Hurdles to Refugee Labor Market Integration

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The qualification recognition procedure is partly accompanied by internships, adult education or further education (Emilsson, 2014). Moreover, since 2015 a so-called Fast-Track Program aims at bridging skilled refugees into shortage occupations. This program combines language-specific validation of professional knowledge acquired in the individual’s home country, for example, through test work or supervised tests, professional certification, supplementary vocational training, vocation-specific Swedish language courses as well as other measures. Medical professions and teachers are among the affected professions (Desiderio, 2016). Furthermore, Sweden strengthens the flexible system of lane change which describes the opportunity to change from refugee status to economic migrant status and vice versa. This aims at resulting in a better use of refugees for the labor market and at reducing costs of immigrant repatriation (Bauer, Konle-Seidl, & Schreyer, 2015). Moreover, the Swedish example revealed that a willingness to move within the host country also increases the economic success of refugees as consequently they can move from areas with few employment prospects to areas with greater opportunities. The internal migration of immigrants in general and refugees in particular is thus important in order to obtain employment. Furthermore, evidence shows that the city and the prevailing labor market conditions are a critical indicator of the outcome of the labor market integration. The access to ethnic networks in larger cities that facilitate labor market integration, for example, is better than in small towns or villages (Rooth, 1999). Despite the strong focus on labor market integration, the overall results are moderate so far. A 2015 survey of refugees who had recently completed the two-year integration program revealed that only one quarter was employed and the majority worked in subsidized jobs (Desiderio, 2016). Similar to the German case, critics mention that the labor market integration numbers for men are considerably better than those of women in Sweden (Emilsson, 2014).

1.1        Hurdles to Labor Market Integration

1.1.1       Refugee Centered

In order to improve and, in particular, to accelerate the employment rate of refugees, the biggest hurdles to this need to be identified. Based on literature, a lack of language skills along with a deficiency in adequate qualification or problems with the transferability of qualifications build the main obstacles to labor market integration. In most cases the latter two hurdles were confirmed in the interviews conducted.

The ability to communicate with the local population is inevitable in order to integrate successfully into a society. Accordingly, learning the language of the destination country is one of the most important steps to take for all kinds of immigrants. In contrast to labor related migration, refugees do not use language or culture as evaluation criteria for the decision on their potential country of destination. Previous literature has shown, that both the fluency in the language of the destination country as well as the ability to quickly learn the language are imminent to transfer existing human capital and to facilitate and improve the immigrants’ integration into the local labor market (Adserà & Pytliková, 2015). The interview with expert of the IfW Kiel stresses this by highlighting the great differences in the level of language skills of refugees compared with other migrants. The diversity of the refugees in Germany is mirrored in the number of their mother tongues. Among the asylum applicants in the first half of 2016, 174 different native languages were registered. Being spoken by 56.9 percent of the registered people, Arabic is by far the most frequent language. Refugees from for example Syria, Eritrea, Iran and Iraq speak this language. Furthermore, 15.2 percent of the people named Dari as their mother tongue. This language is mostly spoken in Afghanistan and Iran and represents the second most spread language among the asylum seekers in Germany. The Kurdish dialect Kurmanji (5.9 percent) together with Sorani (1.6 percent) are also among the often spoken languages (Neske & Rich, 2016). The German Institute for Labor Market and Occupational Research (“Institute für Arbeitsmarkt- und Berufsforschung”) carried out interviews with refugees and experts in the work with refugees in order to find out how the refugees experience their life in Germany, what they have to offer and how they imagine their future. The majority of the interviewed refugees consider language as the most important key to successfully enter the labor market, to get access to education, and to participate in the social life in Germany. Moreover, in their opinion speaking the local language is the only way to be perceived and appreciated as an individual. However, they also mention that bureaucratic hurdles and very long waiting times complicate the actual access to a language class. Although language classes take place prior to education and work in the official order to enter the German labor market, some refugees claim that internships or ancillary activities could be a better way to learn the German language (Brücker et al., 2016a). Nevertheless, the initial focus should still be put on the acquisition of language skills since they serve as an essential basis and facilitator for entering the labor market (Ager & Strang, 2008; Andritzky et al., 2016). Hence, it is important to start as soon as possible with the linguistic education and not to waste time during the long application process. Notwithstanding that the interviewed refugees see language as the most important integration tool, experts refer to the divergence between the verbalized wish to learn German and the actual motivation and discipline to regularly attend the language classes (Brücker et al., 2016a). Finally, adequate and good language training requires mutual effort on the part of the refugees and the federal institutions. A recently published report by the German Federal Audit Office revealed serious shortcomings in the execution and the billing of the language classes arranged by the Federal Employment Agency. According to the Federal Audit Office those deficits supplemented by lack of attendance control and substandard learning materials might be a reason why many refugees cancel the language classes (Bundesrechnungshof, 2017).

