German finance minister Christian Lindner expected cheers when, on a warm day last week, he donned his fiscal Santa suit to present €23 billion in tax cuts.
Any jubilation over his two-year fiscal giveaway for Germans, to counter rising prices and stimulate the moribund German economy, was eclipsed by his promised gifts for foreign workers.
“We are creating a tax rebate for foreign professionals during their first three years in Germany,” announced Lindner, head of the pro-business Free Democratic Party (FDP). “There will be [tax] rebates of 30, 20 and 10 per cent for people who come here as qualified specialists.”
With scant detail, his proposal – part of a late-night budget deal by Germany’s coalition heads – went down like a lead Zeppelin.
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Rather than wait for more information, or explore the thinking behind the plan, the wailing began. “A danger to social peace”, warned one newspaper; another called it a “blatant discrimination of domestic workers”.
Among those caught by surprise was Hubertus Heil, Germany’s federal labour minister, who admitted on national radio that he “wasn’t outrageously happy” over what he knew so far.
“We’ll have to look at this in detail,” said Heil. “Work in this country has to be worth the same.”
In theory he is right: article three of Germany’s postwar Basic Law, as well as the Equal Treatment Act, ensure that everyone in Germany is treated the same in the workplace.
In practice, however, these safeguards haven’t worked for German women: the gender pay gap here is at 18 per cent on average, well ahead of 9.6 per cent in Ireland.
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And in today’s globalised labour market, with apologies to George Orwell, some workers are more equal than others.
Trying to calm tempers over the tax plan, a spokesman for chancellor Olaf Scholz said similar sweeteners are on offer across the EU, from France to Finland and Ireland to Cyprus.
“There will be a minimum annual income and a maximum threshold as well,” he said, “so that multimillionaires are not given tax breaks to encourage them to Germany.”
The idea is still being fleshed out and will only apply for “certain sectors”, the spokesman said. But even in its current half-baked form, it is a response to an uncomfortable truth: Germany is no longer as attractive to foreign workers as many here assume.
A 2023 Bertelsmann foundation survey suggested that, when it comes to attracting skilled workers, Germany isn’t even at the races.
Its analysis of 38 OECD countries placed Germany in 13th place, down from 6th place in 2019, in a list topped by Sweden, Switzerland, Canada and Norway.
Among the chief turn-offs: negotiating thickets of analogue bureaucracy in a country where transparency and digitisation are, in many cases, still foreign concepts. Germany is short 15,000 doctors yet its complicated procedures to recognise foreign qualifications mean medical staff from Ukraine and elsewhere report a two-year wait to secure a work permit.
For Prof Monika Schnitzer, head of the economic advisory council for the government, “the tax sweeteners amount to nothing without a reduction in the bureaucratic hurdles to taking up a job in Germany”.
A demographic clock has been ticking for half a century in Germany. Within the next decade, the last of Germany’s postwar boomer generation will have retired. And low birth rates of recent decades mean, by 2035, five million more people will have retired than joined the labour market.
Even today the German economy is feeling the demographic squeeze, with 1.8 million unfilled vacancies – a state of affairs one economic institute says costs the country about 1 per cent of its annual economic output.
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Just to plug its labour market gaps, Germany needs a net inward migration of about 400,000 people. It consistently misses that goal, with a succession of high-profile visa schemes that rarely live up to their promise.
A study by the Institute for Applied Economic Research (IAW), based on a survey of 1,885 people who had worked in Germany and left, found several common issues behind their departure. Common challenges mentioned were learning the language, integration and negative experiences dealing with authorities.
IAW study co-author Bernhard Boockmann said a common complaint of respondents was of a lack of joined-up thinking between government agencies, where “residency permits for training or jobs simply expire and aren’t extended”.
When skilled workers leave the country, the report noted, no effort is made to maintain contact with them or lure them back. For a country crying out for workers, Germany rarely acts like one.