Immigration Nation

Germany's Anti-Aging Remedy

  • Why it matters

    Why it matters

    Social spending in Germany has reached record levels under German Chancellor Angela Merkel and is set to top €1 trillion in 2021, but the country can afford it, thanks to massive immigration.

  • Facts

    Facts

    • Around 1.5 million men and 1.1 million women have registered for state health insurance since 2013.
    • The number of people paying into old age pension holding foreign passports has raised by 1.7 million, or about 53 percent, between 2008 and 2015.
    • In 2016, benefits paid per insured were lower than expected and welfare state revenues increased by 5.6 percent per insured, the most it has in decades.
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    Audio

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Getting carded. Source: DPA/Ralf Hirschberger

Germany’s population problem has given politicians and economists plenty of gray hairs. But instead of German women having more babies, society has received a youthful injection thanks to immigration. 

According to new federal statistics, the average age of those covered by state health insurance is no longer increasing. A weight has been lifted off the welfare state – there is even a chance that its coffers might start to fill again.

Since 2013, 1.5 million men and 1.1 million women have registered for state health insurance, according to the federal association responsible. Most are under 30 years old, and the system is making a healthy profit as premium contributions tend to outstrip claims.

The companies are also profiting from immigrants – and Germany saw numbers increase significantly after refugees fled war and poverty in the Middle East and North Africa. Immigrants claim much less on their health insurance than Germans across all age groups, even older people who on average cost the state 40 percent less than Germans do. “It’s primarily the healthy ones who come here,” said Doris Pfeiffer, who heads the association of Germany’s 113 health insurance agencies.

Without young immigrants, the demographic of old age pension contributors would be far older. The number of people who hold foreign passports and pay into the system increased by 1.7 million, or 53 percent, between 2008 and 2015.

26 p07 Saving Grace-01

The number of citizens from European Union countries outside Germany who are now paying into the system has doubled from one to two million. Dirk von der Heide of the Federal Pension Service said the expansion of freedom of movement in the EU between 2011 and 2014 has “made working in Germany easy for many EU citizens.”

Citizens from Greece, Italy, Portugal and Spain – countries tagged with the “economic crisis” label in recent years – came in droves, especially southern European university graduates unable to find work at home. The number of people “actively insured without pension coverage” from Portugal has tripled to 166,000, while the number of Greeks rose from from 113,000 to 370,000 and the number of Italian people increased from 240,000 to 900,000.

These numbers are upending all financial forecasts for statutory health plans. Almost one year ago, experts warned of the rapid rise of additional premiums, particularly in the wake of costly new ministry expenditures.

But in 2016, benefits paid per insured person were 3.1 percent lower than expected. Welfare state revenues increased by 5.6 percent per person, the most in decades. If the trend continues this year, Ms. Pfeiffer of the federal health insurance association forecast there will be a €500 million ($570 million) surplus for funding.

It is excellent and timely news for Germany’s governing grand coalition, made up of Christian Democrats and Social Democrats.

“In the end, it makes for lower pension contributions and higher pensions for all,” CDU pension expert Peter Weiss told Handelsblatt. “I wish that would be moved more to the forefront in the current debate about refugees and immigration.”

“Immigration enriches our country not only culturally, but also tangibly by strengthening our social security system,” echoed SPD health expert Hilde Mattheis. “The AfD and other populists should stick that under a magnifying glass if they want to further criticize refugees and immigrants in Germany.”

But while the welfare state is stronger, the burden has been shifted to the Federal Employment Agency. While 5.5 percent of Germans citizens are unemployed, the proportion is higher with Eastern Europeans in Germany – 9.9 percent – and among those from Greece, Italy, Portugal and Spain, it’s 8.8 percent.

Unemployment is highest among refugees and asylum seekers at 50 percent. Long-term unemployment, or what the Germans call Hartz IV, is funded by taxes rather than the welfare state. According to the Institute for Employment Research, some Bulgarians and Romanians receive Hartz IV because they are employed in low wage jobs on a monthly wage of less than €450 or are in a low income bracket.

Of course, the question is how long foreigners plan to stay and pay into Germany’s system. According to federal statistics, about 375,000 foreigners with EU passports left in 2016 and the average stay is only four or five years.

“The only question is how long it will last,” Ms. Pfeiffer said. “Some immigrants will leave as quickly as they came, if things start improving in their home countries or deteriorating here in Germany.”

 

Peter Thelen covers politics and labor relations for Handelsblatt. Handelsblatt Global editor Barbara Woolsey contributed to this article. To contact the author: thelen@handelsblatt.com.

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