The practical insights gained through expert interviews further emphasize the importance of language in order to integrate into the German labor market and complement the literature findings. Based on an interview conducted with the German DGB expert on migration policy, refugees need both a good spoken and written knowledge of German. The dual training system in Germany demands a certain level of written German, too, in order to pass the exams. In addition, the interviewee stresses that the federal government has offered extra-occupational language classes for apprentices for 15 years. However, this offering has not found many participants in recent years as companies often do not know about its existence. Although the number of participants has increased in parts of Germany over the last years, the awareness for this program has to be strengthened. In addition, the other interviewee from the DGB highlights the importance of language in order to shift from ancillary activities to real employment relationships.

Besides the importance of language in the successful integration process, the researcher from the GCEE points out, that in some professions being able to speak German is not an elementary component. Furthermore, the interviewed entrepreneur who employs refugees sets an example for professions that do not require much German. The entrepreneur currently employs 18 refugees as tailors. For him the willingness to learn German is more important than the actual knowledge of the language at the time of recruitment. In accordance with the entrepreneur, the member of the executive board of the BdS mentions that a lack of language proficiency is not hurdle to the employment in the system gastronomy. The expert traces this to industry internal comprehensive experience as well as the high internationality of the industry. This diversity in nationalities allows refugees to usually find a person who speaks his or her language and offers assistance

Limiting the reasons for the poorer labor market integration of refugees in comparison with other immigrant groups and natives to language would be too shortsighted. Education and professional qualifications represent an important pillar. Due to its multifaceted nature, various factors such as difficulties in transferring skills, qualification and experience to the destination country’s labor market, lack of knowledge of the labor market or discrimination also have adverse effects on the refugees’ labor market integration. Thus, when refugees arrive in their country of destination, they may recognize that the human capital they bring is not relevant and adoptable to the local labor market. As already mentioned, this might be obvious for language skills but is applicable for skills acquired on-the-job or through formal schooling in their country of origin, too (Chiswick & Miller, 2009). However, in order to successfully integrate into the host country’s labor market, people need skills that exists demand for. Against the background of the human capital model by Chiswick (1978), the integration of migrants into the host country’s labor market is determined by two factors: Firstly, the transfer of the human capital acquired in the home country to the requirements of the host country’s labor market and, secondly, the incentives of the individual refugee to invest in the human capital of their host country. Nevertheless, the researcher assumes that qualifications acquired in one country are, in general, not unlimitedly internationally transferrable. Though, cultural proximity, similar education systems, comparable technological status of manufacturing as well as the current state of the labor market of the sending and recipient country can significantly facilitate the transfer.

Migrants and especially refugees are confronted with prejudice regarding qualifications as they are often automatically considered less skilled. Moreover, even studies conducted in several countries revealed that refugees, irrespective from age and gender, always perform significantly worse regarding labor market integration in comparison to other migrant group even if they possess comparable qualifications (Peromingo, 2014). However, in comparison with labor market migrants, refugees often do not have the option of returning to their home country. On the basis of the consequently probably longer stay in the host country, refugees may have higher incentives to invest in the acquisition of respective country-specific human capital compared to migrants with a safe option of return. In turn, these investments encourage a fast adaption to the employment situation and the wages of comparable migrants and native employees (Bauer, 2105).

Still, with regards to the recognition of individual qualifications, problems may occur as a formal degree per se is a vague indicator of the usability of the qualification in the destination country. School education already differs a lot from one country to another. International comparisons of pupils disclosed that 65 percent of Syrian eighth grade pupils do not possess the basic skills defined by the Organization for Economic Co-operation and Development whereas this deficit is applicable for only 16 percent of the respective German students (Wößmann, 2016). Furthermore, it is crucial to what extend qualifications acquired in the home country are directly convertible to Germany (Bauer, 2015). Chiswick (2009) examined literature on immigration and concluded that immigrants have difficulties in transferring both education and labor market experience. According to his research, formal school education might be internationally transferrable to a higher extend than on-the-job experience. Moreover, based on studies in the U.S., the less-than-perfect transferability of human capital is intensified the longer the foreign born worker has worked in its country of origin prior to his or her immigration (Chiswick & Miller, 2009).

For the German case, it can be observed that most job prerequisites determined by the Federal Employment Agency cannot be met. After consultations by the agency personnel, the majority of the refugees are intended to work in semi-skilled professions or ancillary activities for which formal professional qualifications are not or only to a limited extend needed (Sachverständigenrat zur Begutachtung der Gesamtwirtschaftlichen Entwicklung, 2016). Moreover, the president of the IWH identified that if any qualification and the respective documents exist they are often difficult to interpret or representatives of German companies lack the skills to decipher them. Nevertheless, the interviewed experts also acknowledge that some skills and knowledge of certain professions cannot be transferred at all. This is applicable for professions that are usually very locally oriented, for example, that of lawyers. Similar to the language barrier example, the interviews conducted with the persons who represent an employer’s point of view reveal some exceptions. The entrepreneur, for example, tests practical skills of applicants instead of insisting on formal qualification while the system gastronomy industry hires people despite their lack of school and professional education. Nevertheless, the academic from the IWH adds this simplicity in the hiring process might surely be different in other industries, namely industries that require fewer manual skills.

