People with an immigration backgrounds are stimulating Germany’s economy through their own start-ups and creating new jobs as employers, even outside the low-wage sector and work-intensive activities. However, there are major differences between the federal states.


Whether Turkish cuisine, kiosk at the corner or China restaurant – between 2005 and 2014 the number of jobs created by entrepreneurs with foreign roots has increased from 947,000 to 1.3 million. This represents an increase of 36%. At the same time, the number of self-employed persons (including freelancers) with a migration background rose from 567,000 in 2005 to 709,000 in 2014 by a quarter. As a result, the study “Migrant Companies in Germany Between 2005 and 2014 – Scope, Economic Impact and Influencing Factors at the Level of the Federal States” was commissioned by the Bertelsmann Stiftung in August 2016.


Total economic employment: around 2 million people in work

According to the study, the overall employment contribution – including the jobs created as well as employers and entrepreneurs with a history of immigration – is even higher. Approximately 2 million people (1,993,000) were in work in 2014 thanks to the entrepreneurial activity of people with an immigration background. Compared to 2005, this overall employment contribution increased by 33 per cent (in 2005 there were 1,514,000 persons).


This is all the more remarkable since the proportion of people with a migration background in Germany grew by just under 9 per cent during the same period (2005: 15,052,000, 2014: 16,386,000). “Entrepreneurs with foreign roots are a job engine for Germany. People with an immigration background not only work as entrepreneurs, but also create jobs and enable many people to take part in the labor market, “said Aart De Geus, chairman of the Bertelsmann Foundation.


Self-employment is a driver for higher income

Migrant entrepreneurs earn an average of 2,167 euros net monthly income, which is 40 per cent more than dependent employees with a migration background (1,537 euros). As entrepreneurs with several employees, the migrant workers earn almost twice as much (2,994 euros) as dependent workers with immigration history. Compared to self-employed persons without an immigration background, however, they still have to suffer losses: entrepreneurs with an immigration history achieve on average an income of about 30% lower than entrepreneurs without a migration background.


Industries are shifting – services are becoming increasingly important

The profile of the migrant economy has changed in recent years. The share of self-employed migrant entrepreneurs in the retail and hospitality sectors has decreased, the importance of other sectors in the service sector and in the manufacturing sector has increased. Nearly half of self-employed persons with an immigration history (48 per cent) are now active in the service sector outside trade and gastronomy. Trade and the hospitality industry are only 28%, a decline of 10% compared to 2005.


In the same period, the proportion of the manufacturing sector rose: one in five self-employed persons with a migration background is active in the construction sector or in the manufacturing sector.


Jobs and education: large differences between countries

Looking at the map of Germany, it is clear that the employment contribution of migrant entrepreneurs is different. In North-Rhine Westphalia, the number of jobs created by them is the largest with 300,000 jobs overall (2005: 296,000). However, in comparable countries, the number of jobs grew more strongly between 2005 and 2014: in Hesse by 81,000, in Bavaria by 113,000 and in Baden-Württemberg by 145,000 jobs. Baden-Württemberg thus achieves the highest value in comparisons with countries.


The country figures can partly be explained by the different economic dynamics of the federal states and the extent of the immigration.


The number of jobs of migrant workers in Hamburg has, however, decreased from 60,000 in 2005 to 41,000 in 2014. In Schleswig-Holstein, the number remained constant at 19,000.


However, the study shows that the educational level plays an important role: the higher the qualifications of people with a migration background, the higher the level of self-employment in the country. This in turn has a positive effect on the number of jobs created and on the income of the self-employed group.


To promote counseling for people with a migration background

In addition, the study authors see a way to further promote the potential of migrant entrepreneurs. In most Länder, authorities and chambers could not serve the demand for specific advisory services for migrant entrepreneurs.


Likewise, the study criticizes a lack of interlinking between consulting services of chambers, municipalities and the private sector. “Education works, especially in entrepreneurs with foreign roots. However, the state and the economy must work together even better to enable migrant entrepreneurs to leap into a successful self-employment, “said Aart De Geus.
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