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German Joblessness Poised for a Bump as Refugees Search for Work

  • Refugee influx could be feeding through to employment figures
  • People from asylum countries saw higher March joblessness

Germany’s unemployment may be headed for a jump even as the economy keeps expanding.

While the labor market for native Germans has rarely been stronger, the recent influx of asylum-seekers into Europe’s largest economy could push up the jobless rate in the near term. Many of the newcomers -- a potentially vital supplement to the nation’s aging and shrinking workforce if successfully integrated -- currently lack the skills employers need.

“Most of them have to be retrained,” said Joachim Bothe, coordinator at Mamba 3 in Munster, who liaises with employers looking to hire refugees and counselors assisting the migrants. “One of the most important challenges is the language hurdle -- we still have a problem getting jobs for people who don’t speak any German.”

Germany’s labor market has been a cornerstone of the nation’s recovery, supporting domestic demand as exports waver in the face of a global slowdown. While the economy is predicted to keep growing, the decline in unemployment may be coming to an end for now.

The number of people out of work probably held steady in April, according to a Bloomberg survey of economists before the data are published on Thursday. The figure was also unchanged in March, snapping a run of five months of declines. The unemployment rate probably held at a record-low 6.2 percent.

“This could be the beginning of a trend reversal,” said Eckart Tuchtfeld, an analyst at Commerzbank AG in Frankfurt. “Only a small portion of immigrants will find jobs quickly.”

Non-Europeans from asylum-seeking countries were the only group with rising joblessness in March, according to a report from the German statistics agency using non-seasonally adjusted data. The number out of work rose 11.3 percent from the prior month and 79 percent from the prior year, even as Germans saw unemployment decline.

More than 1 million people were registered as asylum-seekers at reception centers last year. Those bookings, carried out by the federal states, are anonymous and some people are probably double-counted, while others move on to join family outside of Germany. Ultimately, the federal office responsible for granting asylum had about 480,000 applications last year, up from 200,000 in 2014. First applications at the federal office have continued to rise so far this year.

Asylum-seekers can’t work for their first three months in Germany, and after that they face restrictions -- for instance, under permission-to-reside rules, they can’t be hired during their first 15 months if a German could fill the position. Such constraints mean that it could take refugees some time to work their way into the system to obtain unemployment status.

“For this year in general, we expect a rise in the unemployment figure due to the large inflow of refugees we have seen over the last year,” said Johannes Gareis, an economist at Natixis in Frankfurt.

What would that uptick in unemployment mean for German workers? Probably not much, outside of low-skill-level jobs. Hiring continues and job vacancies are elevated. Companies just aren’t soaking up refugees who often lack the education necessary for open positions.

“What we think is that this will create some downward pressure on wages in the low-income sector; however, we do not expect big rises there anyway,” Gareis said. “We definitely see some labor shortages in the labor market, as regards skilled labor.”

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