Besides the obstacles stated by both literature and the chosen experts, the interview partners consider some aspects important while they do not receive much attention in the literature. This important aspect, which is strongly linked to the need of certificates, is the lack of knowledge concerning the German labor market. As mentioned in chapter 2.3.1, only a very small part of the German labor force is unskilled and vocational training is the key to access many areas of employment. Hence, as confirmed by the expert of the GCEE, in order to be successful in the long-term, especially young refugees should understand that investing in education and qualification pays off, although this might mean a trade-off between fast earnings opportunities and sustainable employment in the future. Nevertheless, the in chapter 2.2.3 indicated young average age of the people coming to Germany could be exploited as opportunity since, according to the researcher of the IfW Kiel, they are motivated to qualify. In addition to this, in the opinion of the DGB expert in the field of social security, refugees often do not know their individual rights on the labor market regarding wage or working hours and hence can easily become subject of exploitation.

Despite obstacles stimulated by a lack of language skills or qualifications, the expert on migration policy from the DBG as well as the president of the IWH mention that the German history with migration as well as cultural differences can also play a role. Nevertheless, they rate the adverse influence of cultural differences as rather subordinate. Furthermore, the experts who mentioned culture as hurdle acknowledged that the occurrence is limited to certain regions. They assume that areas in which the population with a migration background is rather small will have greater problems with accepting refugees than regions with a multicultural population.

1.1.2       External

Besides hurdles evoked by the refugees, some hurdles are connected to external factors, too. Those hurdles can be mainly linked to strong bureaucracy in processes that affect refugees. All European governments are struggling with the huge number of refugees seeking shelter in their countries. The sudden increase in the number of refugees since 2014, has also hit the German authorities hard. The sheer extend has lead to excessive demands and long process times of asylum applications which are mirrored in the aforementioned number of not yet decided applications. Based on an examination of Andritzky et al. (2016), asylum seekers who arrived in spring 2016 can expect an average of 19 months processing time. Though, according to the DGB representative for migration policy, the applications of some asylum applications who arrived in 2011 have not yet been decided. One of the authors of the just cited paper, added during a telephone interview, that half of the time the applicant waits for the application per se and the other half for the actual decision. Moreover, an international research team identified the importance of the speed of the asylum process for both the host country and the refugees since it can decisively affect the refugees’ subsequent economic integration. Hainmueller, Hangartner and Lawrence (2016) examined the process in Switzerland and revealed that a one-year increase of the duration of the asylum process lowers the probability of being employed by approximately 4.9 percentage points. Though, the very high quota of positive asylum applications for people from Syria (98 percent in 2016) lead to the creation of a so-called fast track for them in order to reduce the waiting time (Bundesamt für Migration und Flüchtlinge, 2016c; STÖHR). Furthermore, economic theory suggests that absence from the labor market causes skill atrophy, and therefore, long-term unemployed asylum seekers can face steep hurdles to re-enter the job market. Under German law, applicants for asylum are usually allowed to start working with the positive decision of their application, namely a recognized protection status. Thus, according to insights from the IfW Kiel expert, the lengthy process leads to fewer people being available on the German labor market than expected. Moreover, a fast processing of asylum applications and consequently a clarification of the resident status result in a higher motivation for job search or taking part in qualification and training measures (Bauer, 2015). A negative side effect of the long application process is the great insecurity for both asylum applicants and companies during the ongoing asylum application process. All interview partners stressed the insecurity about the legal status of asylum applicants. Asylum applicants do not know whether they can stay in Germany and companies therefore might not be willing to invest resources in coordinating the cumbersome legal process and assessing the qualification for a person who might not stay in German. This risk also exists for individuals whose deportation is banned. They are allowed to take up a profession in exceptional cases, but since their continuance in Germany is precarious there is a strong risk connected to their employment for both the individual and the company. Although an exception for young tolerated people to stay for the period of an apprenticeship was passed, this exception is according to the expert on migration policy of the DGB restricted to people coming from insecure countries of origin. Consequently, due to the insecurity of stay those coming from countries of origin evaluated as being safe do not have any chance to start an apprenticeship in Germany. Furthermore, he adds that the subsidiary protection granted leads to a more difficult access to language classes or other integration measures. The practical insights further certify the obstacles raised by the government. The interviewed board member of the adult education center, for example, remembers the great insecurity regarding the asylum applicant who now works for him. Since the person who works for him is still in the application process, the employment is linked to numerous appointments with authorities, strict working requirements as well as the uncertainty how the application is decided. In addition to this, the other two interview partners who represent an employer’s point of view criticize that the bureaucratic hurdles on the part of the German government are too high. The member of the board of the BdS stresses that a timely clarification of the employment status is in the interest of both the applicant and the employer.

