WSJ not FT - Sorry
From: Laurent Chekroun (MAKOR CAPITAL MARKET) At: 12/27/24 08:09:58 UTC+1:00
Subject: FT : Germany Opened Its Doors to Migrants. Now It’s Struggling to Cope.Germany Opened Its Doors to Migrants. Now It’s Struggling to Cope.
Even before Christmas market attack, nation was straining under influx; economy needs new workers
SUHL, Germany—Ten years ago, this town in central Germany was aging, rapidly depopulating and almost universally white. Today, its population has stabilized, is younger and includes people from 92 countries.
Some longtime residents have welcomed the change, but for many others, it’s happening too fast. In May, conservative Mayor André Knapp was re-elected with more than 82% of the votes after a campaign critical of immigration, which he blamed for a rise in local crime. In September, the Alternative for Germany, or AfD, a far-right party that advocates mass deportations, won its first state election in Thuringia, where Suhl is located.
“Of course we need immigration, we need foreign workers, but we can’t have a situation where our town is getting completely overwhelmed,” said Knapp.
Many Western countries are rethinking their immigration policies and how open they want to be, even as they grapple with the effects of low birthrates and aging populations. U.S. President-elect Donald Trump made restricting immigration, including mass deportations, a central pitch in his campaign. Countries including Canada, Sweden, Denmark and the Netherlands have tightened controls, citing costs, popular pressure and security. In Austria, the anti-immigration Freedom Party won a general election in October. That same month, Poland said it would bar entry to asylum seekers and tighten visa policy. Earlier this month, Elon Musk weighed in on the issue, posting on X: “Only the AfD can save Germany.”
Germany has long been one of the world’s most welcoming nations to migrants. Between 2013 and 2023, 6.43 million more people settled in Germany than left, according to Germany’s Federal Statistics Office—the biggest inflow of any country outside the U.S., according to the United Nations.
Polls show immigration is a top issue for voters ahead of a general election in February. The concern is likely to gain urgency after a 50-year old Saudi refugee was detained on suspicion of ramming a car into a Christmas market in Eastern Germany on Dec. 20, killing five and leaving more than 200 wounded.
Some of Germany’s new arrivals are workers from other countries arriving to fill specific jobs, or students coming to study. Germany also is the most popular destination in the EU for refugees, accounting for a third of asylum applications in the bloc. Since the 2015 refugee crisis, when hundreds of thousands streamed into Europe, Germany has received 2.4 million asylum seekers, twice the population of Munich.
Migrants, defined as people living for more than 12 months outside their country of birth, made up 18.8% of the population in Germany in 2021, compared with 15.3% in the U.S. in that year, according to the United Nations.
In Germany, 42% of people under age 15 were either foreign-born or had at least one foreign-born parent—Germany’s definition of a statistical category it calls “people with a migration background”—as were 37% of people ages 15 to 24, according to government data for 2022.
Germany, which has no history of mass immigration and limited experience integrating people from other cultures, is now becoming a case study of the challenges that can emerge when migration outpaces a society’s capacity to adjust.
Most economists agree that the German economy, which has stagnated since 2019, badly needs immigrants. Germany was among the first countries in Europe to see fertility rates collapse in the 1970s. Now, as baby boomers retire, the financial burden of their mounting pension and health insurance costs will be borne by fewer workers.
Although unemployment in Germany has been edging up after two years of recession, many sectors, from engineering to health to hospitality, still complain about a crippling labor shortage. A study this year by the Bertelsmann Foundation, a nonpartisan research organization, found that Germany would need net immigration of between 288,000 and 368,000 every year between now and 2040 just to maintain the size of its workforce.
“Germany as a whole, and eastern Germany in particular, are in a demographic crisis,” said Niklas Wassmann, a center-right member of the parliament in the state of Thuringia. “For every two residents of Thuringia who retire today, only one enters the labor market. We can’t rely on technological innovation alone to maintain our growth. We need to bring people in from outside.”
Yet Germany hasn’t had much success integrating newcomers into its labor market. The unemployment rate for noncitizens last year was 14.7%, compared with 5% for citizens.
