When Europe wants to be politically successful, it thinks it must be harsh to migrants. That impression could be gained by anyone who has closely followed how the European Commission in Brussels and key European Union member states have repeatedly pushed plans for a stricter immigration policy.
Although the number of “irregular” arrivals in 2025 fell by 35 percent compared to the previous year, additional measures are now intended to sharpen the EU Migration and Asylum Pact. “Fast, effective, and dignified return is indispensable to the credibility of the asylum system,” said European Commissioner for Internal Affairs and Migration Magnus Brunner. There are plans for multipurpose centers (“return hubs”) along refugee routes in countries such as Egypt, Libya, Morocco, and Tunisia. There, people who are not in need of protection are to be detained and subsequently returned. Evidently, policymakers are worried that new political or climate-related crises could again bring more people to Europe—and thus cause migration issues to dominate election campaigns once more.
But the policy of escalation on migration is a mistake. It has long been established that prosperity and growth are heavily dependent on how well shrinking societies can integrate migrants and thereby offset weaknesses in their labor markets. What is highly controversial from a sociopolitical perspective looks quite different from an economic standpoint: Immigration pays off financially.
What is needed, therefore, is a paradigm shift by policymakers and the public—away from the perennial one-sided focus on “restriction” (or even “remigration”) and toward a new, positive mindset centered on opportunities. It appears that the European Commission is now also moving in this direction.
Migration as a Power Boost
It is time for radical change. The more proactively EU member states offer those wishing to enter the bloc legal opportunities to earn a living and settle, the more likely people are to shun exorbitantly expensive refugee routes and dubious trafficking organizations. It is too often forgotten that the short-term burdens of immigration are offset by the significant long-term benefits that working migrants bring to a country’s economic performance. Corporate and personal incomes rise, and more social security contributions are generated for healthcare, pensions, elderly care, and unemployment insurance. In addition, the government benefits from higher tax revenues.
From such a perspective, immigration no longer appears as a specter that sweeps national populists into power, but rather as a political and economic force that helps the ageing continent to compete against its geopolitical rivals. Countries with open, forward-looking societies can benefit from a sea change in immigration policy, while ageing, insular countries lose momentum.
Such considerations have not yet played a decisive role in any of the reforms of the Common European Asylum System. In any case, the issue of immigration is by no means “largely resolved,” as German Chancellor Friedrich Merz would have us believe.
Migration is a structural phenomenon of the global order and calls for a new political approach. Instead of responding to immigration in a technocratic manner, Europe must grasp it as a strategic resource for prosperity and stability. According to the Friedrich Naumann Foundation’s report “Grand Challenges for Europe 2050,” the EU and the United Kingdom will face a shortage of tens of millions of workers by 2050. Migration is the only realistic solution, the report states. In this respect, Africa with its young population offers great potential for a strategic partnership, it adds.
This issue is already highly relevant for the EU today. One in 10 people in the EU comes from outside the EU; as of early 2025, the largest numbers of non-EU nationals lived in Germany (12.4 million), Spain (6.9 million), France (6.5 million), and Italy (5.4 million).
In practice, however, rational policymaking is hindered by the intense ideological polarization surrounding the issue. Critics of asylum policies struggle to understand political slogans promoting immigration and point out that in Germany, the federal government alone spent nearly €30 billion on refugees in 2023 (for housing, social assistance, language courses and the like). This figure does not even include the asylum costs incurred by the federal states (€6.3 billion) and the local authorities after reimbursements. In France, the costs are said to be even higher.
From a purely market-economy perspective, immigration is completely normal. Migrants are drawn by income disparities; in other words, they settle where they can earn a good living in the long term. It is just as the economist Adam Smith (1723–90) once described it: Poverty and unemployment are “push factors” (reasons for leaving), while adequate wages are a “pull factor,” an incentive for migration.
Immigrants—of whom there were 304 million worldwide in 2024—are primarily driven by a desire for more money, more education, greater political protection, and family reunification, says Ian Goldin, professor of globalization and development at the University of Oxford. Governments that are open to such migration help their country’s economy, he notes. If everyone thinks it’s fine for American capital to invest in China, then it must also be okay for Indians to work in the United States, argues economist Branko Milanović. What is permitted for capital as a factor of production must also be permitted for labor as a factor of production, he says. From a global perspective, migration is efficient, as remittances from migrants to host societies and their countries of origin increase the well-being of all, he adds.
