In Depth

Refugee crisis: why Germany opened its doors (and maybe we should too)

Demographic changes are increasing the burden on the working age population

German Chancellor Angela Merkel has been praised for showing moral leadership in the face of the biggest flow of migrants across Europe since the Second World War, but some suggest that her unexpectedly welcoming stance may in fact be driven by economic prudence.

The BBC notes that Germany is to spend €6bn (£4.4bn) on funding for local authorities and to boost benefits to cope with an expected inflow of 800,000 migrants this year. The move comes after the country abandoned the existing protocol of sending people back to the first European Union country they entered.

But the BBC's economic editor Robert Peston says "one of the unspoken reasons why Germany is being much more welcoming to asylum seekers" is that "right now immigration looks… economically useful".

According to a European Commission report, Germany's population "will shrink from 81.3 million in 2013 to 70.8 million in 2060", by which time rapid ageing means "there will be fewer than two Germans under 65 to work and generate taxes to support each German over 65" (the dependency ratio). "Age-related spending on pensions, health and long-term care is expected to rise by a hefty five percentage points of GDP".

"So to put it another way, it is arguably particularly useful to Germany to have an influx of young grateful families from Syria or elsewhere, who may well be keen to toil and strive to rebuild their lives and prove to their hosts that they are not a burden."

In the UK, the situation is different. The population will actually "rise from 64.1 million to 80.1 million", while changes to pension age mean our dependency rates are also increasing, but not on the same scale. We've also already got more migrants living here.

Oliver Kamm of The Times takes a different view. While Germany is in a "different position", the dynamics that make the economic case for increased migration apply across Europe, including in Britain, he says. "One sobering estimate… is that, just to keep dependency ratios constant, Europe will have to admit more than 1.3 billion immigrants by the middle of the century."

Kamm adds that the "British debate about immigration almost invariably focuses on the short-term costs of assimilation". This is a reality that must be confronted at a time of fragile economic recovery, however, and not just in terms of the outlay on benefits and other immediate expenses. Reforms are needed along with a more inclusive approach.

According to The Wall Street Journal, even Germany is not in an ideal situation to cope with a huge influx as, despite low unemployment, it struggles with a "very low" labour force participation rate of 60 per cent. "Without economic reform to produce a growth economy, migration on the current scale is going to strain Europe's welfare state and further encourage the rise of extreme anti-immigration parties."

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