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July 2016, Volume 22, Number 3

Brexit, Germany

Britain. British voters June 23, 2016 voted 52-48 percent to leave the EU. Britain joined the EU in 1973, and 67 percent voted to stay in the EU in a 1975 referendum. In London, Scotland and Northern Ireland, a majority voted to remain in the EU; in other areas, a majority voted to leave.

Migration was a major issue, with those supporting the Leave campaign complaining of too many intra-EU migrants, largely from Poland, the Baltics, Portugal and Spain. Just before the vote, the Leave campaign predicted that Turkey's entry into the EU would bring an additional one million Turkish migrants into the UK, including some who could be Islamic militants.

The Remain campaign was led by Prime Minister David Cameron, who in 2010 promised to reduce net immigration to the tens of thousands, less than 100,000 a year. However, net migration to the UK was 333,000 in 2015, including 184,000 intra-EU migrants. Almost a third of the net new intra-EU migrants were from Bulgaria and Romania, whose citizens in 2014 obtained the right to move within the EU to seek work.

Proponents of Remain argued that the UK could negotiate new migration rules to limit intra-EU migration and that, in any event, migrants benefited Britain economically, with young migrants filling jobs that might otherwise go unfilled and paying more in taxes than they consume in tax-supported benefits.

Britain has been a bright spot for job growth, with employment rising two million from its pre-recession peak to 31.5 million in 2016. About half of the two million increase in jobs went to intra-EU migrants, bringing the number of non-British EU nationals employed in the UK to 2.2 million in 2016, where they sometimes dominate workforces in construction, agriculture and food processing, and London-area hotels and restaurants.

Employment in the EU 28 member states peaked at 225 million in 2008, and is 222 million in 2016. By contrast, US employment has reached a new peak of 144 million in 2016.

Restaurant Pret A Manger, whose base wage is L8.50, was criticized during the Brexit debate for hiring relatively few British workers. EU nationals from lower-wage countries say that they are filling jobs at Pret A Manger and other restaurants that British workers shun.

There are 1.3 million non-British EU citizens in the UK between the ages of 18 and 35. Many EU youth move to the UK to find work and improve their English, turning London into a magnet for intra-EU migrants. Some who were eligible applied for British citizenship to ensure that they could stay, while others sought jobs paying at least L20,800 to qualify for Tier 2 employment visas (the salary threshold will rise to L30,000 in spring 2017).

There was much speculation on the fallout from the British vote to leave the EU. Cameron will be replaced as prime minister by October 2016. Negotiations to exit the EU are likely to take at least two years.

Some say that the Brexit vote reflects the widening gap between elites and masses on globalization and migration, with elites welcoming falling borders while masses oppose more trade and migration. The major lesson, in this view, is that elites must acknowledge and compensate the losers from trade and migration.

Others said that the British vote to leave reflected EU-specific issues, including the drive in Brussels to foster ever-closer integration in a top-down fashion despite grass-roots opposition. With national elections in France and Germany in 2017, most predictions were for little further EU integration until 2018 or later.

Britain's Modern Slavery Act of 2015 toughened penalties on those who exploit workers. D. J. Houghton Catching Services was convicted in June 2016 of not paying six Lithuanian workers the agricultural minimum wage and housing them in deplorable conditions. The Gangmasters Licensing Authority raided Houghton in October 2012 and revoked its contracting license after finding that the workers were paid piece rates that sometimes gave them earnings of less than the minimum wage.

France. The French unemployment rate has been stuck at 10 percent for the past decade. Employers say that because it is difficult to fire people in France, they are reluctant to hire new employees except as short-term workers whose contracts can be renewed or terminated by the employer.

The Socialist government of Francois Hollande in May 2016 approved a law that would relax France's protective labor laws and allow employers to deviate from industry-wide collective bargaining agreements, as when individual employers negotiate directly with their employees to lower wages in order to avoid layoffs or bankruptcy, thus reducing the power of unions to bargain for wages and benefits on an industry-wide basis.

