Why are so many smart Germans leaving their country?

Emigration is a little-discussed problem in Germany.

Photo by Pascal Meier on Unsplash

Dear Reader,

I recently came across an interesting article from the year 1923 in the archives of the Frankfurter Allgemeine Zeitung. Titled “Away to freedom!” the report documented a surge in Germans looking to leave the country for a better life abroad.

“A deep longing is coursing through the German people,” the article started. “They want to escape from domestic turmoil, from the hatred and envy that poisons the soul, from the ravages of inflation, and from the oppression of inadequate wages. They dream of countries where they can breathe more freely and live more peacefully.”

Most of those who had set their sights on a better life beyond Germany had bought tickets on steamers headed to the New World. A considerable number were also fleeing to neighbouring European countries like Holland, Switzerland, or Romania.

In 1923, Germany was still shattered by the effects of World War One; it was ravaged by hyper-inflation, and people lived under the constant threat of an anti-democratic coup.

A snippet from a very different era? Not quite...

A modern journalist wouldn’t quite get away with pinching the introduction to that century-old article and republishing it today. But it wouldn’t be totally removed from the truth, either.

One of the great untold stories of Germany today - one most people are largely unaware of - is that of emigration.

Perhaps it is just too hard to compute that the Germany of 2024 could be a country that people would want to leave to “breathe more freely” elsewhere. Perhaps it is too damaging to German self-esteem, and people are engaged in an unconscious attempt to repress it.

I don’t know why no one is talking about it. But it is happening.

Pick any year over the past decade, and you will see that around a quarter of a million German citizens moved abroad. Figures compiled by the OECD show that for every 100,000 Germans, 170 left the country in 2021. That is five times the level of the USA and ten times the level of Japan.

Migration of German citizens to and from Germany. Source: Federal Migration Office

Of course, high emigration doesn’t have to be a bad thing. In the 21st century, a ticket to the New World doesn’t mean saying goodbye to loved ones for good.

Most of those who leave come back sooner or later. Many go abroad for foreign work placements, or to study. Broadening your horizons is a good thing.

But there is more to it than that. Government data shows us an unmistakable trend: tens of thousands more Germans are leaving the country every year than are returning. Cumulatively, over the past decade, Germany lost over half a million of its citizens to emigration.

In terms of scale, this might not compare to the waves of millions who left for North America in the late nineteenth century. But the raw numbers don’t tell the whole story. These emigres are not only young, they are also disproportionately highly qualified.

Surveys show the typical émigré is 37 years old (compared to a national average age of 48), while three-quarters of them have university degrees.

“Just like in the 19th century, Germany is once again a country of emigration without this phenomenon being widely discussed by the German public,” observed economist Heribert Dieter in an article for the Neue Zürcher Zeitung. “This time, though, it is not farm labourers but highly qualified people who are leaving. Doctors are moving to Switzerland and Norway, engineers are moving to Australia.”

Few data points illustrate this reality better than figures the World Bank publishes on remittances. Remittances are financial transfers sent by migrant workers back to their homeland. Classic émigré countries like India and China always top the list of recipients. But Germany isn’t far behind. In 2022, remittance inflows of €19 billion put it just behind Nigeria and Bangladesh in 10th place. The countries from which the most remittances flow to Germany are the US and Switzerland.

Why are highly qualified young Germans uprooting themselves to start a new life abroad? One in five told a 2019 survey that they were fed up with the political situation in the country. One in four said they were motivated by money.

In that light, it is hardly surprising that Switzerland, with high wages and low taxes, is consistently the number one destination for Germans: some 20,000 moved their address across Lake Constance in 2022 alone. Next on the list are Austria and the US, while Spain comes in fourth.

Numbers from the Federal Migration Report 2022.

Just how important German immigration is to Switzerland can be seen in the Alpine nation’s health system, which relies on a steady stream of physicians crossing the northern border. Close to 7,000 German-trained doctors currently work in Switzerland - around a fifth of the country’s total medical staff. That’s a good deal for Switzerland - the new arrivals already speak the local lingo and, even better, someone else paid for all their training.

It’s a good deal for migrants, too - junior doctors can double their wages while also escaping Germany’s notoriously stressful hospital working conditions.

However, it’s categorically not a good deal for the German taxpayer. University tuition in Germany is still free. With the cost of training a single doctor estimated at a quarter of a million euros, German workers have subsidised the Swiss health system to the tune of several billion euros.

Naturally, Germany is compensating for that loss by pinching doctors from countries further down the food chain: from 12,000 foreign doctors two decades ago, there are over 60,000 working in Germany today. But that isn’t free. These doctors need to be taught the language and trained up to German standards.

And doctors are far from the only ones voting with their feet. Engineering and academia are two other careers in which Germany struggles to keep hold of its best and brightest.

What can the country do to reverse this trend?

The answer is obvious… it’s just one that few politicians think they can win votes with. Germany needs to cut its top tax rate in order to tempt these people to stay. That shouldn’t be such a controversial proposal. After all, only Belgium places a higher tax burden on its middle classes.

The reality of German politics is a different one, though. When finance minister Christian Lindner (Free Democrats) proposed raising the income threshold for the top tax rate earlier this month, he was immediately attacked by coalition partners from the Greens and Social Democrats.

Lindner’s plan didn’t even constitute a tax cut in real terms: it was calculated to negate the fact that inflation had pushed many more people into the top tax bracket. But that didn’t stop the Greens from accusing him of “bringing tax cuts in the double-digit billion range into play.” Such a proposal is “unserious” at a time when the country needs to invest in renewable infrastructure and defense, the Greens sniped.

According to economist Dieter, Germany is in the red on both sides of its migration ledger. The country is exporting high-skilled labour while importing low-skilled workers. High earners’ taxes thus have to remain high in part to subsidize the wages of poorly trained immigrants. This in turn sustains the incentive to look for jobs abroad.

“In the medium to long term, Germany is heading towards a structural crisis in economic and social policy,” Dieter predicts, gloomily.

Presumably, none of this is set in stone. Switzerland manages to attract workers with competitive tax rates while also having better healthcare and much better public infrastructure than Germany. Australia and Canada have better education systems. Germany can accept mediocrity. But it shouldn’t be surprised that citizens who don’t decide to look for a better life abroad.

---