Can Germany’s family businesses absorb a million refugees?

Whether Germany successfully absorbs the many hundreds of thousands of refugees that have entered the country will largely depend on the private sector, and specifically, the country’s all-important family businesses to hire them. Currently, that prospect isn’t looking so good – here’s why.

German family businesses have for sometime complained about the lack of skilled workers available to hire. That, coupled with an aging population, helps to present a pretty good economic justification to allow refugees into Germany. A pool of young and willing workers will help to alleviate labour shortages and at the same time bring down the average age of the population. All this leads to a virtuous economic cycle and contributes to a more dynamic economy, so the argument goes.

Yes, the absorption of one million refugees, who appear to be predominantly in their 20s and 30s, will bring the average age of the population down, but it won’t solve the skill shortages. Lutz Goebel, the head of the country’s powerful family business association, Familienunternehmer, says most of the refugees coming into the country don’t have the skills required to fill the vacancies.

Speaking to the German press last week, Goebel said that even qualified refugees don’t have the right skills. He said a Syrian engineer would in many cases be no more qualified than a German car mechanic. He added that many don’t speak German, and around 20% of refugees are illiterate.

Goebel went on to say that the only way refugees will be hired in any meaningful way will be dependent on the government providing a €1,000 a month training subsidy for each worker. Familienunternehmer has produced a discussion paper (in German) on the challenges to its members of hiring so many refugee workers.

Although the German economy has proven remarkably resilient for some time, it’s unlikely the government will foot such a hefty training bill for refugees. Policymakers will want the majority of this cost to be absorbed by the businesses themselves. But at a time when all businesses in Germany are having to face paying their workers a newly introduced higher minimum wage, it’s unlikely they will want to pay the cost of training refugees as well.

Some commentators in Germany say that family businesses have an obligation to hire refugees for the greater good of society. They say that their commitment to stakeholder values gives them that obligation.  That may be so, but these stakeholder values are likely to be tested severely in the coming years whether or not the government coughs up with a subsidy or not.

Given the German economy’s huge importance to the rest of Europe, there is much at stake on the issue of finding refugees jobs for the whole of the region.