It’s not the kind of place that draws hoards of German job seekers. The northern port city of Bremerhaven has topped the country’s long-term unemployment charts for years. Oddly though, the city is drawing hundreds of workers from other EU states.
There’s a strange reason for this. A German labor law allows those earning below the minimum wage to “top up” their earnings with social welfare payments. Thanks to the freedom of movement regulations in the European Union, all EU member states are eligible for the top up.
In Bremerhaven, this rule is being exploited, driving authorities and the regional media into a frenzy. Locals have gotten upset over the past year over what they describe as the “Bremerhaven social welfare fraud.”
Statistics from Germany's employment agency show that the number of long-term unemployed collecting benefits fell from 5.28 million to 4.41 million in the last decade.
Trouble started when two supposedly charitable organizations lured hundreds of Bulgarians to the city, put them up in cheap housing, gave them fake job contracts and told them to report to the Bremerhaven’s employment agency. The employment and social welfare agencies did not intervene and accusations since have suggested that at least one official was involved.
The Bulgarians were earning less than the minimum wage and so received supplementary welfare payments, earning them the local nickname “topper-uppers.” They received €6 million in supplements but there are suspicions that some of that ended up with the organizations that initially brought the Bulgarians to Bremerhaven.
While deceit and corruption were involved in Bremerhaven, it seems that the German rules, which are thought to be expanding the country’s increasingly controversial low-wage sector, are also attracting people from poorer neighboring countries.
Benjamin Werner, a social scientist from Bremen, warns that in the long term, EU citizens migrating to escape poverty will be more of a burden on Germany than other Western European countries which don’t offer the same support for low earners.
Statistics from Germany’s employment agency show that the number of long-term unemployed collecting benefits fell from 5.28 million to 4.41 million in the last decade. However, the number of non-German beneficiaries collecting those benefits rose from 980,000 to 1.49 million; and the proportion of EU citizens among these beneficiaries increased in that time from 197,000 to 332,000.
The difference is even higher among the “topper-uppers” – employed individuals entitled to support from the state. The total number has remained constant over the last ten years, and recently declined slightly to 1.16 million. However, the number of people from abroad in this category increased from 235,000 to 364,000. And the number of EU citizens topping up grew even more, from 51,000 to 129,000 people, a 153-percent increase.
“The idea of living as an unemployed beneficiary is not a reason for internal European migration.”
Bulgarians make up a fair proportion of that increase, rising in the last decade from a few hundred to more than 25,000. The “topper uppers” also include people from Poland (just under 25,000), Italy (20,000), Romania (17,000) and Greece (13,000).
“Migrants from eastern Europe want to work in western Europe,” Mr. Werner confirme. “And the second-tier labor market in Germany, where you get the chance to feather the nest with social welfare payments, offers them a chance to do that. In Germany we are seeing a rising number of low-income earners from eastern European countries who are getting supplementary welfare benefits.”
Outside the specific issue of topping up, Mr. Werner and researchers at the University of Copenhagen, say across the region, they don’t see the kind of welfare-state magnetism that some were concerned about when freedom of European movement was introduced. The number of EU citizens drawing regular benefits – not the ones specifically supplementing low-income work – has not increased significantly. There has been an increase in EU citizens working in Germany, but their contributions to the tax system balance out any extra social welfare payouts.
“The idea of living as an unemployed beneficiary is not a reason for internal European migration,” Mr. Werner concludes. “It is just the low-income sector. You can see this by comparing the situation to Denmark, a country with a generous social welfare system but no low-income sector.”
This article first appeared in the business weekly WirtschaftsWoche. To contact the author: Ferdinand.Knauss@wiwo.de