international analysis and commentary

The German welfare system and foreign workers: a complex debate

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Sozialtourismus (“Welfare Tourism”) has been named the most inappropriate word of the year in Germany. Behind the term is the concept of EU immigrants claiming state benefits without having worked and made social contributions themselves – which is one of the main concerns for German citizens when it comes to the relationship with the EU partners.

It has become a heated topic and the central political battlefield in Germany since the beginning of this year, as Romanian and Bulgarian citizens began to benefit unconditionally from the free movement of people and workers in the EU, seven years after having joined the block. Before 2014, they had the right to work in Germany in certain sectors like seasonal jobs,  healthcare, as well as executive management. After receiving full access to the German labor market, Romanians and Bulgarians can now also claim certain state benefits. Some politicians, mainly from the conservative CSU from Bavaria, are warning of the exploitation of the welfare state with slogans like “Cheaters go home” – which could even be interpreted as threatening citizens of EU partners with deportation.

This is in line with the euroskeptic Alternative für Deutschland (AfD)the new party that almost made it into the Bundestag last September with slogans like “Yes to immigration, but not into our welfare systems”. The well-established CSU does not want to lose voters to the AfD, considered by many as populist, which is why they are strengthening their right-wing profile with regards to the upcoming European elections in May. This phenomenon can be seen across Europe where euroskeptic or nationalist parties like the UKIP in the UK or the Front National in France are likely to do well at the polls  in their respective countries.

The CSU’s slogan intends to reflect the concerns of voters about the misuse of benefits for unemployment, housing and childcare. These fears are not unfounded as mayors of big German cities across the political spectrum, including from the Social Democrats, have raised concerns of overpopulation and “ghettoization” of Southeastern Europeans in suburban areas; these neighborhoods are already among Germany’s poorest.. The negative side of EU immigration is a concern shared by a great majority of German citizens, according to the latest DeutschlandTrend opinion poll published in January. More than two thirds agree that those who are not coming to the country to seek work should be forced to leave.

Some observers call for a more balanced view: for instance Norbert Mappes-Niediek, an expert on Southeastern European relations, points out that the opportunity for any EU citizen to claim benefits is not a deciding factor for people migrating to Germany, and that many of them are not even aware of these entitlements and would come anyway for purposes of reuniting with family or in order to escape extreme poverty at home. In 2013, 38,000 people from Romania and Bulgaria were on the national benefits scheme (Hartz IV), receiving monthly state allowances. This accounts for roughly 10% to 12% of the Romanians and Bulgarians living in Germany, which is below the average of all foreigners receiving state aid in Germany and constitutes 0.6% of overall national welfare expenses. To date there is no proof of exploitation of the German welfare system.

An OECD study from 2013 also suggests that the picture is less gloomy than the pessimists seem to believe: 62% of Romanians and Bulgarians of working age who migrated to Germany were employed. This means that they are paying taxes and social welfare contributions as well as into the German pension fund.

German employers indeed benefit from the fact that, since 2012, European workers have the right to submit a request for the recognition of foreign university and apprenticeship titles. Furthermore, there is an urgent need of highly skilled labor in Germany. The country has currently 3,000 Bulgarians and Romanians practicing as family doctors and dentists (which also helps explain why Romania is the country with the lowest density of practitioners in Europe). Almost a quarter of migrant workers from Bulgaria and Romania come with a university degree, which suggests they are likely to get above-average paying jobs and will eventually pay higher taxes. Public debate is not often focused on this kind of immigrant, even if a vast majority of Germans agree that the country needs high-skilled labor from abroad.

At the beginning of the year, Frank-Jürgen Weise, the President of the Federal Agency for Employment, declared that without immigrants the German labor market would collapse. He predicts that given the demographic change, workers from Bulgaria and Romania will continue to be needed. The business-friendly German Institute for Economic Research (DIW) elaborates on this by criticizing the claims by the CSU as unfounded, and demands more (not less) government incentives for EU workers if Germany wants to compete on the international stage.

The German Employment Agency, together with the government and the Bundesbank, anticipate an economic growth for 2014 of 1.7%, which is three times as high as the previous year. Expecting a promising outlook, businesses will be more likely to make investments and create jobs. In this context, Southeastern European workers will help to expand the labor force in Germany.

In order to anticipate the future impact of Southeastern European migrants on the German economy, the first wave of Eastern accession in 2004 can be taken as a precedent. Migrants were given full rights in the labor market in Germany in 2011. Instead of enormous waves of Polish, Czech or Hungarian citizens causing higher unemployment rates, the numbers were much lower than expected as many had already migrated to other countries like the UK. In fact, German unemployment rates actually decreased by 1% to 2% in 2012.

The latest DeutschlandTrend shows that three quarters of Germans view their personal economic wellbeing as either “good” or “very good”. When it comes to the national context as a whole, the picture looks even brighter with almost 80% rating the German economy as positive. This is the highest value registered in the past 17 years of the survey. Therefore, the picture is somewhat contradictory, between an optimistic climate and concern over the future of migratory flows. It will take time to really assess the net effect of foreign workers on the German economy, but it seems certain that a lively debate will continue on the strengths and weaknesses of the German welfare system.