Another aspect that affects the integration of refugees is the residence obligation that is determined by law. After the application for asylum has been lodged, applicants receive a certificate of their permission to reside. This permission is territorially restricted to the district in which the responsible reception facility is situated (Bundesamt für Migration und Flüchtlinge, 2016b). This restriction aims at ensuring a fair initial distribution among the sixteen federal states in Germany. However, since it can be observed that refugees usually prefer metropolitan over rural areas an uncontrolled and free choice of the living space for refugees is rather difficult to implement. The respective part in the integration law aims at preventing segregation, ensuring a fair distribution of refugees, and enhancing integration efforts. Especially a strong cluster development can become an issue as history shows that migrants usually favor living in areas where people of the same nationality reside. This behavior could result in clusters and the risk of segregation (Bartel, 1989; Glitz, 2012). Though, segregation can cause both positive and negative effects on labor market integration. An ethnic network with high average education levels can positively incentivize new members as well as a rather poorly educated community can hinder education and qualification measures (Romiti et al., 2015; Borjas, 1995). Moreover, a concentration of migrants in a certain area causes and uneven financial pressure for the municipalities that cannot be absorbed by financial compensation within Germany (Sachverständigenrat zur Begutachtung der Gesamtwirtschaftlichen Entwicklung, 2016). The labor union’s expert on social security underpins the risk of segregation and even ghettoization by referring to the past. Her colleague, further emphasizes on the importance of a distinction between recognized refugees and not yet recognized refugees. According to him, a restricted mobility in the beginning of the asylum application process is reasonable in order to achieve a fair distribution. The researcher from the GCEE also acknowledges that the restricted mobility could be seen as barrier if there not many jobs are available in the assigned region. Though if a refugee has found a job in another region moving is possible.

On the part of refugees, in chapter 4.3.1 qualification is mentioned as hurdle to the successful labor market integration, but as previously indicated, the strong focus on qualification as well as the unique German system of dual training form an obstacle. According to the interviewed experts of the IfW, DGB, and IWH, the rigid and very certificate centered German labor market might further impede the integration based on in the home country acquired skills. According to the interviewed specialist on social justice, qualified people arrive in Germany, but their integration into the labor force is complicated by the difficulties of the recognition of qualifications. This can be attributed to the claim that the refugees’ qualifications are not comparable to the German qualifications and that they lack practical experience. The interview partners often named craftsmen who have gained several years of work experience in their home country but do not have any certification for that as example of the strong focus on the certification of qualifications in Germany. This lack of authorizing documents can hinder their access to a profession although their skills are theoretically transferable to Germany to a great extend. Furthermore, currently German authorities do not pay increased attention on informal degrees, such as soft skills according to one of the representative of the DGB. In the opinion of IfW expert this can lead to a great waste of human potential since for, for instance, service providers these skills might be more relevant than any certificates.

1.2        Recommendations

1.2.1       Suspending Priority Review

In Germany, the so-called priority review in connection with the allocation of jobs via a local employment agency exists. That is the agency examines whether there is a preferential applicant for a specific position a asylum applicant or tolerated person applied for. In this case, normally German citizens, EU citizens, citizens of Island, Norway, Liechtenstein and Switzerland as well as third country nationals with unlimited labor market access in Germany need to be preferred over other applicants for vacant positions that compensate with their skills and qualifications. Moreover, it also comprises the assessment of the conditions of the employment in order to ensure that the person would not be employed under less favorable pay and working conditions (Bundesamt für Migration und Flüchtlinge, 2017c). Therefore, given the current situation, the priority review could be rated as recruiting deterrent for both the applicant and the employer. According to that it is deducible that with the priority review asylum applicants did not have a chance to find an employment. Furthermore, the employer side identified this test as a significant obstacle to hiring asylum applicants, too (Desiderio, 2016). In order to facilitate the entry into the labor force for asylum applicants and tolerated persons, in the course of the integration law the priority review has been suspended from 2016 on. This suspension does not apply in employment agency districts with unemployment rates that are equal or above the national and is limited to period of three years (Bundesministrerium für Arbeit und Soziales, 2016). The member of the board of the BdS confirms that for the case of the system gastronomy the priority review has been a hurdle to the labor market integration. Before the suspension, asylum applicants or tolerated persons did not have any chance to find an employment even if a person from the above mentioned group was only available in theory. Nevertheless, policies comparable the priority review also serve as protection for the local labor force and aim at preventing unfair competition (Desiderio, 2016).

Furthermore, since the suspension of the priority review has proven to be successful and companies make use of it, the so far limited period of three years could be extended. Based on the already mentioned experience with the labor market integration as well as the long asylum application process, a time horizon of three years seems to be too optimistic. The board member of the BdS also mentions that a prolongation of the suspension would be desirable while the GCEE even demand a complete abolishment (2016).

