Germany’s labor market is under pressure, but the recent influx of Ukrainian refugees is “no silver bullet” for the workforce issues.
JOHN MACDOUGALL / Contributor / Getty Images
Germany’s labor market is under severe pressure, and the recent influx of Ukrainian refugees is unlikely to solve the country’s workforce issues in the long term.
The employment rate in Europe’s largest economy hit a new record high in the fourth quarter of 2022, with 45.9 million people employed, according to the German Federal Statistical Office. But more than half of German companies are struggling to find skilled workers to fill vacancies, the German Chambers of Commerce and Industry reported in January.
Aside from Poland, Germany has taken in more refugees than any other region since Russia invaded Ukraine one year ago. The conflict has ravaged swathes of Ukraine and seen eight million people leave in search of safety.
Over a million of these Ukrainian refugees have been recorded as arriving in Germany, a country that has warmly welcomed them, with Chancellor Olaf Scholz saying it will help Ukraine for “as long as it takes.”
The arrival of these often highly educated Ukrainians could bring benefits for Germany, particularly when it comes to bolstering its workforce.
Sylvain Broyer, chief EMEA economist at S&P Global Ratings, said the presence of refugees would be “positive” for the Germany economy right now.
“Definitely Germany faces major shortages of labor and needs immigrants and Ukrainians,” Professor Panu Poutvaara, director of the Ifo Center for International Institutional Comparisons and Migration Research told CNBC.
“If I compare to the previous asylum seekers, Ukrainians are clearly better educated and have integrated much faster into the German labor market,” he added, noting that Germany is an attractive country for people looking to join the labor market.
Research by the EWL Foundation for Supporting Migrants on the Labour Market found that 22% of its 400 respondents chose Germany as a country of refuge based on its employment prospects.
But Ukrainian refugees can’t be expected to fill the gaps in the German labor market.
Around 60% of Ukrainian refugees in Germany perceived language barriers as the biggest challenge in their new environment, according to an OECD survey.
This comes despite the fact that almost half of the refugees who responded in the EWL study said that they had “at least a communicative level” of German, while 57% said that they were currently learning the language. More broadly, Ukrainians have a better grasp of the German language than most, and Ukraine is the fifth-biggest learner of German in the world in absolute terms, according to the Goethe-Institut.
All refugees arriving in Germany are able to take part in a free integration course, which includes language, history and culture lessons, but acquiring the level of German fluency required to fully participate in a work environment is no quick process.
A couple of months in a country does not offer enough language exposure to be able to communicate confidently, according to Christoph Schroeder, a professor in the Department of German Studies at the University of Potsdam.
“You have to sit down and work,” he added, which isn’t necessarily compatible with holding down a job.
“The way to go is not to exclude people from the labor market until they [reach near native fluency],” Schroeder said, “but to develop provisions so that you can … [improve] while working.”
Perhaps unsurprisingly, Germany has implemented fast-track measures to allow language teachers from Ukraine to get working quickly after arriving. While it may be easier for teachers to enter the German labor market compared to other professions, this could cause future problems in Ukraine, according to Katharina Buck, the deputy director of the Goethe-Institut in Ukraine — who herself fled to Germany as a result of the war.
“One of the main aims of Russia in this war is … sadly to completely erase Ukrainian, the Ukrainian nation, Ukrainian culture – to obliterate it,” Buck told CNBC.
“If the bearers of culture, so to speak, the most educated people, stay away for good, that’s a massive problem for Ukraine,” Buck added.
A report by Germany’s Federal Office for Migration and Refugees shows that 72% of adult refugees have a university degree, while Ifo data suggests a large percentage of Ukrainians will only accept work that matches their education level.
Germany does lack “skilled” workers, but mismatches in skills are “widespread” among Ukrainians who enter the German labor market, according to the OECD.
“Higher educational levels … increase the risk of underemployment and skills mismatch,” the OECD report reads.
The majority of Ukrainian refugees are highly educated, but most are also women, often with children — who must balance joining the labor market with family responsibilities.
‘Ready to go home every day’
Many Ukrainians want to go home as soon as they can, making their participation in Germany’s labor market limited and short-term.
Research by Germany’s Institute for Employment Research showed that 37% of Ukrainian refugees want to stay in Germany permanently or at least for a couple of years, while 34% plan to stay until the end of the war, 27% were undecided and 2% plan to leave within a year.
The survey included data from 11,225 Ukrainian refugees, polled between August and October 2022.
Working on the assumption that Ukraine will win the war, the majority of refugees will likely return to their home country, according to Poutvaara.
“Looking narrowly only at the internal economic situation, then Ukrainians staying in Germany are strengthening the German economy,” Poutvaara said.
“At the same time, if I take the wider geopolitical situation, Germany has a very strong incentive in a strong, rebuilt Ukraine,” he added.
Buck says that she sees that Ukrainian refugees have a strong desire “to stay as flexible as possible” and “to be ready to go home every day” through her work at the Goethe-Institut.
“It would be rather short-sighted if we thought that these Ukrainians, they can now alleviate our shortage of skilled labor that we have in Germany,” she told CNBC.
“Of course some of them will. You know, they’re free people, they can make choices and, yes, some of them already have been rapidly absorbed by the labor market. [But] I think we should really not seek to foster that,” she added.
The expectation that the refugee movement out of Ukraine will have a “sustainable” and “positive” impact on the German labor market is a “misperception,” according to Steffen Kampeter, chief executive of the Confederation of German Employers’ Association.
“It would be wrong that we see the war, the Russian aggression as a source of improvement of our labor market situation … Maybe it could help a little bit, but … it’s not going to solve the problem longer term by any means,” he said.