In the U.S., migrants seeking asylum typically receive no federal aid, but they are permitted to work once they submit their applications. In Germany, they aren’t generally allowed to work until they are officially deemed refugees, which can take months or even years. But they are entitled to benefits worth as much as hundreds or thousands of euros a month—which cost the federal government €29.7 billion in 2023, according to research company Statista. State governments bear additional costs.
More than 60% of the people in Germany who depend on government benefits for income are foreign-born or are second-generation migrants. Noncitizens, who make up 15% of the population, perpetrated 41% of all crimes in 2023, up from 28.7% in 2014, according to police statistics.
In a September poll conducted by Infratest dimap for public-sector broadcaster ARD, 77% of respondents said Germany needed to change its immigration policy. In a separate survey by insurer R+V, 56% said they feared the government was being overwhelmed by immigration, and 51% said they were concerned about political tensions related to the issue.
Immigration was one of the issues that divided the fractious ruling coalition in Berlin that collapsed in November. Polls show the center-right CDU is the heavy favorite to win the February election, with the AfD in second place.
“Immigration is having an impact in all aspects of life,” said Thorsten Frei, a senior CDU lawmaker and one of the architects of the party’s immigration platform, which calls for turning back asylum seekers who traveled through other safe countries on their way to Germany. “We have to recognize that we are being overstrained,” he said. “We’re not keeping up.”
Like most towns in Germany’s formerly communist east, Suhl was largely homogenous when the Berlin Wall fell. By 2013, it had fewer than 1,000 foreign-born residents. By year-end 2023, that figure had grown fivefold. Poles, Romanians, Syrians, Afghans, Ukrainians and other foreign nationals now account for more than 13% of Suhl’s 35,000 residents.
When asylum seekers arrive in Thuringia, most are sent first to live at the state’s Initial Reception Facility on the outskirts of Suhl, a hilltop complex of five-story buildings. It is meant for 800 but has routinely housed twice as many.
The facility, known by its German abbreviation EAE, is surrounded by fencing, and both occupants and employees must swipe an ID to get in. It is cramped, unhygienic and dangerous, according to local officials and current and former residents.
The asylum seekers are mostly from the Middle East, Afghanistan and Africa, with others from Russia, Iran and Turkey. Residents are housed in two buildings—one for men and another for families, pregnant women and LGBTQ people.
Security challenge
When the refugees first began arriving in 2015, “there was a lot of compassion” in town, said Karin Hornschuh, an 82-year-old who leads volunteers who organize sports activities and games for the center’s children. These days, she said, support for her efforts has all but disappeared. “Some people say they are being invaded,” she said.
Reinhard Hotop, a member of a church organization that provides asylum counseling in the camp, said sentiment began shifting in 2015 after the police stormed the facility to prevent what authorities called an attempt to lynch an Afghan man who had torn up a Quran. Over a dozen residents, police and guards were wounded. Five asylum seekers were convicted of inciting a mob.
During the pandemic, break-ins in a nearby neighborhood were traced back to the camp. Last year, the fire department was dispatched to the camp 299 times for emergencies, including two alleged arson attacks by residents.
Police figures show noncitizens are responsible for one-third of crimes in Suhl, two-thirds of shoplifting incidents and more than half of aggravated assaults.
“Just this week, I caught three guys…trying to steal €400 worth of perfume,” said Thomas Wolf, manager of the Müller drugstore. who said he was attacked twice last year by foreign shoplifters. “Last time, it left me with a torn shirt and pants and a visit to the doctor,” he said.
National crime statistics indicate that noncitizens account for a disproportionate share of crime. Among the explanations offered by local police: poverty, joblessness and the young age of migrants. Local police said some migrants need money to repay smugglers or family members who funded their journey.
The influx of migrants has emerged as a big challenge for Germany’s schools.
“Our school has about 35% of non-native speakers,” said Alexander Dorst, director of the Otto Lilienthal Community School in Erfurt, Thuringia’s capital. Younger children who can’t speak German are easier to integrate than older ones, he said. “Politicians often say, ‘Sit them in there and it’ll be fine.’ It’s not…You can’t sit a kid who can’t speak next to one who can and hope he’ll somehow catch up. It’s hell for that kid.”
