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The number of ethnic Germans born abroad who moved to Germany dropped from 90,000 in 2002 to 72,000 in 2003. Ethnic German arrivals peaked at 400,000 in 1990, and a total of three million ethnic Germans moved to Germany since 1987 (about 80 percent of those arriving are family members of ethnic Germans).

Hamburg voters in February 2004 gave the anti-immigrant, law-and-order party led by Ronald Schill fewer than five percent of their votes, keeping the Schill party out of the new government led by the Christian Democrats, who got 47 percent of the vote. The Schill party received 19 percent of the vote in September 2001 elections, and formed a contentious coalition government with the Christian Democrats.

Labor. In 2003, Germany had 82.5 million residents, including 42 million in the labor force. There were 38 million employed and almost four million unemployed; the employed included 34 million wage and salary workers and four million self-employed. The wage and salary workers included eight million in manufacturing, two million in construction, and 24 million in services.

In March 2003, the German government approved four laws to increase the flexibility of the labor market, the Hartz reforms, as part of Agenda 2010. The duration of unemployment benefits was reduced from indefinitely to six to 18 months depending on age and length of previous employment. If no new job is found before UI benefits end, the unemployed worker receives E345 a month. In addition, there are higher health care fees, lower retirement benefits, looser job protection laws and income tax cuts. Germany reduced taxes on mini-jobs, those paying up to E400 a month, allowing employers to pay a flat 23 percent in payroll taxes and two percent other taxes.

In April 2004, 200,000 demonstrators massed at the Brandenburg Gate in Berlin to protest the year-old Hartz reforms, which have reduced the popularity of Chancellor Schroeder's Social Democrats to just 25 percent, compared to 50 percent for the opposition Christian Democratic Union.

As part of its labor market reforms, government has stepped up the fight against illegal work, which includes Germans drawing social benefits while working, employers not paying required taxes and fees, and foreigners working without required permits. There are fears that the new penalties for this so-called Schwarzarbeit, now enforced by 7,000 Customs inspectors instead of the Labor Ministry, will have unintended consequences such as making neighbors helping each other guilty of violations.

Germany has 1.8 million active and 1.3 million retired civil servants (Beamte or public officials), who can retire after 40 years of service at 70 percent of their final year's pay. A third of the members of the German Parliament are Beamte, which makes reforms that would reduce their pension benefits very difficult.

Between 1970 and 2000, employment in the US rose by 30 percent, from 78 million to 136 million, compared to three percent in Germany, from 27 million to 36 million (adjusted for unification). The standard explanation for slow employment growth in Germany is an over-regulated labor market, although some studies suggested an alternative explanation--faster productivity growth in Europe. For example, the employment elasticity in Germany, which is the growth in employment associated with one percent GDP growth, was 0.3 percent, compared to 0.6 percent in the US.

Veysel Oezcan, "Fewer Ethnic Germans Immigrating to Ancestral Homeland," Migration Information Source, February 1, 2004.