1.2.2       Suspending Statutory Minimum Wage

Similar to refugees, long-term unemployed persons are considered as particularly difficult to integrate into the labor market. The term long-term unemployed describes people who are unemployed for at least 12 months. Thus, the introduction of the legal minimum wage raised the question whether a minimum of pay would further raise the hurdles to find a job. In order to absorb negative implications on the group’s labor market integration possibilities, the German government passed an exception for, among others, long-term unemployed regarding minimum wage (Becker, Berge, Klingert, Lenhart, Trenkle & Umkehrer, 2016). In 2016, the GCEE proposed to treat recognized asylum-applicants seeking employment equally as long-term unemployed people. This would result in recognized asylum-applicants not being eligible to receive the statutory minimum wage according to §22 of the German Minimum Wage Act. The GCEE justifies this proposal by the legal minimum wage presenting a hurdle to employing recognized asylum applicants, especially after its increase in the beginning of 2017. The exception would apply for six months as is does for long-term unemployed people. Furthermore, internships should be excluded from the minimum wage up to 12 months due to its educational purpose (Sachverständigenrat zur Begutachtung der Gesamtwirtschaftlichen Entwicklung, 2016). A personal interview with one of the researchers working for the GCEE further revealed the reasoning behind the proposal. He states that refugees are in a similar situation as long-term unemployed since they were also absent from the labor market for a long time. Hence, he sees it as a chance to get to know a company and to prove his or her skills. Nevertheless, he also recognizes that the suspension of the minimum wage opens room for misuse, but still it could be an alternative to not work at all.

About two years after the introduction of the minimum wage, the exception for long-term unemployed is hardly put to use. So far, no effects for the discussed group of the regulation on employment possibilities, stability and remuneration can be observed. Furthermore, a study conducted by Becker et al. (2016) revealed that the reasons for this are manifold, namely, limited applicability only to specific employment relationships, already existing and more suitable subsidies, and low appeal of the concept per se. Especially long-term unemployed people consider a fair wage that lies above the governmental benefit receipt as motivation to step out of unemployment and thus perceive the suspension not tempting. Furthermore, on the one hand, many long-term unemployed do not know about the exemption that applies for them. The mentioned study revealed that only 1.4 percent of the long-term unemployed request a confirmation of their exact unemployment duration at their job center or the local labor agency. Calculating with 25,000 new labor market entrants per month this results in monthly roughly 350 inquiries whereby the number of actually used confirmations is again lower. On the other hand, employers stressed that the qualifications of an individual are more important than the wage as a smooth and fast vocational integration is the most important.

Except from the representative of the GCEE, all interview partners agreed on the statutory minimum wage not being a hurdle to the labor market integration of refugees. One of the representatives of the labor union interprets the suspension of the minimum wage rather as a measure to discriminate against a very fragile group of people as well as to exploit them. The interviewed colleague from the DGB adds that companies who already employ refugees do not consider the wage as hurdle. The interviewed entrepreneur who currently employs 18 refugees confirms this. His company pays employees by their performance not by their gender or nationality. He thinks that people who perform deserve a fair wage and uses payment also as motivation tool for employees. Furthermore, he as well as the member of the BdS mention that both Germans and refugees need a learning period at the beginning of an employment relationship. The BdS representative also emphasizes that for both long-term unemployed and refugees the wage is not the biggest obstacle to the labor market integration. Furthermore, the interviewed academics see a potential risk of envy evoked by a differential treatment of refugees regarding wage. Similar to Becker et al. (2016), the representative of the IWF mentions individual agreements between job centers and employers as well as subsidies that are more attractive than paying less than the minimum wage as reasons for the little usage of the suspension of the minimum wage for long-term unemployed. Hence he points out that this also applies for the case of refugees. Nevertheless, as it can be derived from the interviews remuneration below the minimum wage is appropriate if despite school-leaving qualifications follow-up trainings are necessary. If this is applicable, a training wage is adequate. A proposal mentioned by the researcher of the GCEE is to add the time of integration to the duration of unemployment. Thus, the state of being long-term unemployed will be reached earlier. The president of the IWH, though, stresses the importance of integration measures to prepare for a good labor market entrance. Hence, this time should not be rated similar to unemployment.

1.2.3       Harmonizing Qualification Assessment

As indicated in chapter 3.3.1 qualifications are a key characteristic that shapes the success of labor market integration. Therefore, not only the transferability of qualifications acquired in the refugee’s home country is of utmost importance, but also the recognition in the host country and – if needed – further training by both potential employers and labor agencies. In order to achieve this, not only the German government needs to take initiative but also companies.

