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Home / India / Why Germany isn't 'hot' for IT

Why Germany isn't 'hot' for IT

Despite a new immigration law in place, Indians still make a beeline for UK and US, writes Varupi JainBerlin Diary.

india Updated: Mar 22, 2005, 21:30 IST
BERLIN DIARY | Varupi Jain
BERLIN DIARY | Varupi Jain

There was much uproar in Germany recently when the official number of the unemployed touched an all-time high of over five million people. Perhaps this is a good point to reflect on the mismatch — both in quality and quantity — of demand and supply of (German and foreign) qualified labour force in Germany.

The new Immigration Law, which came into force on January 1, 2005, is hardly more than false glitter — in any case, no cause of celebration for Indian professionals pinning their hopes on Germany.

Back in 2000, Chancellor Schroeder was much lauded for having introduced the German Green Card programme to meet the growing demand for highly qualified personnel in the IT industry in Germany. A total of 15,110 green cards were granted by August 31, 2003, of which 4,072 were given to Indian nationals, who represent by far the largest national group of German green card holders.

Yet, four years down the line, the programme proved to be a hit on a number of fronts but a whimper on many more. 

Germany currently accounts for $200m of software exports and is the second largest European destination for Indian IT exports. Indian companies were the single largest beneficiaries of the scheme since it facilitated easy entry of their employees into Germany. 

However, let us look at the many potentially problematic aspects of the German Green Card programme — given the economic, historical and cultural baggage that the initiative comes along with. Just like there is competition among professionals aspiring to go to UK, USA and Germany, even the potential host countries need to outdo one another in attracting competent people.

UK and USA have an edge over Germany in terms of the English language, an image of cosmopolitan and foreigner-friendly environment, a less-devouring tax structure and a more heterogeneous population. Not many Indian IT-professionals, for instance, wish to go through the struggle of having to learn German and therefore prefer English-speaking zones like the USA and UK.

Also, contrary to the UK and USA, who were both proactive in making policies attractive to foreigners, Germany only 'reacted' with half-baked policies. Germany woke up as late as 2000 to the fact that they were missing out on the IT boom and needed to introduce a system to attract foreign IT professionals to compensate for lack of adequate number of German professionals.

However, by the time Germany put things in place, the IT bubble had burst and the professionals retrenched from the USA and UK started coming to Germany. Germany again had to make do with perhaps only the second or the third best, for the USA and UK typically did not lay off their best workers.

"German companies pay less, but usually offer more job security. Taxes are higher in Germany. The tax rates in USA and UK are 5 - 7 per cent cheaper, and for a person earning an average wage of around $60,000 per year, there are more ways to save taxes in US and UK than in Germany.

For short-term financial gains, which many Indians seem to be looking out for, UK and US are thus more attractive," offers Pranav Bihari, an Indian Green Card holder working with one of the leading software firms near Heidelberg, Germany.

With the new Immigration Law, Germany adequately addresses issues of asylum seekers and better integration of immigrants. However, the Law is still way too cautious in throwing the doors wide open to highly skilled personnel - who - as German industrial pundits continue to harp - Germany badly needs, given the sustained low fertility rates and the rapidly aging population. By 2025, for example, one-quarter of the German population will be over 65, and the number of new labour-force entrants will decline by one-third.

In many ways, the new Law will do only lip-service to attracting talented workforce. The recruitment ban that was passed in 1973 will remain in effect (this legally binding decree bars active recruitment of foreign labour; exceptions for nurses, IT specialists, and seasonal agricultural workers are legally defined by another decree).

Contrary to the present trend of students having to leave Germany on completion of their studies, they can now obtain residence permit for a year to look for a job. The new Law welcomes the self-employed provided they create employment and bring in substantial start-up capital.

However, ambitious young people from other non-EU countries will still not be able to take up permanent residence in Germany. Only newly arriving top-ranking scientists and managers will receive the right to take up permanent residence. Moreover, German nationals and other EU citizens will continue to enjoy preferential treatment during hiring processes.

According to the Cologne Institute for Business Research, about 20,000 jobs requiring high skills remain vacant because of a shortage of qualified workers. German industry has been constantly urging the political quarters to streamline immigration policies with an eye on meeting the future needs of the German labour market.

Yet, all that Germany has managed are tiny little steps - surely in the right direction - which will leave behind not the desired economic repercussions but only imperfect ripples.

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