Meet Carmen Torres, 31. When the Spanish economy collapsed in 2011, her prospects looked dim. That’s when her mother spotted an ad from Audi for 40 trainee positions at the German carmaker’s headquarters in Ingolstadt. Torres snagged a spot and was off to Bavaria. Six years and a German engineering degree later, she organizes a production line at Audi’s main Bavarian plant.
Or meet Oded Shoham from Israel. In 2014, he came to Berlin for his MBA. Last year, together with an Israeli friend he persuaded to join him in Berlin, he launched Evania, a video advertising company that already has 20 employees. Shoham, 38, also just started a family in the German capital. “I’m learning German now and plan to stay,” he says. Shoham is among an estimated 10,000 Israelis who’ve made Berlin their home.
Finally, meet Balazs Szabo, a Hungarian-born entrepreneur. In London, he founded Konetik, a start-up that manages car fleets. But after Britain’s vote last June to secede from the European Union, he moved the entire business to Germany. Like many CEOs in Britain, Szabo worries that moving workers across borders could become a massive headache once Brexit is completed. Better to be safe now than sorry later.
Torres, Shoham and Szabo are among more than 10 million arrivals since 2005. They’ve helped make Germany the western world’s No. 2 destination for immigrants after the United States. Astonishingly for a country with only one-quarter of America’s population, Germany even soared past the US in the number of new arrivals in each of the past four years.
Some German companies even report an uptick in the number of US citizens from America’s liberal coasts applying for work.
True, the massive wave of refugees that arrived in late 2015 still dominates both the headlines as well as the most recent set of numbers. But the focus on refugees obscures a powerful, long-term trend: Thanks to a combination of a booming economy and much more liberal immigration rules than in the past, Germany is finally beginning to win the war for the world’s best and brightest. During the euro-zone debt crisis, waves of educated Greeks, Spaniards and Italians left their countries to find opportunities up north. Smart young Russians have joined large Russian communities in German cities. Increasingly, Asia’s elites are sending their kids to German engineering schools. Diploma in hand, many find work in German manufacturing.
The new Germans are arriving in droves. London bankers are heading for Frankfurt as major banks and insurance companies shift staff, worried about losing access to EU financial markets after Brexit. Goldman Sachs, Credit Suisse and UBS are among more than 20 banks that have either shifted staff to Frankfurt already, or are planning for the contingency. Szabo’s Konetic isn’t the only UK start-up that has already relocated to a German tech hub like Berlin and Munich. In Britain now, there are thousands of foreign workers wondering how much longer they’ll be welcome, and who are already looking for Plan B. Many of them will follow Szabo and his team.
A potentially even bigger shift in global immigration patterns is being set off in Washington. America, as most of us know by now, has profited from super-smart newcomers like no other nation. Foreign-born entrepreneurs (think Google founder Sergey Brin or Tesla CEO Elon Musk) juice up the economy, while immigrant researchers working at MIT or Stanford help maintain the country’s scientific edge. Now, a nationalist president in the White House has plans to shut out Muslims, build a Mexican border wall and cut back on visas for workers. Already, Germany’s official network of culture centers, the Goethe Institute, reports that its language courses in Mexico City are packed, as middle-class Mexicans looking for an international career are redirecting their ambitions. Like other future immigrants with skills on offer, they’ll think twice about whether the US under Donald Trump is still the country of their dreams. Some German companies, like the online language-learning service Babble, even report an uptick in the number of US citizens from America’s liberal coasts applying for work since the November election.
Today, thanks to a series of immigration policy reforms, German companies have never had better access to the skilled workers upon which a 21st-century economy depends. But it wasn’t always like this. Only a decade or two ago, the country was losing the global talent wars. Due to ancient laws curtailing immigration and restricting citizenship to those with German bloodlines, immigrating to Germany usually meant being a so-called “guest worker” – unskilled laborers recruited in Greece or Anatolia in the 1950s and 1960s. Skilled migrants gave Germany a wide berth and headed straight to the US, Canada or Australia. The only exceptions were citizens from other EU countries making use of their right to settle anywhere within the bloc. Eastern European EU citizens remained barred.
Fast forward to the global financial crisis, which launched Germany’s current immigration boom. With southern European economies in freefall, waves of young Greeks, Spaniards and Italians suddenly packed up for a better life up north, where the German economy was one of the few to emerge unscathed. German companies, who’d long struggled to find enough engineers and other workers in a shrinking pool of German graduates, began recruiting systematically. Often, they partnered with Goethe Institutes in Athens or Barcelona, which gave crash courses in German to job applicants. Chancellor Angela Merkel, during a state visit to Madrid at the height of the crisis, proclaimed publicly that young Spaniards were welcome to work in her country. Carmen Torres was one of 100,000 of her compatriots who’ve heeded Merkel’s call since then, in addition to 175,000 Italians and 90,000 Greeks.
