German Industry Leader: Uncontrolled Immigration Is Not the Answer

Refugees in Germany
Migrants are escorted by German police to a registration centre, after crossing the Austrian-German border in Wegscheid near Passau, Germany, October 20. Michael Dalder/Reuters

I am an unequivocal supporter of the concept of a united Europe, and I appreciate the freedom of labor and persons that comes with it. I am against fences and want nothing to do with the right leaning rabble rousers. Nevertheless, the uncontrolled influx of refugees is endangering all of these freedoms which have been achieved. More and more countries in Europe are closing their borders. This is endangering prosperity in Europe.

To explicitly protect this prosperity, the private industry and especially the industrial sector has to be extremely careful in being open and honest with the public about the economic costs that this uncontrolled stream of refugees will have. I believe that the repeatedly stated claims of reputable institutes and economic experts in the media that refugees can be compared to a small economic stimulus package and that they will solve the demographic problems of our future, are naive.

Even if we are currently in the fortunate circumstances to finance the cost of the refugees out of our current fiscal budget surplus, several alternative appropriations of these funds could be conceivable. An increase in government spending on education and infrastructure would have approximately the same stimulating effect on the economy while increasing the long term productivity in Germany at the same time, thus leading to a more permanent growth impact.

I consider it a mistake that we are currently neglecting the risks associated with the uncontrollably high stream of refugees and instead only pointing out the opportunities rather one-sidedly. Many labor market experts are right in their assessment that the integration of many refugees into the German labor market will not be successful in the short term, due to their low productivity level and the currently prevailing minimum wage. As it is unlikely that the politicians are willing to renegotiate the minimum wage level, it is to be expected that the projected positive impact of the current wave of refugees onto the employment level will be confined to a very narrow scope.

Based on all this I cannot comprehend the undifferentiated euphoria about the uncontrolled stream of refugees pouring into the country, which is currently prevalent in parts of the German economy.

There are also cautionary voices warning of the alleged positive impact of immigration on the social security system. It is plausible, that in the short term, the refugees will be a burden on the social security system rather than strengthen it. In light of the lower qualification level of the current wave of refugees, a high level of social security contribution also cannot be expected in the medium term. Only people that have paid into the pension fund for a sufficient period of time can relieve it.

Furthermore it is to be expected that an increase in the number of refugees who receive a permanent right of residence in Germany will lead to an increase in the unemployment rate. This in turn will lead to a significant increase in spending on unemployment insurance. On this account it is hard to comprehend why the increase in refugees provides a solution of our country's demographic challenges.

It is important to me that the risks are addressed as well as the opportunities. Even for refugees that have received vocational training, sometimes an adjustment qualification will be necessary to integrate them into the German labor market, despite existing technical qualifications.

Therefore it would be an illusion to assume that it will be possible to swiftly transfer all of the currently arriving refugees into a state of employment. Even with extensive requalification measures, many refugees will be employed far below their actual professional qualification levels. In addition, the nationwide statutory minimum wage will hamper the attempts to enter the labor market, as it does for other low qualified wage earners.

In a high-wage country such as Germany we have to first and foremost think about increased productivity, in the interests of competitiveness and in respect to closing the gap for high skilled labor and supporting the solution of the demographic challenges we face. This is only possible with an immigration act, as it already exists in many other countries, and not with uncontrolled immigration.

Michael Knipper is the head of the German Construction Industry Federation.