Achieving an adequate balance between finding a job fast and finding a job that fits the individual qualifications and the potential of a refugee is important. As already indicated, many refugees aim at earning money quickly but do not consider the resulting long-term effects. Therefore, first of all, foreign qualifications need to be recognized in order to ensure that refugees find an employment that suits their level of education and qualification as well as in order to avoid a loss of already existing human capital. Since the analysis revealed that just a small share of the refugees bring the formal prerequisites to get integrated into the labor market as specialist or employee at higher qualification level, less focus needs to be put on formal qualifications (Brücker et al., 2016b). The instances of the company operating in the clothing manufacturing industry as well as of the adult education center successfully demonstrate how to flexibly respond to applicants who do not have German certificates or any certificates at all. In both cases, the applicants were able to prove their capabilities independent from certificates. As in line with the recommendation of the representative of the BsD, employers and official institutions could perform certain test to assess whether a person’s skills are matching the job requirements in Germany or not. A standardized official test could facilitate the assessment of skills prior to the job placement offered by the local labor agency and thus enhance targeted placement while tests individually conducted by companies enable position specific assessment and recruiting. This test could check both practical and theoretical know-how. Furthermore, a test seems to be more reliable than certificates since the certificate standards usually differ among countries. In particular due to the unique German dual training system, most refugees lack in corresponding certificates. Thus, a test could also query specific knowledge that is needed for a certain job and in addition to that reveal the scope of further training needed. The identified gap could be closed by individual trainings or, in the case of professions that require a university degree, with postgraduate studies. Besides that, training on the job in the form of internships should be supported more intensively, too. Especially for people who are, due to their age, not suitable for apprenticeships, concrete measure into stable employment relationships are needed. In accordance with the president of the IWH, this would also allow that people who have a profession there exists demand for in Germany do not need to repeat their whole studies or to work in a profession they are overqualified for. At the moment this problem can be observed for a number of professions, for example, physicians. Although mastering the German language is still of high priority, the introduction of more international courses of study, as recommended by the president of the IWH, could also be an action to facilitate the labor market entrance. Moreover, the access to apprenticeships should be promoted for refugees and asylum applicants likely to remain in Germany who do not possess qualifications relevant for the German labor market. This would also enable them not being stuck in ancillary activities. In order to facilitate the access to proper qualification independent from the legal status of the person, apprenticeship inclusion should be separated from the right of residence. This would allow both the employer and the employee a certain security with regard to residence during the period of the apprenticeship. Furthermore, this suggestion complies with the IfW Kiel economist’s demand for giving asylum applicants who find an employment that makes them independent from welfare a perspective to stay in Germany. This not only allows a long-term planning but also further supports the aspired strive for an investment in proper education and qualification on the part of the asylum applicants and refugees. Enabling access to qualification and work at an early stage of the asylum application process also positively influences the overall integration of a person. A possible measure to implement could be designed after the Swedish model described in the best practice examples from other countries.

All in all, efforts for a closer collaboration between authorities and companies should be made. The analyzed example of the German clothing manufacturer demonstrates the mutual success for the company and the employed refugees of an employment relationship, but also reveals that cooperation with the local job center is crucial in order to make refugees aware of vacant positions. Moreover, this example proves that companies who want to employ refugees are able to bring down the hurdles. In the case of the adult education center, the interviewed member of the management also made reasonable efforts to enable employment of asylum applicants and did not fear the significantly higher effort compared to employing German recruits. Moreover, in both the examined practical cases, the employers showed a certain willingness to take risk. The economist and representative of the IWH wants this behavior from other companies, too. Pursuant to the already suggested qualification tests, he requests a more individual and less formal qualification focused assessment of each applicant by the companies as well as more governmental pressure to pursue this.

Moreover, it is not enough to only implement measure to foster integration, but also to ensure an adequate quality since, for example, a completed language class does not guarantee that the participant speaks the language afterwards. For this, qualified teachers who are able to cope with the special requirements are needed as well as measures to control the attendance of the language classes. The already discussed recent investigations of the Federal Audit Office as well as the insights from interview partner of the GCEE confirm this. Besides measure taken by the German government, companies employing refugees should also engage in further improving language skills of their non-German employees. Thus, on the part of the employer, pictures with German captions describing a specific work step could enable learning the language on the job. Nevertheless, as demonstrated in the service gastronomy, this is only applicable for rather manual jobs in which the individual work steps are not very complicated. Moreover, industry specific language classes offered by the company could decisively support the success of an employee in his profession. Furthermore, offering them on mobile devices could facilitate the access and the feasibility. Again, this is already performed by individual companies but not at a large scale. The German government has also offered language classes accompanying training for more than ten years, but due to little familiarity only few companies have used this opportunity.