The General Confederation of Labor, France's largest union with 700,000 mostly public sector employees, organized strikes of rail- and energy-related workers, and threatened chaos during Euro 2016, a soccer tournament that occurs over a month in seven French cities that began June 10, 2016. The CGT organized a major demonstration in Paris June 14, 2016 against government proposals to change laws to give employers more flexibility to deviate from industry- and occupation-wide collective bargaining agreements and more flexibility to fire workers.

France has 2.9 million union members, two-thirds of them public employees, and they are organized into eight major unions. Some Socialist politicians, including economy minister Emmanuel Macron, say that France must change so that ambitious youth aspire to be entrepreneurs rather than civil servants who work 35-hour weeks.

Germany. Germany's EASY system recorded 1.1 million asylum seekers in 2015. About 800,000 remained in summer 2016, and they were joined by another 190,000 registrants in the first four months of 2016.

Most eventually apply for asylum, and by April 2016 some 660,000 had received permission to stay in Germany. Applicants from the Balkans and North Africa are often rejected, and German states, which handle deportations, are expected to remove them. States removed almost 60,000 foreigners in 2015.

Some 428,000 Syrians arrived in Germany in 2015, and another 72,000 arrived in the first five months of 2016. German officials in June 2016 estimated that each recognized Syrian would bring another family member, so that 500,000 recognized Syrian refugees would generate a million Syrians in Germany after two years.

German officials want to decide quickly who can stay and who must leave. Those who can stay are being encouraged to learn German and find jobs; the government in April 2016 announced the creation of 100,000 jobs for low-skilled workers.

Integration may not be easy. The head of Germany's employment agency said that they "are not the work force that the German economy needs." Frank-Jurgen Weise predicted that 10 percent of those granted asylum might be able to find regular jobs within a year, and half within five years.

In June 2016, there were 44 million employed workers in Germany, including 32 million wage and salary workers in social security systems. Another 2.6 million workers were unemployed, 5.9 percent; the 600,000 unemployed foreigners were a quarter of the unemployed, and the unemployment rate for foreigners was almost 15 percent.

Most of the refugees who arrived in 2015 were young men, and Germans have become skeptical about them. Two-thirds of those identified for committing 1,500 cases of robbery and sexual assault on women outside the Cologne train station on New Year's Eve were identified as Algerians and Moroccans who arrived in 2015. The anti-migrant Alternative for Germany party made gains in March 2016 regional elections and has 15 percent support in polls.

Germany is trying to quickly separate those who can stay from those who must leave, and get the stayers integrated quickly. The question is whether integration is best facilitated by government spending for language and make-work jobs or via wage subsidies and other measures that aim to get workers into private-sector jobs.

The first interviews of asylum seekers suggest polarization in education: some completed secondary school or more and have work experience, while others have very little education and work experience. Syrians, Iraqis and Iranians in Germany tend to have more education and work experience than those from Afghanistan, Pakistan and Somalia. Educated refugees express frustration that their credentials are not recognized in Germany, while less educated migrants say that learning German and obtaining credentials is difficult.

Migrants from the Balkans, most of whom are not recognized as refugees, sometimes speak German and have German work experience from their time in Germany during the break-up of Yugoslavia in the 1990s.

Integrating newcomers into the German labor market faces three challenges. First is the skepticism of employers, who do not know if the newcomers they hire will be allowed to stay. Second are the bureaucratic hurdles, including ensuring that a German or EU national is not available to fill the job for which the employer wants to hire a migrant. Third are the sometimes unrealistic expectations of migrants who expect high wages and good benefits in what are usually entry-level wages.

Germany in May 2016 approved a new integration law that requires foreigners who receive asylum to stay in the first city to which they are assigned at least three years unless they have a firm job offer elsewhere; those who move and are unemployed lose benefits. Asylees must learn German and take cultural classes to retain benefits, and they will be eligible for one of the 100,000 E1 an hour jobs being created with federal subsidies.

Sociologist Friedrich Heckmann attributes German acceptance of immigrants between 2005 and 2015 to a low unemployment rate and employers complaining of labor shortages, an elite consensus that Germany needed immigrants, and changes in German integration policies to promote inclusion. With opinion leaders arguing that immigration was needed to maintain Germany's economic competitiveness, there was no great fear of migrants changing German culture or identity.

