Migrants are poised to kickstart the solution for Germany’s chronic workforce problem

Gloomy outlook.
Gloomy outlook.
Image: Reuters/Philippe Wojazer
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The migrants, mainly refugees, who have come to Germany since the beginning of 2015 will take time to integrate into society. And not all of them will. But eventually they could help solve the country’s problems of a shrinking workforce due to a declining population.

The migrant crisis has added hundreds of thousands of people to European countries’ populations in under two years. Germany alone had 1.2 million asylum applications from the beginning of 2015 until the end of May 2017, 1.5% of the German population. Across 28 European Union countries, 2.6 million people filed for asylum in that period.

Before the 2015 refugee crisis, which was classed as worse than the one following World War II, Germany’s population was predicted to drop consistently for decades. That would pose a problem because fewer people would be joining the workforce, paying taxes, and helping pay for pensions.

It’s doubtful that the refugee influx could help with Germany’s demographic problem in the long term; the country’s birthrate is just too low and it has a large baby-boom population which will die off. But at least for the short term, recent revisions to population numbers and birth rates show that the unprecedented refugee crisis is making a tangible impact.

As a new report from HSBC titled “EU Migrant Crisis: A new phase brings new challenges” points out, the UN now predicts that the German population will rise to 83 million in 2020, from around 81 million currently, after previously being estimated to drop to 80 million. Germany’s fertility rate rose to a 33-year high in 2015, thanks in large part to immigrants.

Of course, those people still need to be integrated into the workforce. The headline figures aren’t promising: Only 9% of migrants who arrived in 2015 have found a job so far, according to a German Institute for Employment Research (IAB) survey, cited by HSBC.

But HSBC’s analysts argue that most of these migrants are currently in training programs and Germany’s education system is well-equipped to train people on both academic and vocational paths. For the latter it has apprenticeship systems that train people in bulk for jobs the economy needs. So there should soon be a glut of workers ready to help Germany.

“The litmus test” will be whether those people are ready to get to work when the training programs come to an end, warns the report. However, it says, German unemployment is so low, at 3.9%, that the country can withstand a rise in unemployment if not all the new trainees can immediately find work.