Therefore, the analysis of the people coming to Germany as well as insights generated from expert interviews result in a necessary adjustment of the initially optimistic reaction to use the massive inflow of people in order to counter skills shortage in Germany. Although the people coming to Germany bring along qualifications and skills, only few are directly transferrable. Thus, amongst others companies have to understand the importance of investing in people and supporting their employees’ development independent from their legal status. Furthermore, together with the skill shortage for certain professions, the demographic change contributes to fewer people being available on the labor market. The economist of the IWH underpins this problem by emphasizing that in ten to 15 years, roughly 300,000 employees will departure from the labor market, representing 1 percent of the labor force. This strong retreat can only be counteracted by immigration. Though, this immigration does not need to be realized only via refugees. The statements of the interviewed entrepreneur attest this from a practical point of view. He states his difficulties in finding skilled employees or those who are willing to become tailors since among the German population the profession is rather unpopular. Moreover, he has to cope with the fact than due to retirements or other reasons 20 to 30 tailors leave his company per annum. Currently the entrepreneur fills this gap by employing refugees. In connection with the demographic change, it is of utmost importance to retain skilled workers in the long-term. This correlates with the insights from the interview with the member of the board of the employer organization for system gastronomy. In the chapter on a possible development of the German labor market (2.3.3), a lack of employees in MINT fields of work was already indicated. Although the expert interviews revealed a need for employees in other industries, MINT occupations offer room for labor market integration, too. The numbers of insurable employment relationships of people from Eritrea, Iraq, Afghanistan, and Syria have increased dramatically most recently and 11.2 percent of all insurable employment relationships of people of the just mentioned nationalities are in MINT occupations. Moreover, the report identifies up to 44,000 refugees who possess the potential for working in MINT professions until 2020 as well as a possible positive adaption if Germany succeeds in qualifying refugees. However, besides all efforts to facilitate labor market integration of refugees, they should not receive too intense special treatment in order to prevent envy and to strengthen their acceptance in a company or the society.

Best Practice Examples

1.2.4       Improving Housing Situation

As already indicated all countries currently affected by a large inflow of people seeking for asylum cope with challenging tasks. Especially, a fair and bearable distribution has proven to be difficult. Furthermore, government intervention should prevent segregation and the overburden of some urban areas. The just passed Integration Law can restrict recognized asylum applicants’ mobility to the districts to which they were assigned on arrival (Andritzky et al., 2016). The economist of the IWH stresses that the shortage in adequate housing evoked by the fast increase of people arriving, should not lead to people being allocated in areas in which housing is cheap. Hence he argues that they should rather be able to go where jobs exist and the unemployment rate is low. Moreover, the high spatial concentration in reception facilities should be kept as short as possible in the opinion of the president of the IWH. Nevertheless, he also acknowledges that Germany has already recognized the importance of mobility and adjustments have taken place. The GCEE (2016) further acknowledged that a restricted mobility could result in long-term negative effects on employment and wage. The member of the board of the BsD also emphasizes the importance of mobility with respect to labor market integration in particular, but general integration, too. According to her, a higher mobility together with an earlier taking up of work accelerates integration. Consequently restricted mobility should only be a temporary measure.

1.2.5       Fostering Self-Employment

Experiences with the labor market integration of previous great influx of people to Germany have demonstrated that self-employment could be considered a reasonable option. According to researchers of the German Kreditanstalt für Wiederaufbau (2014), annually roughly 170,000 new start-ups founded by migrants or naturalized migrants in Germany are registered. While this number amounts to 20 percent of all annual start-ups in Germany, the share of German founders is slightly smaller. Thus, it can be derived that migrants in Germany are active in founding to an above average extend. Furthermore, this number has significantly increased compared to the years prior to the data collection. Though the assessment of this observation is equivocal. Some researchers rate the high founding activities of migrants as indicator of integration while others rather interpret self-employment as enforced form of escaping unemployment. On the one hand, researchers of the first opinion justify their view on the topic by stating that people who are able to found a company have saved or acquired necessary financial resources and demonstrated that they understand the economy of the host country (Borjas, 1987). On the other hand, researchers sharing the latter opinion interpret self-employment among migrants as measure to escape unemployment and only as way for people who do not find an employment on the regular labor market (Evans, 1989). For the German case, Özcan and Seifert (2000) could show that the increasing number of self-employed migrants can be understood as sign of gradual integration. However, this pattern cannot be directly transferred to refugees since as mentioned they start from a different position and the numbers discussed above do not apply for migrants of the first generation.

Therefore, the examined example of the asylum applicant giving classes in an adult education center illustrates an atypical example and a step into being self-employed at a very early stage. Furthermore, it also reveals that the bureaucratic hurdles for becoming self-employed are the same as for starting to work in en employment relationship. Insights from the interview with the president of the IWH confirm self-employment of migrants being a reasonable step into the labor market by referring to previous cases of successful migrants, such as Italians, Portuguese or Chinese. Nevertheless, he also mentions the great bureaucratic hurdles connected to founding which need to be overcome by both migrants as well as Germans. Therefore, existing hurdles to self-employment should be dismantled. However, self-employment should not become an employment opportunity for all migrants or refugees coming to Germany. As already mentioned above, people who pursue a job for which exists demand for in Germany, should be able to practice this job in Germany and the hurdles to do this should be removed.

