Ifo Viewpoint No. 60: Seven Truths Regarding Immigration

Hans-Werner Sinn
Munich, 1 December 2004

We called for labour, and people came. People who are proud of their home countries, who love their children and friends, and to whom Germany has remained a foreign country. In view of the country’s economic weakness, discussions have revived about a multicultural society, guest workers and immigrants. But the following must be kept in mind:

1. Immigration is an enrichment for Germany.
Immigrants have enriched the cultural variety of our country and have made Germany more cosmopolitan. Life has become more colourful for Germans. Not only have gyros become a German favourite with total sales exceeding even McDonalds hamburgers. We would also not want to do without Polish doctors, Turkish retailers as well Greek and Italian restaurants.

2. Immigrants are industrious, create jobs.
The majority of immigrants work and are responsible and reliable people. They do jobs that Germans no longer want to do. One tenth of them are self-employed or collaborating family members. Many of them create jobs, also for Germans.

3. Immigrants are law-abiding.
Only a small part of the immigrants work in the underground economy, and those who do, do so because they have no work permit or because their certificates or diplomas are not recognized here.

4. Immigration makes us smarter.
The German research community benefits from the immigration of foreign researchers. Science is exchange. It cannot prosper in isolation. In this way, a lot of research knowledge was also imported into Germany.

5. Immigrants make us cosmopolitan.
Immigrants help open the world for Germany by not only creating support and understanding for us with their contacts to their home countries, but also helping to establish valuable trade relationships. German exports to Turkey rose by half during the first six months of 2004 alone.

6. Immigrants were lured in by the welfare state.
It is also true, however, that in the past there was too much immigration of low-skilled people that was induced by the benefits of the welfare state. This should not be blamed on the immigrants, however. Rather, the problem was created by the politicians who failed to stop immigration into the welfare state.

7. Immigration must be formed.
The politicians are also to blame for the fact that during the past thirty years many low-skilled Germans allowed the immigrants to push them into the easy chairs provided for them by the welfare state. In order to create additional jobs for those immigrating, wages must fall, and in order for the low-skilled nationals to accept this and not suffer disadvantages, a system of state top-ups of wages is needed. The welfare state must spend its funds on participation instead of unemployment.

In short: We need immigrants, but we must change our welfare system in such a way that all of us benefit from immigration.

Hans-Werner Sinn
Professor of Economics and Public Finance
President of the Ifo Institute

Published under the title "Sieben Wahrheiten über unsere Gastarbeiter", Bild, No. 278/48, November 16, 2004, p. 2.