Welfare for Immigrants

Curbing 'Social Benefits Tourism'

People wait outside a job center in Berlin. Politicians want to reduce the number of foreigners collecting welfare benefits. Credit: DPA
People wait outside a job center in Berlin. Politicians want to reduce the number of foreigners collecting welfare benefits.
  • Why it matters

    Why it matters

    Lawmakers are concerned by a perceived increase in “social benefits tourists,” or foreigners who come to Germany solely to collect benefits.

  • Facts

    Facts

    • The Federal Social Court ruled in December 2015 that after living in Germany for at least six months, penniless E.U. foreigners are entitled to some form of welfare.
    • While spending for German recipients declined by about 11 percent since 2007, it increased by about 2 percent in the immigrant population.
    • Berlin spent €6.7 billion on welfare benefits for non-E.U. citizens in 2013.
  • Audio

    Audio

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When it comes to what is known as “social benefits tourism,” London and Berlin are taking a stand.

British Prime Minister David Cameron argues that only immigrants who have worked in Great Britain for at least four years should be entitled to social benefits.

And while German Chancellor Angela Merkel doesn’t want to go that far, she too is pushing for a change in the law so that immigrants don’t become too comfortable collecting social benefits.

In September 2015, more than 422,000 registered recipients of Germany’s Hartz IV welfare benefits were from non-European Union countries, a 17-percent increase over the previous year. The increase is a consequence of continued strong immigration, especially from Eastern European countries that have joined the European Union more recently.

But the problem may not be nearly as bad as politicians may think.

“There is no reason to call this social benefits tourism,” said Herbert Brücker of the Institute for Employment Research. That’s because the number of people with jobs among the immigrants has also risen sharply – by 22 percent among Eastern Europeans alone.

According to experts there is still no evidence of deliberate social benefits tourism.

Still, Romanian and Bulgarian immigrants are of particular concern. While the rate of welfare benefit recipients among foreign immigrants has remained virtually constant at 16.1 percent, it increased by more than 3 percentage points to 17.2 percent among citizens of these countries within a year. The statistic counted about 62,000 Bulgarians in September, an increase of more than 50 percent over the previous year.

 

Welfare Benefits for EU Citizens in Germany-01

 

About a third of the increase applies to workers who earn so little that they have to supplement their income, said Mr. Brücker. Another third of the new benefit recipients are children or other individuals unable to work. And the last third consists of Bulgarians who have been unable to find a job.

The costs of welfare benefits for non-E.U. citizens are enormous. The government spent €6.7 billion on the program in 2013. While spending for German recipients declined by about 11 percent since 2007, it increased by about 2 percent in the immigrant population. Benefits paid to citizens from Bulgaria have increased more than fivefold.

Cases like that of a native Bosnian woman, who had worked for only a short time and then sued for benefits, had fueled suspicions of a growing wave of “social benefits tourism.”

However, the European Court of Justice has already curbed the largess of European social welfare systems. It ruled that Germany is not in violation of E.U. law when it denies benefits to foreigners who only enter the country to collect social benefits or look for work.

Still, officials in Berlin have become increasingly concerned since the Federal Social Court ruled in December 2015 that after living in Germany for at least six months, penniless E.U. foreigners are entitled to some form of welfare, though not to standard Hartz IV benefits.

“It is important that federal lawmakers address this issue soon,” said the managing director of the Association of German Counties, Hans-Günter Henneke. According to Mr. Henneke, the Federal Social Court has undermined the principle that individuals without the right of residence cannot claim social benefits. Counties and independent cities face €800 million ($873 million) a year in additional costs for an estimated 130,000 beneficiaries, he said.

Labor Minister Andrea Nahles, a member of the center-left Social Democratic Party, has announced a new law to address the problem. She can expect support from the chancellor.

Hamburg Mayor Olaf Scholz, also an SPD member, has proposed that foreigners from other E.U. counties must have lived and worked in Germany for at least one year before being entitled to social benefits.

No E.U. country is obligated to provide ongoing social benefits to immigrants unwilling to work. If a foreigner from another E.U. country has not found work after six months of residency, he or she can be deported. The British are especially strict in enforcing this rule.

But it is also true that in Italy, Ireland and Great Britain, employment rates are higher for immigrants than for domestic residents, as the E.U. agency Eurofund points out in a study on the “Social Dimension of Mobility Within the E.U.”

On the whole, however, immigrants from the ten Eastern European accession countries collect more unemployment benefits and assistance per capita than the citizens of the host country.

But according to experts, there is still no evidence of deliberate social benefits tourism.

They argue that immigrants always have bigger problems in searching for jobs, partly because of language barriers, and often work in the low-wage sector. This is the only reason they are more heavily dependent on government assistance.

 

Ruth Berschens heads Handelsblatt’s Brussels office, leading coverage of European policy. Donata Riedel covers economic policy. Frank Specht is based at Handelsblatt’s Berlin bureau, where he focuses on the German labor market and trade unions. To contact the authors: berschens@handelsblatt.com; riedel@handelsblatt.com; specht@handelsblatt.com

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