Impact Analysis: Does reducing aid to Ukrainians lead to increased employment in Germany?
In Germany, a debate is unfolding about the role of social welfare benefits for Ukrainian refugees. However, a recent study suggests that economic factors, particularly wage differences, play a significant role in attracting Ukrainian refugees to the country.
According to a study conducted from 2007 to 2018, immigrants, including Ukrainians, tend to be younger than native German citizens, work for longer, and are less likely to draw on pensions and healthcare benefits. This research, which included both intra-EU and non-EU migrants, debunks the idea that migrants are a burden on social security and the treasury. Instead, it suggests that measures to improve integration such as language learning, qualification recognition, and childcare facilitation could boost employment.
The IAB-BAMF-SOEP survey revealed that Ukrainians in Germany have high motivation to work but face obstacles such as a lack of German language skills, delayed recognition of professional qualifications, and a lack of access to childcare. Despite these challenges, wage differences between countries have about four times the influence on refugees' choice of destination than differences in social benefits, suggesting economic motivation to work is primary.
However, there is a political push to reduce social benefits for Ukrainian refugees. The German federal government has plans to withdraw access to citizen's allowance from Ukrainians who have arrived in the country since March 2022. The draft law, expected by the end of the year, would make Ukrainians who arrived after April 1, 2025, ineligible for citizen's allowance. Markus Soeder, Bavaria's Prime Minister and chair of the conservative Christian Social Union party (CSU), has called for the end of citizen's allowance benefits for all Ukrainian refugees.
Some politicians argue that high financial support may reduce refugees' motivation to seek employment, even among highly skilled individuals. However, integration into the German labor market shows that after three years only about 35% of Ukrainians are employed, indicating there may still be barriers to employment despite refugees' willingness to work.
In a televised interview with ZDF, Soeder claimed that Ukrainian refugees, regardless of when they arrived, should no longer be eligible for citizen's allowance. However, a recent survey of Ukrainian refugees in Germany found that the vast majority did not base their decision to come to Germany on the country's welfare benefits. Instead, motivations were overwhelmingly linked to the need for safety and protection after being uprooted by the Russian war of aggression.
Dr. Giacomo Boffi, one of the study authors, explicitly rejected the idea that migrants are a burden to the state. In fact, a study by economists from Leiden University found that immigrants, including refugees, contribute positively to public finances in Germany, with an average annual net fiscal contribution of €5,375.
In summary, economic factors, especially wage differences, strongly influence Ukrainian refugees' decision to come to Germany rather than social welfare generosity. While there is a political effort underway to reduce social benefits with the rationale that smaller benefits will increase employment motivation, actual employment rates remain moderate. Ukrainian refugees generally want to work, but employment integration is still incomplete three years after arrival. This suggests that while welfare benefit levels matter politically and have some effect, the main motivation for refugees is to find paid employment and better economic prospects rather than merely accessing social benefits.
- The political push to reduce social benefits for Ukrainian refugees in Germany is questionable, considering a study by economists from Leiden University indicates that immigrants, including Ukrainian refugees, contribute positively to public finances in Germany.
- Despite the political debates that suggest smaller social benefits may increase employment motivation among Ukrainian refugees, the recent survey and the study from 2007 to 2018 demonstrate that economic factors, particularly wage differences, have a more significant influence on refugees' choice of destination than differences in social benefits.