In Austria, Norbert Hofer of the anti-immigration Freedom Party in April 2016 won 35 percent of the vote for president in the first round of voting, but narrowly lost to ex-Green leader Alexander Van der Bellen in the May 2016 run off. Hofer alleged irregularities, and in June 2016, the Constitutional Court ordered a new election for September-October. Voters rejected the two parties that have dominated Austria's coalition governments, the Social Democratic Party and the People's Party.

Austrian Chancellor Werner Faymann, in office since 2008, resigned from the SDP, a casualty of the 2015 migrant crisis. The long-time coalition governments dominated by the Social Democratic People's Party and the PP has been weakened as polarized voters move toward the Freedom Party and the Greens. Unemployment is 10 percent.

Greece. Greece hosted 50,000 refugees in June 2016. Migrants who arrived in Greece by sea from Turkey before March 20, 2016 may apply for asylum, and if their application is rejected, they can appeal.

Greece was on the brink of default again in spring 2016, raising questions about whether it can remain in the 19-member Euro zone. Government debt was 180 percent of GDP at the end of 2015. The IMF in May 2016 demanded that the government reduce pensions, among the most generous in Europe and costing 20 percent of GDP, in order to unlock more EU aid.

Greece in May 2016 consolidated several pension systems, reduced benefits and raised contributions. The IMF, which says that Greece needs debt relief, wants the Greek government to approve more budget cuts that would be implemented automatically if tax revenues were less than projected.

Prime Minister Alexis Tsipras resisted, arguing that pensions are the lifeblood of many families in a Greek economy where a quarter of all workers are unemployed and half of under-25s are jobless. Greeks in a July 2015 referendum voted for "no more austerity," but in August 2015 the Greek government signed an agreement with the EU and IMF that required more budget cuts.

The Tsipras government enacted standby legislation that will raise taxes if revenues are less than expected, but resisted calls to reduce spending, as demanded by the opposition New Democracy party. The EU has lent Greece about E200 billion, and is due to lend an additional E60 billion. The IMF wants the EU to keep Greek payments on its outstanding debt to less than 15 percent of GDP.

Sweden. Sweden received 160,000 asylum seekers in 2015, and in June 2016 enacted legislation that requires recognized refugees who want to bring family members to Sweden to show that they can support them.

Turkey. Turkey is the key to reducing the flow of migrants to Greece. Relations between Turkey and the EU have been strained by the authoritarianism of Recep Tayyip Erdogan, who has dominated Turkish politics since 2003.

Erdogan in April 2016 persuaded the German government to charge TV personality Jan Boehmermann with insulting Erdogan by reading a poem during his March 31, 2016 show. The Turkish government routinely brings criminal cases against those who insult its leaders, filing 2,000 cases in Turkey that can result in four-year sentences. German critics said that Erdogan was interfering with freedom of speech.

The major issue facing Turkey today is Syria. Turkey has taken 2.5 million Syrians, including 300,000 who live in camps along the Turkey-Syria border. Turkey in January 2016 allowed Syrians to obtain work permits, but Turkish employers in the southeastern part of the country with the most Syrians say that they want skilled labor, and that Syrian refugees lack needed skills. Some call on the EU to provide funds to create jobs for Syrians in Turkey.

Turkey is strongly opposed to the Assad regime, and has come into conflict with Russia, but also opposes Syrian Kurds who are being supported by the US and are allied with separatist Turkish Kurds.

The Turkish government is using fighting against Assad and ISIS as a pretext to attack separatist Kurds in southeastern Turkey. The Kurdistan Workers' Party (PKK) ended a cease fire with the government in July 2015, prompting government-PKK clashes that have displaced thousands. In the mostly Kurdish city of Diyarbakir, the government expropriated Surp (Saint) Giragos, one of the largest Armenian churches in the Middle East, after it was damaged in fighting.

The government says it wants to turn Diyarbakir into a tourist destination modeled on the Spanish city of Toledo. Kurds and Armenians fear that they will be displaced as their damaged homes are expropriated for rebuilding.

Heckmann, Friedrich. 2016. Understanding the Creation of a Public Consensus: Migration and Integration in Germany, 2005-15.

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