Meanwhile, Berlin lawmakers have been doing their homework. Germany used to make it fiendishly difficult for non-EU citizens to come for work. Now, several immigration reforms later, German companies are allowed to recruit anywhere in the world for any job requiring a university degree – with no quotas or upper limits. What was once the biggest stumbling block for companies – a lengthy investigation by the labor bureaucracy to find out if any German could do the job – has been completely abolished for a broad swathe of sectors, including nursing and elder care as well as engineering and IT. Even tourists can come to look for work as long as they have a technical or other college degree. Try that on a tourist visa in the US or Britain, and you could find yourself deported.
As a result of these and other reforms, German worker immigration rules are now among the most liberal in the world. “There have been so many improvements that we’ve lost track,” says Carmen Barsan, a labor market expert with the German Employers’ Federation (BDA). The OECD now ranks Germany as one of the countries with the easiest access for foreign workers. “Most people still don’t know this,” Barsan says. “We really should market ourselves better.”
With a 71 percent visa approval rate for foreign tech workers, Berlin outranks Silicon Valley among global start-up hubs, says Startup Genome, a San Francisco consultancy. Berlin Partner, the German capital’s official business relocation agency, even offers foreign tech companies visa decisions for their workers in as little as five days. That’s one reason why Berlin is now second only to Silicon Valley in the share of technology start-ups launched by immigrants, just ahead of London and far ahead of Paris (see chart). Another reason is the wave of talent from all over the world, turning Berlin into one of the world’s most dynamic start-up hubs, vying with London for the top spot in Europe.
Foreign students, too, have been flocking into the country. Many are attracted by free university tuition and seem undeterred by the unfamiliar language. Their numbers are up 32 percent in just a decade, to 340,000 last year. The largest number is coming from China and India, where a German engineering or IT degree virtually guarantees a job. For the first time this year, Germany outranked Britain as the most attractive country in Europe for international students, according to the education consultancy Study.EU, which looked at quality, affordability, lifestyle and other factors. Study.EU’s Gerrit Blöss expects US and British universities to lose some of their allure as uncertainty mounts over future visa policies, and after media reports of anti-foreigner attacks in both countries. If that sends more foreign students to Germany, that can only be good news for German companies with specialist shortages. Here, too, a new rule helps: Not that long ago, non-EU students were kicked out right after Germany had finished educating them for free. Now, graduates can keep their visas for another 18 months – enough time to look for a job with a German company.
The effect has been a steady internationalization of the German workforce. Audi now has some 100 nationalities working at its domestic plants. Spokeswoman Michaela Schnellhardt says the share of non-Germans on the payroll has been steadily rising. BMW has also gone abroad to recruit, especially for the specialists it needs in artificial intelligence, machine learning, big data and autonomous driving. Partnerships with universities in the US and Singapore, the carmaker says, are focused as much on research as they are on recruiting IT specialists to bring back to Munich.
That’s not to say that Germany has solved all its problems. Getting foreign qualifications recognized — for nurses, teachers or physical therapists — can be next to impossible, and German cities are full of Iranian and Iraqi medical doctors driving cabs. The language remains a barrier, even if its popularity is rising abroad (India, for example, has plans to train 10,000 new German teachers). Companies complain that immigration offices are so swamped dealing with refugees that their work visas aren’t getting processed. Perhaps the biggest remaining obstacle, however, is the reluctance of many German companies to recruit abroad. In its study, the OECD was astonished that so few German companies were making use of Germany’s new openness.
Part of the reason is that many companies – especially smaller and mid-sized ones – don’t yet realize the laws have been changed. Some are still reluctant to deal with non-German workers. “Many of the people leaving Britain are now going to Holland,” says Kerstin Hattar, recruiting director at Manpower. “They can speak English there, and Dutch companies are more flexible.” Even among the new arrivals, not everyone is happy. Julian Baladurage, co-founder of MBJ, a cloud services start-up he moved to Berlin after the Brexit vote, is taking most of his staff back to London. “We’d need three full-time accountants just to deal with the bureaucracy here,” he says. To hedge against the risk of London turning sour, he’ll outsource more work and keep a few people in Berlin.
As attractive as Germany has become for immigrants, the competition for the world’s best and brightest remains fierce. “The war for talent has only begun,” Manpower’s Ms. Hattar says. But for the first time ever, Germany stands a chance at winning.
This article first appeared in the Summer 2017 issue of Handelsblatt Global Magazine. Stefan Theil is the magazine’s executive editor. Tal Rimon and Christopher Cermak from Handelsblatt Global contributed to this report. To reach the author: email@example.com.