“Yes, we can,” a determined German Chancellor Angela Merkel said nearly one year ago when speaking of how Germany would embrace “refugees” from the Middle East. Since that point, there have been some issues to overcome relative to Syrian refugees entering Germany, not the least of which are the terrified migrants who have come in search of a better land and/or criminal behavior. And now not only is there talk of a 10-day emergency stock pile, re-introduction of a mandatory draft, but even warnings of attempts by Wahhabis to infiltrate German armed services.
But could it be worse? One of Germany’s biggest banks says ja!
A recent Commerzbank report puts what has become a refugee crisis in perspective, looking at it from a cold, hard math standpoint and doesn’t consider all the costs, but draws the conclusion that economically negative interest rates are economically more damaging.
Welcome to the big German melting pot
Since Chancellor Merkel made her proclamation that refugees were to be welcomed with open arms, nearly 960,000 applications for asylum have been received, according to Germany’s Federal Office for Migration and Refugees (BAMF). That number is expected to continue to swell as a shaky agreement with Turkey keeps new migrants at bay while another 665,000 in extended family members risking life and limb for a better life.
That means nearly one in eighty people walking the streets will be from a war-ravaged region that in has, at best, a checkered history in accepting democratic principles of pluralism, equal rights for women and accepting the concept of freedom of speech. Assimilating this group into one big happy melting pot is bound to be a challenge as previous experiences of Middle Eastern refugees throughout Europe can attest.
Solving what is an increasingly difficult problem is best handled by not ignoring the issues.
More refugees coming into Germany are illiterate than those with high school degrees
Commerzbank report authors note that it is not just cultural assimilation that is at issue, but also economic integration. With the German workforce declining in number and the general population aging, an influx of new workers would be welcome; one would think.
The migrants speak a different language and will likely have difficulty finding work among one of the highest educated work force in the world. Estimates from Turkish authorities and UNESCO cited in the report point to more illiterate refugees entering Germany than those with a high school or separately those with a university degree.
This could be a significant problem, the Bank report, in a defiant moment of politically incorrect analysis, pointed out:
We have pointed out repeatedly in recent months that there are only limited employment opportunities for non-European refugees. For one thing, there is the language problem. There is also a lack of other qualifications, not least of all the fact that a large percentage of refugees (40%+) have had no schooling involving sufficient basic education. It will undoubtedly prove difficult to place most asylum seekers in any job. Consequently, most official bodies, including the Labour Market and Job Research Institute of the Federal Labour Agency (IAB), are predicting that unemployment will start to rise over the course of this year even though the number of employed is still increasing strongly.
Commerzbank estimates the cost of refugees regarding government healthcare and housing
What is likely to happen is many of these refugees are going to end up receiving significant government benefits, the report notes. Commerzbank estimates the monthly government cost per refugee is going to be nearly €980 a month, or roughly $1,096, which includes the cost of government health insurance and housing accommodation only. Based on likely estimates, these expenses translate into a corresponding government expenditure to 0.2% of GDP.
Commerzbank says this cost is likely to be offset by potential increases in GDP due to increased government spending. There logic is that nearly for every euro the government spends on the Syrian refugees is roughly a euro in new GDP.
“Multiplied by the average number of refugees in 2015 (525,000), this gives an estimated €6 1/2 billion for net state expenditure, corresponding to 0.2% of GDP. In purely mathematical terms, this boosted growth last year by 0.2 percentage points,” but estimates could be off by as much as 1/3 due to other technical factors, the report said. Separate studies have questioned the notion that government spending on social services such as welfare result in an equal amount of GDP growth, but the report didn’t address this issue.
The bigger threat to the economy is negative interest rates
In the end, the spending and relative growth from the migration are too small to consider, the report contends. “Boosts to the economy on this scale are minor,” pointing to central bank policy and negative interest rates doing more harm. “We still estimate that the impulse from, which are far too low for Germany, is far greater than that from additional expenditure on refugees.”
There are a few key points the report didn’t consider. First, to successfully integrate the new migrants into society, there is likely a requirement for at least remedial education and job training, which was not factored into the bank’s government spending numbers.
Another point missing from the calculation is the very real fact that those who don’t assimilate are turning to crime. You might not know this from reading local media and bank analysts seem to focus solely on the bottom line, however. As the New York Times pointed out in a January 15, 2016, Op-Ed, the country has been less than honest about dealing with the real problems associated with the migrant inflow. Ignoring the issue – and in fact covering up news and real crime statistics that has been documented – is in part behind growing government and establishment distrust. Commerzbank, for its part, didn’t touch the hot potato of the cost of increased crime in society.
Many of the lawbreakers who turn to crime once they reach German soil – the country now has 70,000 are unaccompanied minors living in its midst – are not deported. This social problem, which is of significant concern to most citizens and even refugees, has consequences. Most immediately it taints society at large to the vast majority of refugees who are struggling to escape violence and are willing to work hard to integrate into society. But more pointedly, by ignoring the real problems – and in fact censorship of news about the issues – is only increasing not pacifying a growing rage in the region. Merkel might feel at the next election if the ruling elite is not careful. And in the long run one can only wonder which issue is more likely to cause the powwder keg to erupt…