We like to talk about liberalism, but when it comes to migration, we are less willing to accept the consequences of liberal thinking. Everyone has the right to “dispose of their possessions and persons, as they think fit, without asking leave, or depending upon the will of any other man,” wrote the philosopher John Locke (1632–1704). This can be understood as a kind of guarantee that everyone, wherever they may be, should be the architect of their own fortune. The philosopher Judith Shklar (1928–92) observed that the mark of liberalism used to be that it viewed violations of the life and liberty of members of any group, anywhere in the world, as a matter of personal concern to everyone, but that it had become a “revolting paradox that the very success of liberalism in some countries has atrophied the political empathies of their citizens.”
In Germany, the cost-benefit debate has recently gained new momentum due to a study by the Bochum economics professor Martin Werding, who is a member of Germany’s council of economic experts. He expects that in the future as well, it will primarily be young, low-skilled people who flee to Germany—people whose employment rates and average wages are below those of the general population—and that this will help reduce the deficits in the social security systems.
The economist argues that the economic growth stimulated by migrant labor clearly offsets the increased financial burdens resulting from immigration. He calculates that by 2070, with net immigration of just 150,000 people per year, government spending would rise to 35 percent of gross domestic product (GDP). By contrast, with net immigration of 350,000 people, spending would fall to 32 percent of GDP. This is due to the expansion of the taxpayer base. If 200,000 more people moved to Germany each year, the government would save approximately €104 billion annually in the long run. “On balance, migration eases the burden on public budgets,” Werding concludes.
Essentially, Werding is describing the situation in Spain. Some 1.2 million foreign workers have entered the country since 2021, in many cases on tourist visas. This has led to record employment levels and 2.8 percent growth in 2025 (Germany: 0.2 percent). Up to 800,000 of the migrants, most of whom work for low wages, are expected to receive a temporary, renewable work permit soon.
Allow Controlled Immigration
Such positive findings seem plausible when one takes a closer look at demographic trends and the demand for labor. Analysts are right to warn that Germany has the lowest number of births on record (654,000) and an average birth rate of only 1.35 per woman. By the mid-2030s, 20 million workers will retire, while only 12.5 million will enter the labor market. Artificial intelligence—the panacea of our time—won’t plug this gap, and nor will raising the retirement age or increased female labor force participation rates.
The situation is similarly dramatic in other European countries. Birth rates are even lower in Spain (1.12), Italy (1.14), and Poland (1.16), while France (1.56) is at least slightly above Germany’s rate. Everywhere, there is a shortage of young people who work, pay taxes, and support the social security system. That is why immigration is an important instrument for tackling the “sustainability gap” in public finances. The problem is a state that lives beyond its means, not one that allows migration in a controlled and forward-looking manner.
Without immigrants, businesses would have to close or scale back their operations. Take the roller shutter manufacturer D&M, based in the Westerwald region of western Germany, which recruits urgently needed new employees directly from a refugee shelter. And when a well-trained kitchen worker at a restaurant in Passau was recently deported to her home country of Sierra Leone, the restaurant owner publicly criticized the government and received many comments of support.
The labor supply will only remain constant in the long term with an annual net immigration of 400,000 people, the Institute for Employment Research has calculated. Germany’s growth and increased economic strength since the late 1950s were only made possible thanks to the recruitment of so-called “guest workers” from Italy, Spain, Greece, and Turkey.
It is undeniable that immigrants continue to play a vital role in sustaining the everyday economy; they often work in jobs that are essential to the system. Without them, agriculture and supermarkets, nursing and healthcare facilities, the hospitality and travel industries, and many household services would grind to a halt.
If workers are to stay permanently, there needs to be thorough integration. However, when it comes to temporary jobs—such as in construction or farming—regulations for posted workers can be applied. However, the track record of the “Blue Cards,” which the EU has been using since 2012 to attract highly qualified workers, is not very encouraging. Although the number of cards issued rose sharply, they were hardly used—in 2023, they accounted for only 2.3 percent of all initial residence permits issued. The application processes need to be shorter, and mobility rights need to be broader. Many member states have their own, more flexible, and simpler immigration programs.
