Nine Months after the Start of the Pandemic: The Impact of COVID-19 on Labor Migration and the Labor Market Situation of Migrants in Germany

The third Migration Zoom Time, a digital version of the successful Migration Lunch Time event format, brought together a broad range of participants from the federal administration, politics, associations, civil society, media and academia. The objective was to discuss the impact of the COVID-19 pandemic on labor migration and the labor market situation of migrants in Germany nine months after the start of the pandemic.

Professor Herbert Brücker from the Institute for Employment Research (IAB) and the Berlin Institute for Integration and Migration Research (BIM) gave a short presentation to inform the discussion with current empirical findings. Marie Rövekamp, editor at the Economics Department, Der Tagesspiegel, questioned the social implications of these findings. Afterwards, Thomas Liebig from the Organisation for Economic Co-operation and Development (OECD) put the results into an international context. Then, the discussion was opened to the entire group of participants. The event was moderated by Matthias M. Mayer.

Important results of the discussion were the following:

1. Migrants (and especially refugees) react more strongly and quickly to the lockdown, in positive and negative ways. The COVID-19 pandemic interrupts migrant employment growth but did not lead to a collapse in employment, as initially feared. This is due to the fact that migrants were more affected by the first lockdown than the German population. The reasons for this are that foreigners (and in particular refugees) work more frequently in temporary jobs, perform manual tasks that are less compatible with working from home, and work more often in sectors that are hit particularly hard by closures (such as the catering industry). This disadvantage is further exacerbated by migration-specific conditions, such as below-average job tenure and employment in small firms. It is striking, however, that after the end of the lockdown, employment of migrants and refugees started to rise immediately and disproportionately. Migrants and refugees benefited, for example, particularly from the reopening of the catering industry in the third quarter and thus responded very directly to policy measures.
    
2. Foreigners and Germans adjust differently to the lockdown. For natives, adjustment to the shock is more likely to occur through remote work and changes in working hours (e.g., reduction of overtime). For refugees and other migrants adjustments are more likely to occur through the so-called short-time working allowance (Kurzarbeitergeld), reduction of contracted working hours, and termination of employment. Nevertheless, the data show that migrants (excluding refugees) work from home as often as Germans, while refugees work significantly less from home. The first finding is somewhat surprising, but it can be partially explained by the fact that the work activities of the migrant population (excluding refugees) become more similar to the ones of the German population.
    
3. The increase in unemployment among refugees can also be attributed to the decline in policy measures. The termination of integration and labor market policy measures as a result of the first lockdown led to an increase in unemployment, especially among refugees. One reason for this is that participants taking part in these measures are not officially listed as unemployed. It should be noted, however, that some of the measures would have ended anyway, e.g. due to the regular expiration of integration courses. Nonetheless, in a counterfactual scenario without COVID-19, this would likely be largely offset by employment increases. This is because the employment rates of refugees have grown significantly in recent years, starting from a comparatively low level. This growth trend has now been interrupted. In addition, persons whose asylum procedures have been completed are now less likely to enter integration or labor market policy measures or find a job (which also leads to an increase in unemployment among refugees). In order to prevent the pandemic-related decline in policy measures from having a lasting impact on the labor market integration of refugees, it should be examined how adequate the current structure of measures is for the target groups. For example, the existing range of language courses that build on integration courses could be expanded, and the areas of vocational training and further education could be refined. In addition, particularly vulnerable groups, such as women and young people, could be addressed with targeted programs. However, setting up the optimal support and implementation structure for this is certainly associated with challenges, since these groups can be reached digitally only to a limited extent.
    
4. Migration movements react strongly to the lockdown, reasons for this are manifold. Initial figures show: Due to the lockdown and travel restrictions in spring 2020, the growth of the foreign population flattened significantly but picked up again rapidly following the relaxations of the third quarter. Nevertheless, net immigration is expected to be noticeably lower in 2020 compared to the previous year. The exact reasons for the changes in migration flows are difficult to identify and reliable data are not yet available. It can be assumed that various factors play a role: On the one hand, companies are generally hiring less during the crisis, and recruiting skilled workers from abroad is fraught with particular uncertainties and risks due to the pandemic. On the other hand, administrative processes such as visa issuance and recognition of professional qualifications have become more difficult. One possible reason for the rapid recovery of migration following the end of the first lockdown could be Germany's relatively good economic situation coupled with sometimes catastrophic circumstances in some countries of origin. It is equally possible that it was fed in part by catch-up effects from migration movements that did not occur in the second quarter, coupled with Germany's relatively moderate border closures. In any case, it is very likely that the bulk of the observed migration movements consists of intra-EU mobility. Moreover, the labor market has shown absorptive capacity even during the crisis, and in sectors such as agriculture, the absence of migration has even led to a decline in output.
    
5. The pandemic does not change structural demographic developments. The pandemic will most likely have no long-term impact on demographic developments in Germany. This means that, without immigration, the labor supply in Germany will decline. Because the death rate significantly exceeds the birth rate, Germany loses approximately 350,000 to 380,000 natives of working age per year. Figures from the Federal Statistical Office of Germany show, for example, that there was a population decline for the first time in ten years in the first half of 2020 because reduced immigration to Germany could not compensate for the birth deficit.
    
6. The pandemic could also have long-lasting impacts on individual economic sectors. From a macroeconomic perspective, many sectors are expected to recover quickly from the crisis, such as catering and manufacturing. However, it cannot be ruled out that some sectors will face long-lasting shocks. This could be the case for the transport sector, as business travel will mostly likely continue to be less important than in the past due to virtual communication options - which have received a massive boost from the pandemic. Since a disproportionate number of foreigners are employed in the transport industry, this could hit the migrant population particularly hard. It is also to be expected that polarization on the German labor market will continue. On the one hand, academic qualifications will continue to be in high demand. On the other hand, this is also the case for manual non-routine and interactive non-routine activities, for example in the service sector. These activities do not necessarily require a formal vocational training, yet they are difficult to automate. This tendency towards polarization can already be observed in the current qualification structure of migrants.

Video and presentation are only available in German.