 

2         Conclusion

This thesis audited in detail the recent refugee crisis along with its impact on the German labor market. Moreover, implications for both policy makers and companies in order to facilitate and accelerate the integration of refugees and asylum seekers into the German labor market were developed. Consequently, these measures could also positively impact the general integration into society. The implications were derived from incorporating literature and expert interviews with either academic experts or people employing persons belonging to the examined group of migrants. The experience of experts in the field of migration or labor market policies was considered to account for the limited research on measures to integrate refugees of the current refugee crisis into the German labor market. Furthermore, the experts discussed the concrete proposal of a temporary suspension of the minimum wage. As it can be inferred from this thesis, the six out of seven experts who commented on the minimum wage in conjunction with refugees did not consider a possible suspension to facilitate integration.

The purely literature based part of the thesis exposed that violent conflicts and wars as well as persecution constitute the main triggers for the immense inflow of people seeking shelter. The majority of the people escaping from the mentioned reasons come from Syria, Afghanistan, and Iraq. Furthermore, the analysis of the asylum seekers with regard to socio-demographic characteristics revealed that the majority is male, younger than 25 years old, and the education and qualification level is difficult to compare with the level of the domestic population. The current positive employment situation in Germany is underlined by the analysis of the labor market together with a preliminary balance of the effects of the introduction of legal minimum wage. However, it cannot be completely transferred to the refugees’ situation. The examination of the status quo of the labor market participation of the refugees and asylum seekers results in sobering results. Although the German government has already passed some integration supporting laws and measures, the employment rate among recognized refugees is quite low and depends on the arrival date. If considering full-and part-time employment relationships the employment rate varies from 2.2 percent of those who arrived in 2016 to 20.8 percent of those who arrived in 2013 (Brücker, Hauptmann, & Sierries, 2017). However, a future outlook including the anticipated development of the German labor market identifies potential for employment relationships due to skill shortages in individual industries and the demographic development. The expert opinions together with literature revealed that on the part of refugees and asylum seekers, lacking language skills and qualifications difficult to transfer are among the biggest obstacles to integration into the labor market. Cultural differences as obstacle to integration did not accord any great importance. Nevertheless, besides the hurdles evoked by refugees, some hurdles are caused by external factors. Those hurdles are mostly triggered by bureaucratic processes in Germany, the German dual training system, or the very strong focus on certificates of applicants in the recruiting process. Both the aspects hinder a fast integration into the labor market by slowing it down. Inferred from the insights obtained through the interviews and backed up by literature, the suspension of the minimum wage was not considered an adequate measure to enable access to the labor market for refugees. Experience with the temporary suspension of minimum wages for long-term unemployed has shown no positive employment effects. Though, three other measures could be derived that can positively impact employment. Firstly, a three-year suspension of the priority review is too shortsighted and should be extended. Moreover, the currently restricted mobility that applies for asylum seekers and recognized refugees impedes their options to find a job independent from their assigned location. The most important challenge to overcome, though, is preventing the loss of already existing human capital. In order to succeed in this, both the German government and companies need to become active. In cooperation with the interviewed experts, the suggestion of developing profession-related practical test to assess skills arose. However, a deviation from the current pure focus on formal qualifications would be needed for that. Nevertheless, the access to education and especially dual training for refugees and asylum seekers with good perspectives to stay should be of utmost priority, too. In addition, a closer collaboration between public authorities and companies willing to hire refugees is needed. Experiences with previous immigration waves as well as insights from one of the interviewed experts have demonstrated that self-employment also marks an adequate was into the labor force. Although various challenges are connected with the current refugee crisis, it should not be neglected that the refugees and asylum seekers arriving in Germany can contribute a significant part to the prosperity and the development of the country. Especially against the background of the demographic change and the need for skilled labor, refugees, if integrated, could be seen as long-term chance and not as burden.

Nevertheless, the findings of this thesis should be considered in the light of certain limitations. In the first place, the scope of the thesis was limited to Germany and thus all sources of primary data were also German. Since the topic of the thesis though currently concerns many countries, the scope of research could have been broader. Due to a predefined time frame and limited resources only definite data could be obtained. In the case of primary data, eight expert interviews were conducted. The researcher aimed at gaining insights from a very broad pool of opinions by choosing experts in the subject to research with different backgrounds. However, the insights from eight experts are not generalizable. Opinions of the interview partners with an academic background can normally be backed up with literature while the practical insights are rather specific. The two company cases cannot be easily transferred to other companies, especially against the background of the heterogeneity of skill and education requirements between different industries. Still they can serve as a point of reference. However, a greater data set would have allowed broader insights and improved the validity.

Further research could be applied in the concrete and detailed implementation of the proposed implications. The proposal of some implications affects policy makers to the same extend as company representatives, therefore, they should test the applicability of the measures proposed. Moreover, it needs to be emphasized that the roots of the refugee flow do not lie in Germany as recipient country, but elsewhere. Consequently, it should be of highest priority to address the causes of flight and a long-term goal to stabilize the situation in the home countries of the people fleeing to Europe.

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