IMF: Refugees may hold key to Germany’s economic growth

Germany’s economy could improve if the country helps integrate refugees into the labour market, report says.

Refugee carpentry initiative in Berlin
Refugees work in a carpentry workshop, part of the Berlin Chamber of Trades refugee initiative 'Arrivo' in Berlin [Rainer Jensen/EPA]

Germany must accelerate structural reforms to boost growth potential by broadening the participation of refugees, women, and older workers in the labour market, the International Monetary Fund has said.

The IMF recommended that Germany implement several reform measures to help revitalise potential growth and enhance the authorities’ leadership at the European level in the area, a report released on Tuesday said.

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“Additional policies to integrate the current wave of refugees into the labour market, to broaden opportunities for full-time employment of women, and to extend working lives,” the report said.

“A sizable expansion in government spending this year will be partly financed by revenue gains from a buoyant labour market and growing domestic demand. 

“The new spending will go to social transfers, asylum-seeker and refugee assistance, and, to a smaller extent, public investment”.

Simon French, chief economist at Panmure Gordon & Co, told Al Jazeera that many people may not believe a lot of this data.

“I think the IMF report is contentious, but that is not the end of the story for the German government because what we saw earlier that the Austrian political situation is that the votership [the population] simply do not believe a lot of this data – that the broader economy benefits from migration.

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“It’s [the report] entirely consistent with most migration impact assessments across the developed world but selling them to a sceptical public, who only see the impact on their local service, local labour markets and their schools, is a very, very difficult thing to do, even for a government with a lot political capital,” French said.

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The IMF also praised Germany’s efforts to integrate refugees into its labour market: “The government has helpfully removed a number of restrictions to access to employment and training for asylum-seekers and persons with a temporary suspension of deportation”. 

Germany took in at least 1.1 million asylum seekers in 2015 – the largest influx since World War II. 

The head of the Federal Office for Migration and Refugees said on Monday that it still had to work through some 430,000 applications that are still pending.

Despite the high numbers of asylum applications, the number of asylum seekers arriving in Germany has dropped significantly since the start of the year.

One of the main reasons behind the decline is the closure of the Balkan migrant route in early March, which left thousands of refugees stranded in Greece.

Source: Al Jazeera, News Agencies