Berlin Cracks Immigrant Door

Berlin Cracks Immigrant Door
Labor Shortages Drive Move to Ease Curbs; Cultural Barriers Persist
By MARCUS WALKER
August 27, 2007; Page A5
http://online.wsj.com/article/SB1188164 ... lenews_wsj

BERLIN -- Germany is taking baby steps to relax its tough restrictions on immigration as growing shortages of skilled labor force many European countries to compete for migrant workers.

Complaints from businesses that they can't find enough qualified staff -- especially in the engineering sector -- are pushing Europe's largest economy to rethink its reluctance to admit foreign workers. Chancellor Angela Merkel said Friday that her cabinet had agreed to let companies hire more engineers from European Union countries in Eastern Europe.

But Germany plans to keep a lid on the number of Eastern European migrants in other sectors, maintaining restrictions that have been in place since Poland and seven other ex-communist countries joined the EU in 2004. In contrast, other established EU countries such as the United Kingdom and Ireland opened their doors to workers from the East. The influx of workers is widely judged to have boosted their economies.

Germany, like many European countries, is torn between the economic case for more immigration and an attachment to the traditional idea of an ethnically homogeneous nation-state. For years, German politicians on the left and right have assured voters that Germany wasn't a country of mass immigration -- even though the country has gone through periods of letting in millions of foreigners. Even when large numbers of Turks settled in postwar West Germany, most Germans assumed these "guest workers" would return home.

"Germany is struggling to accept the idea of diversity in society," says David Audretsch, an American who heads the Max Planck Institute of Economics in Jena, Germany. But countries that open up to people with different backgrounds and experiences are likely to fare better in the global economy than countries that try to stay homogeneous, he says.

During the 1990s, Germany had Europe's highest immigration rate, partly because it opened its doors to asylum seekers and ethnic Germans from Eastern Europe. About 13% of today's German population was born abroad -- the same proportion as in the U.S., according to the Organization for Economic Cooperation and Development.

But in recent years, immigration has slowed amid bureaucratic restrictions, while an increasing number of Germans are moving abroad. Net immigration in Germany fell to 80,000 in 2005, compared with 270,000 in 2001.

In contrast, countries including the U.K., Ireland and Spain have absorbed huge numbers of immigrants in recent years, which many economists credit with boosting growth and living standards for the native population.

Others contend competition from immigrants depresses wages of lower-skilled workers. In the past few years, much of the debate over immigration in Europe has focused on how to better integrate immigrants and their children into society. Riots in France and the U.K. and problems at German schools have highlighted social exclusion among ethnic minorities.

Terrorism by militant Islamists, including the Hamburg students who took part in the Sept. 11, 2001, attacks on the U.S., have made many Europeans mistrustful of their Muslim minorities, adding to the unpopularity of allowing more immigration.

European policy makers also must address illegal immigration. Boatloads of destitute migrants -- often smuggled by criminal gangs to Europe's Mediterranean shoreline -- are common. On the other hand, many Europeans see immigration as one of the steps needed to ease future labor shortages that will afflict Europe's aging societies, together with improving low employment rates in certain parts of the native population.

"By 2015 at the latest, our replacement needs will be bigger than our domestic supply of newly qualified workers," says Volker Treier, skills adviser at the German Chambers of Industry and Commerce.

Pressure for more immigration is compounded by an unexpectedly strong boom in German manufacturing, fueled by surging global demand for capital goods. A survey for Germany's Economics Ministry by the Cologne Institute for Economic Research found that last year German firms were unable to fill about 110,000 job vacancies for lack of qualified candidates. The study's author, Oliver Koppel, estimates the skills shortage, concentrated in engineering and information technology, cost the economy €20 billion, or about $27 billion.

Yet German Economics Minister Michael Glos, who unveiled the study last week, stopped short of calling for more immigration. Instead, the government focused on the need to train citizens better for the labor market, which Ms. Merkel said on Friday was a higher priority than immigration.

Among the members of Ms. Merkel's cabinet, only Education Minister Annette Schavan recently has called for further relaxation of immigration rules. "Improving education and strengthening immigration aren't alternatives," she said in June. "We need both."

Ms. Schavan called for Germany to relax one particularly onerous rule that German business chafes at: Firms can recruit highly skilled workers from abroad only if they pay them at least €85,000 a year. But other ministers overruled her, and last week the cabinet agreed to only one change: Beginning in November, companies hiring mechanical and electrical engineers from new EU countries in Eastern Europe will no longer have to go through a long bureaucratic process to prove there is no suitable German candidate for the job.

"Minimal steps are not enough," says Hartfrid Wolff, immigration spokesman for Germany's pro-business Free Democratic Party. Under EU law, Germany will have to drop its restrictions on East European EU citizens by 2011 at the latest -- so it might as well do so now and reap the benefits, he says.

In another measure to protect Germany against unwanted foreign intrusion, Ms. Merkel reiterated Friday that her government is working on ways to stop investors backed by foreign governments from taking over German companies in sensitive sectors -- a concern Germany has expressed in recent months against a background of the growing influence of state-backed investment funds from emerging economic powers such as Russia and China.

Write to Marcus Walker at marcus.walker@wsj.com