War For Talent: Germany

Much is being made of Germany's ability to weather the recession. Sustained growth in Europe is currently dependent upon the strength of this country's economy. There's a little-considered problem with this relationship, talent:

Indeed, according to Klaus Zimmermann, president of the influential German Institute for Economic Research (DIW Berlin), Germany needs even more immigrants. In an interview with the newspaper Hamburger Abendblatt, Zimmermann said that the country's aging society means that Germany "badly needs workers and immigrants from abroad." He said the labor market needed "net immigration of at least 500,000 more people each year to ensure our economic strength."

Zimmermann's comments come in reference to Germany's low birth rate and a consequently aging society. "As of 2015, the German economy will lose around 250,000 workers," he said. He proposed the introduction of an immigration points system, much like that in place in Canada and Australia.

German voters find the prospect of attracting more immigrants to be unpalatable. I doubt that any sort of liberalization of immigration policy is possible at this time. But I might have a solution, Berlin:

"Increased Competition for Clever Minds" is the title of a report analyzing migration from cities with more than half a million residents. Its three authors from the Institute of Employment Research (IAB) paint a picture in which well-educated Germans most readily move to places renowned for their political leanings, their solid foundations, their ability to provide work and perhaps even for their good air, be it of the sea or mountain variety.

In many ways, the findings are not surprising. Not only for the cities that did feature at the top of the popularity chart, but also for those that did not. Most notably: Germany's unconventional capital Berlin, which unlike Hamburg and Munich, has not had the benefit of being able to continually evolve since the days of the post-war economic miracle.

After 40 years of division and almost 20 years of reunification, Berlin is still trying to find its feet, economically speaking. As Martin Gornig, the head of innovation, manufacturing and service at the German Institute for Economic Research told Deutsche Welle, the capital city does not boast the kind of economic framework that entices people hoping to launch prosperous careers.

"Berlin doesn't have BMW or Allianz," he says. "The big companies left Berlin and they have not come back."

And nor are they likely to, given the difficulties associated with uprooting established companies.

"What Berlin has to do now is grow new ones," Gornig says. "It might be a slow process, but it has to happen."

Gornig is not talking about new car manufacturers or new insurance companies, but about Berlin playing to its greatest strength: creativity. It has always had a reputation for attracting artists, but in recent years the capital has become a veritable stomping ground for those pointedly seeking inspiration over security.

I might say that Berlin has the dreaded Portland Problem. The city is a magnet for Creative Class migration, but no economic growth to show for it. This is the Achilles heel of amenities migration strategy to regional prosperity. What do you do with all those brains once you attract them to your cool downtown?

One answer to that question is the geographically targeted admission of immigrants. Not only will these foreign born dynamos create jobs, they will attract business. If a talent shortage is the problem that Klaus Zimmermann makes it out to be, then companies will move to Berlin to access the skilled labor.

I'd also hazard to guess that Berlin can handle the influx of outsiders. A possible political storm would be the migration of a factory from one part of Germany to Greater Berlin. I don't think the high skill immigration zone would sit too well with voters from the area where the jobs were lost. Germany would be stronger for the policy, but that argument is a tough sell.