Another problem is that, although migrants are better educated than ever before, many of them work in low-skilled jobs, mostly as cleaning staff and unskilled laborers. According to the EU Labour Force Survey, 32 percent of immigrants from non-EU countries held a college degree or equivalent qualifications in 2024. A lack of language skills and insufficient recognition of credentials are the biggest obstacles to finding work.
Gradually, the EU is shifting course. There are plans to lower the high barriers faced by companies seeking to recruit skilled workers from non-EU countries. And above all, the qualifications that migrants earned in their home countries are to be more easily recognized in the EU.
One priority is to expand existing legal pathways for entry. “Skill Partnerships” are planned to establish training programs in non-EU partner countries that are tailored to the EU’s specific requirements for skilled labor. Pilot programs are already in place in several EU member states in the care and skilled trades sectors, for example. This approach should be expanded to include more countries and occupations. In addition, a new EU talent pool is being planned as a central platform to match potential migrants and their skills with the labor market needs of individual EU member states. An additional “refugee track” option for recognized refugees is also being discussed.
Excessive bureaucracy is a problem in many cases, for example in connection with Germany’s Skilled Immigration Act, which has, at least, been significantly improved. Greater digitalization and more government staff could help. In Norway, a “turbo review” allows authorities to perform a non-binding evaluation of migrants’ qualifications within five business days. Employers should fundamentally be more closely involved in such processes. In industries like IT, where everyone speaks English anyway, skilled workers could be deployed immediately, regardless of their proficiency in the local language. Faith should be placed in migrant entrepreneurship: Immigrants who start companies contribute more than average to tax revenue and social security funding. Companies like Apple, Google, and Nvidia are built on the ideas of founders with immigrant backgrounds.
Migration as a Source of Progress
Right though it is for the EU to want to control migration more effectively than it has in the past, it would be disastrous if the international community were to get the impression that the bloc lacks a welcoming spirit.
An international survey of highly qualified professionals conducted by the InterNations platform found that Germany ranks among the least attractive of 53 countries. This is attributed to an at times xenophobic atmosphere, bureaucratic hurdles, and major problems with government agencies and finding housing. The high quality of jobs isn’t much help in this regard. A disproportionately large percentage of immigrant professionals leave Germany after just a few years.
The government must take this as a warning—and make sure that efficient counseling is offered to immigrants. Every euro invested in this saves many more euros in follow-up costs. Bundesbank President Joachim Nagel is right to call for immigration to be better geared to the needs of the labor market and for more efficient coordination among government agencies.
“The conversation surrounding migration is usually driven by emotions, few facts, and a great deal of ideology,” says Janina Kugel, a member of multiple supervisory boards. So far, she notes, it is only experts who talk about Germany’s inability to thrive without migration into the labor market. The problem isn’t immigration itself, but how it is handled.
Back in the 19th century the liberal philosopher John Stuart Mill (1806–73) had already observed that the short-term social and local costs of migration should not distract from its role as a primary source of progress. The conclusion for the modern world would be that a forward-looking strategy needs to focus in particular on promoting the immigration of expertise and to manage the intake of low-skilled workers as needed—possibly through a migration ministry.
European policymakers can learn from Canada or Australia. Aside from asylum application procedures, those countries have “resettlement” programs in place for refugees who are particularly vulnerable, bringing them directly from initial reception countries, such as camps run by the UNHCR, the UN Refugee Agency. Both countries manage their immigration through a needs-based points system that would also be appropriate in the EU.
Naika Foroutan, director of the German Center for Integration and Migration Research, advocates a new migration policy model—a “Multiculturalism Act” similar to the one Canada introduced in 1988. Migrant children should be actively addressed with narratives of upward mobility, equality, and belonging: Policymakers should “ambitiously help shape the post-migrant society, rather than constantly questioning it,” she argues.
Europe faces a massive test. Demographic change is taking its toll, but its consequences can be shaped. An improved approach doesn’t confine itself to asylum policy but fuses it with labor migration and integration. Whether the ageing continent stagnates or flourishes will depend on whether it plans its future with immigrants. If Europe wants to be politically successful, it must treat immigrants well.
—Translated from the German by David Crossland
Hans-Jürgen Jakobs is senior editor and writer at Handelsblatt, Germany’s daily business newspaper.
