap and erode the skill level of these immigrants – after all, engineers don't tend to sneak across borders, nurses are not the types to falsify papers, and schools rarely hire black market teachers.
Five years after the 2004 round of EU expansion, enough evidence is in conclude the policy rationales – and fears – that underpinned the German decision at the time have meant German government did not get what it bargained for – and even ended up shooting an own goal in the process.
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Polish footballer Jakub Blaszczykowski is one of the few “skilled laborers” allowed into Germany.
.While a touchy subject politically, immigration is an essential ingredient of Europe's history. In that sense, the EU expansion in 2004 represented a return to the old norm.
With real migration between Europe's east and west interrupted for decades by the Iron Curtain, wage levels between Eastern Europe and Western Europe were literally worlds apart. Once the eastern transformation from planned economies to market economies got underway, so were employment levels.
Between 1960 and 1973, Western Europe saw its share of foreign workers doubling to 6% from 3% of the workforce, driven by labor demand. But this freewheeling traffic ground to a near-halt in 1973 with the onset of the oil crisis. Germany was no exception, and until the 2004 EU expansion, legal immigrants to Germany were either rufugees, asylum seekers, reuniting families or ethnic Germans.
The 2004 expansion was meant to crumble the remaining walls between east and west, and allow Europeans to move freely about the continent.
Faced with so much change, worries actually abounded on both sides of the old divide. While Western Europeans feared downward pressures on wages and, more generally, a hollowing out of their welfare states, Eastern Europeans were concerned about brain drain.
In the real world, many of these worries proved to be either unfounded, exaggerated or counterbalanced by significant positive effects. There is no denying, for example, that the new EU members suffer from some brain drain. At the same time though, increased mobility of skilled employees is contributing to a better continent-wide matching of skills and available jobs, thus improving the EU's overall economic efficiency. This also helps rebalance existing demographic pressures.
Specifically with regard to Germany, despite the government's "closed shop" approach to immigration from new EU, there has been a steady inflow from Central and Eastern Europe – recently leveling in at about 50,000 immigrants per year.
That compares to an annual inflow of about 254,000 people into the 15 "old" EU member states since 2004, mostly to Ireland and the United Kingdom.
Those migrants who made it to Germany after 2004 are relatively older and less well-educated than the ones who came to Germany prior to that date. That is not exactly an outcome a modern competitive economy such as Germany should aim for.
In contrast, the more liberal-minded EU countries found their open labor market policies rewarded with an actual reduction in low-skills immigrants from new EU member compared arrivals in the pre-2004 time frame.
Furthermore, in Germany's case, those immigrants – primarily young men from Poland and the Baltic countries – were 23.1% less likely to be employed than their German-born counterparts This is almost double the pre-2004 level, when immigrants from these countries were only 12.7% less likely to be employed than Germans themselves. Again, not the trend one would wish for.
Again, this contrasts with the development in those EU countries that had the courage to opt for open labor markets. Their rate of employment for the post-2004 immigrants is actually higher than for the group of pre-2004 arrivals.
However one chooses to look at the data and trends, Germany's approach to dealing with immigrants from the new EU member states makes no sense in light of Germany's unquestioned need to attract expert professionals.
Open borders among EU member states do not lead, as often feared, to a deteriorated labor market. And since these immigrants do not have a higher propensity to receive welfare than the domestic population, neither do they further intensify the pressures already squeezing European social security systems.
Instead, this migration helps us Europeans build a more integrated, more dynamic continental economy. That is a record we should build on with great determination, if we want to secure future sources of prosperity.
Based on the available empirical evidence, Germany's so-far restrictive policy must be judged a complete failure. That may sound harsh, but how else can one describe a policy that fails to attract the required highly skilled workforce, while continuing to draw an influx of low-skilled immigrants? If that can't be considered a painful own goal, what would?
The new-found vitality in the German Bundesliga could show German policymakers the way forward to a brighter, more inclusive future. A move earlier this year allowing university graduates from all parts of the world to enter the German labor market suggests they are beginning to learn these lessons.
Mr. Zimmermann is the director of IZA, the Institute for the Study of Labor in Bonn, Germany, and co-editor of "EU Labor Markets After Post-Englargment Migration," published this year.
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