MALAIKA MAHLATSI: How Germany is rebuilding its economy using African labour

A few days ago, German Chancellor, Olaf Scholz, and Kenyan President, William Ruto, signed a skilled labour and migration agreement in Berlin. The agreement will see more than 200,000 skilled Kenyans migrate to Germany, the European Union’s biggest economy, over the coming years. It commits to easing the migration of skilled Kenyans to Germany, while simultaneously facilitating the repatriation of those who do not have the right to stay in Germany.

President Ruto has hailed the deal as a “win-win” for both countries, arguing that Kenya has a youth bulge which such a deal will resolve while harnessing the country’s human capital. Scholz, giving a more practical analysis, stated that the deal would help Germany compensate for its shortage of skilled workers. Indeed, despite the excitement that many young Kenyans may be feeling about the prospects of migrating to a developed nation where prospects for upward mobility are much greater, the fact of the matter is that this deal has little to do with improving the conditions of Kenyans and everything to do with maintaining the comfort of Germans at a time when analysts such as Indrabati Lahiri and others are referring to Germany as “the sick man of Europe”.

The German economy is in serious trouble – and it has been years in the making. In March 2024, the International Monetary Fund (IMF) published an article titled Germany’s real challenges are ageing, under-investment and too much red tape on its website. The article outlines the serious structural economic challenges confronting Germany, including its weak economic growth. Germany was the only country in the G7 to see its economy shrink in 2023, and according to the IMF, it is set to be the group’s slowest-growing economy again in 2024.

A month later, in April 2024, the Weil European Distress Index was published. It surveys 3,750 European listed companies in five markets, namely: France, the United Kingdom, Germany, Spain-Italy and Total Europe. It takes into account 16 indicators across liquidity, profitability, risk, valuation, investment and financial markets, and measures distress levels across corporates. This recent study revealed several key insights into the continent’s corporate distress sector, one of which is that Germany is the most distressed market in the entire continent of Europe. Its key industries, including manufacturing, are especially hard-hit. The report goes on to state that: “There is looming concern for a potential recession, with economic output at risk of declining in early 2024. Germany’s industrials sector is particularly strained by high interest rates, skilled labour deficits and extensive regulations, leading to more insolvencies”. Many other similar reports and analyses have been published. The German government has corroborated them.

There are many factors that inform the decline of Germany’s economy – some temporary and some more structural. These include the impact of the Russo-Ukrainian War. Over the past decades, Germany’s growth was spurred by its highly competitive export industries. Germany’s automotive industry, in particular, has been its economic backbone for decades. This competitiveness was powered by Germany's importing of cheap gas from Russia. However, following the shutoff of Russian gas in 2022, precipitated by the war, German industries and households were hard hit. The shutoff led to rising levels of inflation and a cost-of-living challenge as the cost of producing goods increased exponentially. While interventions by the German government made it possible for households and industries to absorb some of these shocks, the impact has had lasting effects even as wholesale gas prices are stabilising.

The bigger problems for Germany’s economy are more structural. One of the most salient of these is an ageing population. According to the IMF, Germany’s labour force is predicted to drop more than any other G7 country, putting downward pressure on gross domestic product (GDP) broadly, as well as GPD per capita, as the ratio of retirees to workers will be greatly skewed. It will also lead to a combination of higher social security contributions and lower pensions.

Furthermore, an elderly population will increase demand for healthcare services, which are already under pressure in Germany. German emergency services suffer from major inefficiencies and vastly different services across the country. Germany’s Association of General Practitioners contends that there are insufficient resources, including staff, leading to a burden on the healthcare system.

The situation is so concerning that according to the CEO of Robert Bosch Stiftung, Dr Bernhard Straub, public trust in the health system is declining significantly. In an article published in March 2023, Dr Straub asserts that the percentage of Germans who trust that healthcare policy will ensure quality and affordable care has fallen from 70 to 40%. With a greater demand for healthcare workers, there are concerns that this will draw workers away from other industries. Compound this with the threat of the deterring of investment owing to labour shortages, and it is clear that Germany is in desperate need of skilled and semi-skilled migrants. To attract them, it has passed laws to ease immigration and support migrant start-ups.

While it’s reasonable for any country to prioritise its own national security and growth, the fact that Germany is targeting developing countries to rescue it is concerning for two reasons. Firstly, Germany has historically demonstrated contempt for Africans in particular. This is evidenced in its disproportionate and unjust trade laws and practices, wherein it views the African market as one solely for export while it imports very little from the continent. German companies make billions of dollars in Africa, but it’s extremely difficult for African companies, particularly those run and managed by Black people, to thrive in the segmented labour market of Germany.

Furthermore, Germany has a serious racism problem that it has yet to fully appreciate and resolve. According to a racism report released by the German Centre for Integration and Migration Research (DeZIM) in 2023, the first of its kind in the country, Africans are disproportionately affected by racism in the country, with nearly 20% of those surveyed saying they have been subjected to repeated threats or harassment, compared to 13% and 12% of Muslims and Asians, respectively. The report posits that the incidents spanned the public sphere, taking place anywhere from public transport to healthcare facilities, social clubs and banks. Overall, the study found that 54% of Black people in Germany had experienced racism at least once.

I relocated to Germany for my doctoral studies just over a year ago and while I have not experienced racism, I don’t believe that Germany is a country that places sufficient value on Africans. Clear evidence of this can be seen in Germany’s investment in prioritising consistent reparations for victims of the Holocaust while offering a pittance to victims of the Herero and Nama genocide in Namibia, where tens of thousands of Herero and Nama peoples were massacred by the German Empire. To be specific, while Germany has paid nearly US$100 billion to victims of the Holocaust over the years, it has offered just over US$1 billion to the Namibian government over 30 years, for the Herero and Nama genocide. And even this offer came after years of legal action by Herero and Nama peoples, against the German government.

Furthermore, it is incredibly difficult to integrate into German society, even in the more liberal states such as Niedersachsen where I reside, owing to conservative practices such as stringent language requirements that contribute to significant problems such as the deskilling of African migrants as well as those from developing countries outside the European Union.

It's unsettling that a country that has such disregard for Africans now turns to us when its economy is on its knees. More than this, it is yet another demonstration that to Europeans, Africans are of value only when they benefit European lives. The deal with Kenya is the evidence.