Students from more than 20 nations, including a large group of Arabic speakers and a sizable Ukrainian contingent, are now split into two groups. Those with poor German initially attend a “German as a second language” class in addition to classes that don’t require fluency, such as math and art.
While German-born children of migrants tend to fare well in school, the performance of those born outside Germany has worsened over time and is below that of foreign-born students in other rich countries, according to a 2024 report by the OECD.
Dorst said his school is trying to foster a sense of belonging, but that integration can work only if foreigners don’t reach a critical mass. With so many newer students, he said, many congregate along national lines, which occasionally leads to clustering in gangs and physical confrontations.
“We must be careful that these differences don’t turn into rifts,” he said.
Many families of newer arrivals have settled in low-rent parts of the city, including in a Communist-era housing project near the school called Rieth.
“Ten years ago, foreigners made up 9.5% of Rieth’s residents,” said Wassmann, the state lawmaker. “Today it’s 32%.” Erfurt is now one of the most segregated cities in Germany, he said.
Labor problem
The state of Thuringia expects to lose 40% of its workers to retirement in the next five years. If younger foreigners are to fund the pensions of future retirees, they will need to be working. That hasn’t been happening.
Germany’s income-support system entitles anyone unemployed for longer than a year—and any worker whose income is below a certain level—to a tax-free stipend. In addition, the state pays for rent, heating, medical bills, school supplies, daycare, even mortgage interest payments. A family with three children 14 and older can get €2,425 a month in cash payments alone.
All qualified refugees are eligible, although those awaiting an asylum ruling are entitled to less support. German authorities have said it can be easier for noncitizens to qualify than for citizens because the benefit is means-tested, and authorities often struggle to estimate assets abroad.
“The cushier the safety net, the more unattractive it becomes to take up work, especially here where we have a lot of jobs that pay the minimum wage,” said Steffi Ebert, head of a work placement agency in a rural district west of Suhl.
Germany sets high hurdles for those who want to work. Asylum seekers aren’t permitted to work for at least three months after arrival. Electricians and mechanics aren’t allowed to own their own business or hire employees until they complete a vocational course. Economists and politicians said Germany is slow in recognizing foreign qualifications for doctors and teachers.
Millions of migrants now depend on government support. In the rural district west of Suhl, 35% of the recipients of income support are noncitizens, compared with almost none a decade ago, Ebert said.
Nationwide, almost half of recipients are noncitizens. Only 18% of the more than one million Ukrainian refugees work and earn enough not to qualify for benefits, compared with 65% of them in the U.K. and 61% in Poland, according to government data compiled by Statista.
Economists agree that Germany’s growing migrant community could be a boon. Statistically, foreigners are more likely to own their own businesses. On Erfurt’s Johannesstrasse, boarded up stores have given way to a Syrian market, Arab barbershops and Asian grocers. Thuringia has become a logistics and transport hub that employs many migrant workers, many of them taking jobs that would otherwise go unfilled.
“The only reason Thuringia has stable employment is our success in bringing migrants into the labor market,” said Irena Michel, head of the state labor agency for central Thuringia.
For decades, Suhl was a left-wing stronghold. In 2018, it elected Knapp, a center-right politician, on a promise to fix immigration problems. In September, the nativist AfD party won the state election in Thuringia with more than 30% of the vote—its best ever showing there.
“When [former German Chancellor] Angela Merkel failed to close the borders after the migration crisis started, we warned about what would happen,” said Stefan Möller, the AfD’s No. 2 official in Thuringia. “And people now see that our warnings have come to pass.”
At the end of the summer, delegates from Germany’s federal government and mainstream opposition parties gathered at Chancellor Olaf Scholz’s office to discuss ways to curb the influx. The trigger was the arrest of a Syrian whose asylum request had been rejected and who was suspected of killing three people in an attack claimed by Islamic State.
Days later, Germany reintroduced border controls. Scholz, a center-left politician, has pledged to deport undocumented migrants “in a big way,” and recently reintroduced sanctions for welfare recipients who refuse to work.
Merz, the center-right CDU chairman who polls suggest could become Germany’s next chancellor after the February election, wants all asylum seekers who travel through another EU country on their way to Germany to be turned back.
