Wasted Potential

Minimum Wage Thwarts Refugee Jobs

Flüchtlinge stehen am 26.10.2015 vor dem Landesamt für Gesundheit und Soziales (LaGeSo) in Berlin. In dem Amt in Berlins Turmstraße können Flüchtlinge sich Registrieren lassen oder erste Unterstützungsleistungen erhalten. Foto: Michael Kappeler/dpa +++(c) dpa - Bildfunk+++
Refugees queue in October 2015 at the LaGeSo registration center in Berlin.
  • Why it matters

    Why it matters

    Germany might have to change employment policies and laws to assimilate asylum-seekers into the labor market.

  • Facts

    Facts

    • The number of young people entering the trades in Germany declined by 25 percent over the past 10 years and continues to drop.
    • The influx of migrants are seen by some as a welcome boost to German businesses, which are having trouble finding employees to fill vacant positions – but it’s estimated that less than a tenth of migrants could be directly placed into jobs.
    • In September, conservatives including deputy finance minister Jens Spahn, a senior figure in Chancellor Angela Merkel’s Christian Democratic Union (CDU), called for exceptions to the country’s new minimum wage law, saying that people with few-to-no qualifications could struggle to find jobs.
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  • Audio

    Audio

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The influx of refugees into Germany continues, and the political establishment apparently isn’t able to manage the situation.

The law for speeding up asylum-request processing won’t be able to correct years of administrative lapses. And while attempts to combat the causes of migration are justified, they remain hopeless. It won’t be possible to quickly or easily remedy the failures of German policy and its isolation in Europe.

The readiness for change simply doesn’t correspond to the magnitude of the challenge. That would require a demonstration of legislative courage to loosen regulations and experiment with alternatives.

At the very least, the waiting time to begin working after receiving a residence permit is being reduced from four years to 15 months – for work through a temporary employment agency. In professions with worker shortages, that waiting time is being reduced down to three months. But even this waiting period is just as impractical as the so-called “priority reviews” of 15 months. 

 

Almost half the refugees who arrived during the first half of the year have no professional qualifications. At the same time, 50 percent of them are under age 35 – so there is reason to be positive.

The biggest challenge is to integrate refugees into Germany. The basic integration systems are – assuming linguistic competency – education and the labor market. Almost half the refugees who arrived during the first half of the year have no professional qualifications. At the same time, 50 percent of them are under age 35, and nearly 30 percent are minors – so there is reason to be positive. A majority of the refugees are just beginning on the path to professional qualifications. But, at least in the short term, there will be a drastic increase in offers of low-skilled work.

Economically, if the lower wage limit remains at a legally determined level then the consequence is clear: Unemployment will rise in this low-qualification area of the labor market. Which brings us back to whether or not the minimum-wage law works in the face of this challenge.

Understandably, politicians want to keep the peace and would rather avoid bringing up this controversial issue. These anxieties about social harmony should be taken seriously. But the objections are less convincing in view of the major pressure put on labor-market policy by the influx of refugees. If nothing is changed, the minimum-wage law will keep many refugees from finding a first job.

But it’s not a matter of lowering the minimum wage in general. That would be necessary if one were forced to conclude that it won’t be possible to provide the refugees with qualifications. Since the refugees are predominantly young, there’s a possibility that they don’t have to remain at a level of basic education and minimal qualifications. 

An interpretation of the legal provisions regarding the minimum wage allows room for experimentation. Professionally oriented training that’s open to asylum seekers after three months is subject to the minimum wage if it lasts longer than three months and the trainee is older than 18. These constraints should be lifted, analogous to the existing cancellation of the minimum wage for job-entry qualifications and measures preparing for professional training.

Likewise, under the regulation for the long-term unemployed, who are entitled to the statutory minimum wage only after seven months, one could open a route for people with asylum status or with exceptional leave to remain, so that they could receive the minimum wage only after 18 or 24 months. If anyone rejects this for ideological reasons, then they need to think about increasing the funding for Hartz IV welfare benefits or providing money for job-creation programs.

The integration of refugees will require special effort one way or another. This isn’t a walk in the park and stubbornness will only lead to a situation that will be a lasting burden – and not just economically. 

 

To contact the author: gastautor@handelsblatt.com.

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