Why do highly skilled workers leave China

When highly qualified people leave and less educated people come - Germany's double migration problem

When it comes to migration, Germany is in a twofold unfortunate situation. While it provides many countries with people who have been educated for dearly at German universities, it experiences a steady influx of people with low qualifications. This cannot remain without effect in the long run.

In Germany and other European countries, the issue of migration continues to be discussed intensively. The French President has made migration and its regulation a central issue in his European election campaign. The focus is on immigration, its consequences and regulation. At most, emigration from southern and eastern European countries is discussed. Another problem is being overlooked: for example, many highly qualified people are emigrating from economically prosperous Germany. As in the 19th century, Germany is once again a country of emigration without this phenomenon being discussed in the German public.

However, it is not German harvest workers, but highly qualified people who are leaving today to work abroad. German doctors in Switzerland and Norway, but also German engineers in Australia are among these quiet emigrants. Data about them are somewhat hidden, also because the decision to emigrate (often temporarily planned) is less serious today than in the 19th century. Apartments are temporarily sublet and contact with the old homeland is maintained. Economically, this export of human capital is a remarkable phenomenon. Since these are not low-skilled, even a small number of emigrants has noticeable effects.

Home transfers as an indicator

You can measure the transfers to your home country by citizens working abroad. The World Bank describes people who work abroad for more than twelve months as emigrants and calculates their money transfers. In 2017, Germany ranked ninth according to the World Bank, behind traditional emigration countries such as India, China and the Philippines. After all, 16.6 billion dollars were transferred home by Germans working abroad. Americans, despite quadrupling the population, sent just $ 6 billion home in 2017.

Unsurprisingly, the US tops the list of countries from which money is sent home: In 2017, citizens of other countries working in the US sent home $ 66.6 billion, ahead of Saudi Arabia with $ 37.8 billion. In third place on the list is Switzerland with $ 26.3 billion, ahead of Germany with $ 20.6 billion.

An assistant doctor at a German hospital earned around 81,000 euros gross in 2018, which is just 4,300 euros more than a truck driver who works for Walmart in the USA.

Germany differs significantly from classic immigration countries such as Australia, Canada or the USA. These do not show a noteworthy volume of transfers to the home country of their own citizens. This is due to the fact that their own citizens seem to have little inclination to leave the country temporarily or permanently and to look for better-paid employment abroad. Traditional immigration countries are able to create economic incentive structures for highly qualified immigrants and To create locals.

Germany, on the other hand, combines the emigration of the highly qualified with the immigration of the less qualified. The doctors and engineers trained at the expense of German taxpayers maximize their personal benefit, which is understandable and legitimate. If one compares, for example, the employment and income conditions of doctors in the German health care system with those in Australia or Switzerland, it becomes apparent that the incomes in Germany are significantly lower and the working conditions are often worse. Senior physicians employed in Germany earn a third of what is paid for comparable positions in Australia or the USA. Annual salaries of employed doctors there range up to 450,000 euros. In Denmark or Switzerland, salaries are at least twice the German value.

Internationally beaten

Health Minister Jens Spahn is the emigration of doctors trained in Germany a thorn in the side. How he can prevent this, however, he does not know. It seems difficult to imagine imposing sanctions on doctors working abroad. What is strange is that the obvious solution, higher salaries, is not being considered. It will remain difficult to keep highly qualified people in Germany as long as there is a lot more to be earned abroad. The salaries of employed doctors, for example, are modest in Germany, at least by international standards. Even those with low medical qualifications get a similar wage in other countries: an assistant doctor at a German hospital earned around 81,000 euros gross in 2018, which is just 4,300 euros more than a truck driver who works for the Walmart retail chain in the USA. After taxes and social security contributions, truckers have a higher net income than German medical professionals.

For the immigration countries, the immigration of highly qualified people is a profitable business. These workers increase the country's per capita economic output and thus help to stabilize the living standards of the local population. Switzerland in particular can count itself among the beneficiaries of German exports of doctors. Every fifth doctor in Switzerland was trained in Germany. Around 6500 doctors from Germany are currently working in Switzerland, mainly in hospitals. The training of these doctors cost the German taxpayer around 250,000 euros per person. Overall, Switzerland has imported human capital worth around CHF 1.9 billion. This saves you considerable training costs; Germany, on the other hand, is left behind with its “brain drain”.

The situation in Germany is also uncomfortable for another reason: The large number of immigrants with low qualifications lowers the average economic performance on the one hand, and the social systems are burdened on the other. This problem is particularly evident with the refugees living in Germany. In August 2018, 6.6 percent of the total population, but 63.7 percent of the refugees received the Hartz IV basic security. Of the 1.7 million refugees registered in Germany, 361,000 are in employment subject to social security contributions. Since many migrants do not have a qualification that is in demand on the German labor market, they only have ancillary activities: cleaning, waiting, hauling. These badly paid jobs also do not allow the immigrants to make lavish transfers back home.

When analyzing the economic effects of migration, the redistribution within social systems is often overlooked. Many observers believe that just taking up an auxiliary activity means that an immigrant can finance himself. This is not the case. Germany is not only one of the countries with the highest burden of labor income through taxes, but also through social security contributions. The health insurance premiums of a well-paid person in the statutory insurance are currently around 830 euros per month including half of the employer's share. The Federal Minister of Finance transfers the health insurance funds only around 100 euros per person per month. The higher earners subsidize the recipients of social benefits, including immigrants.

Doubly unfortunate

For Germany, the current migration policy is doubly unfortunate. The country is losing trained, highly qualified workers at the expense of the taxpayer - no different from African countries or India. At the same time, the poorly qualified continue to immigrate and put a strain on the welfare state. Taxes and duties remain high by international standards. Not least because of this, German employers can no longer offer highly qualified employees as much as they used to.

In the medium and long term, Germany is heading for a structural crisis in economic and social policy. High achievers are leaving the country and weakening economic prospects. The immigration of low-skilled workers has the same effect. In order to change this problematic development, German politics would have to ensure that the tax burden falls and at the same time the salaries of highly qualified workers rise so much that they become competitive in international comparison. In today's political atmosphere, which is characterized by an oversized coalition of redistribution advocates in the Bundestag, this demand for more inequality and fewer social benefits is utopian. There is a lack of insight into the consequences for Germany that it can no longer keep its own talents in the country.

Heribert Dieter is visiting professor for international political economy at the Zeppelin University Friedrichshafen. He is also part of the Global Issues research group at the Science and Politics Foundation, Berlin.