When one thinks of Germany, poverty doesn’t usually come to mind. But there are indications that poverty in Germany is a looming threat for the country of over 80 million. The influx of migrants in the past couple of years may provide a solution for the country’s low-wage labor market and the aging population.
Germany’s Economic and Social Problems are Manifold
In May 2016, the country’s Federal Employment Agency reported that one in seven children under the age of 15 were living on government long-term unemployment benefits in 2015. In some states, like Berlin and Bremen, the figure was one in three. The total number stood at 1.54 million and represented an increase of 30,000 compared with 2014.
Sabine Zimmermann, a Left Party member of the German parliament, recently argued that the issue is systemic. She also said that it lies with the country’s slack labor market. Germany’s labor market offers few jobs and low wages.
Similarly, the Bertelsmann Foundation, the largest private foundation in Germany, published a study in October 2015 which revealed that 19.4% of Germans under the age of 18 are at risk for poverty and social exclusion. This is the case because even though the country’s youth unemployment rate, at 7.7%, is the lowest in Europe, 40% of young people toil at low-wage service industry jobs.
Daniel Schraad-Tischler, one of the co-authors of the study, wrote that the current state of the German labor market has serious implications for the future of the welfare state. The government, he concluded, needs to create opportunities for young people to move to higher-paying professions.
Remove Employment Restrictions for Foreign-Born Citizens
Rather than being a burden on German society, migrants may encourage German businesses to invest at home and create jobs. Schraad-Tischler is not the only one pointing to migrants as a measure to address widespread poverty in Germany.
Christian Dürr, a German politician belonging to the center-right Free Democratic Party, wrote in a Huffington Post article that migrants will help bridge Germany’s sustainability gap.
This concept measures the amount of money needed to sustain future payments promised by the government. In 2013, Germany’s was 237% of its GDP, which translates to nearly 6.5 billion euros.
The Sustainability Gap is a Result of Changing Demographics
Germany’s population is aging at the same time as it is shrinking. This means that government expenditures on health care and pensions are on the rise. But fewer and fewer people are putting money into the system.
Eventually, this would force the government to divert money from education and infrastructure in order to finance this deficit. As a result, many people would fall into poverty due to lack of future opportunities.
With the help of migration, however, the gap can be reduced to 217%, according to research that Dürr cited.
It is true that the gains made from migration will be modest. In addition, the government needs to pass a few necessary laws. It is also true that migration alone cannot resolve the country’s economic problems. Migrants, however, can help slow the advance of poverty in Germany by easing demographic pressures and catering to labor market demands.
– Philip Katz