Turkish immigrants in Germany

Osmi Anannya

Image © Zanthia

It’s been 51 years since the once booming West Germany signed a recruitment agreement with Turkey to provide guest workers for the nation’s workforce. Usually unskilled labourers, armed with a minimum wage payroll and accommodation for the duration of their temporary contractual stay, came to the Western side of the country. This practice continued up until the 1973 global oil crisis and by that time somewhere around 710,000 Turks had benefited from the programme, living amongst German people and other ethnic minorities in Germany. Although many chose to return to their homeland soon afterwards, several thousand instead chose to bring their families to Germany, triggering an increase in the Turkish immigrant population numbers. Today these numbers constitute about 5% of the country’s population.

Studies by the Berlin Institute for Population has revealed that, of all immigrant groups in Germany, the Turkish population are least likely to integrate and most likely to be poorly educated, underpaid, and unemployed. With time, schools have started to introduce additional lessons in Turkish to aid immigrant workers’ children to further integrate into German society and increase their employment prospects. When rapid modernisation of industry in Germany began, companies demanded better qualified workers and Turkish guest workers found themselves ill equipped to compete in this new labour market.

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Ireland’s Referendum: Aye’s have it, but apathy wins the day

Daniel Crump 

Image © Foreign and Commonwealth Office

We now know that Ireland have officially endorsed the European Fiscal Pact. It was a hard fought campaign with both the ‘YES’ and ‘NO’ camp sketching out the worst case scenario if voters did not listen to them. It will be to the benefit of Ireland in the long term that the ‘YES’ camp have won the day. Ireland is still in an incredibly fragile position economically, and the last thing they needed to do was spook the markets even further by rejecting tighter fiscal discipline.

The saddest part of the whole affair is not that it was such a close run contest, but that it almost seems fitting to commend those who actually formed an opinion at all. Figures suggest that fewer than half of the 3.1m registered voters turned out to make their decision. This makes turn out, at best, 50% in some regions and, at worst, below 30% in others.

In the end, the right camp won out. This is Europe’s second chance at imposing coordinated oversight of fiscal policy and setting workable and imposable limits on structural deficits. Even Germany, the economic powerhouse of Europe and the champion of efficiency, broke the original rules set out in the 1992 Maastricht treaty on state borrowing. Whilst this has been a popular argument against the fiscal pact, not least in the southern economies, this is not the time to look back in anger, but to acknowledge that something must now be done to shore up the single currency for the future.

For Ireland, a No vote would have effectively denied them all future bailouts from the troika of the EU, ECB and IMF. If Ireland is serious about returning to the bond markets in 2014, as is their stated aim, they may well need to continue on life support for the time being. Turning off the supply would leave this already ambitious target in serious jeopardy.

Having said that, one can certainly see why the ‘NO’ camp was tempting some voters to their way of thinking. Out of the so called ‘PIIGS’ economies of Southern Europe, Ireland have been courting the approval of the financial markets and their European neighbours. They have won praise by implementing deep austerity measures, cutting into their enormous budget deficit and recapitalising a near collapsed banking system. When they look across to their fellow strugglers and the possibility of Eurobonds writing off yet more Greek debt, it is not unreasonable to ask what all the hard work was for. Read more of this post

In Defence of Mrs Merkel

Daniel Crump 

Image © World Economic Forum

Back home in France, the election of Mr Hollande was hardly an occasion for national pandemonium, despite the usual clever camera shots to suggest otherwise. The French election has been dubbed by many in France as the day Sarkozy was defeated, rather than the day the French Socialist Party rose from the flames. The man they nicknamed ‘Mr Normal’ was, in many respects, the alternative to President Sarkozy, and not much else.

In Europe, however, he is firmly in the driving seat of the latest popular craze; all aboard the Anti-Austerity bandwagon! He has picked up some notable hitchhikers along the way, including Italy’s un-elected Prime Minister Mario Monti, who has taken a seat beside the un-elected Greek Prime Minister Panagoitis Pikrammenos. The most significant of these gentlemen is US President Barack Obama. In the past days he has been quoted as saying ‘’a responsible approach to fiscal consolidation should be coupled with a strong growth agenda’’. The bandwagon is now full to capacity, and carries the leader of the free world, probably riding shotgun. It is also travelling at alarmingly high speed straight towards Mrs Merkel and her Christian Democratic Union led coalition in Berlin.

Supporters of Hollande, and his merry men, are even claiming that the CDU’s poor performance in North Rhine-Westphalia last week is an indication that Merkel’s own citizens are turning away from Germany’s policies on the continent. This would be a slight misconception. According to the Economist, 82% of voters said that state matters were paramount, and that the CDU’s performance was mostly to do with former environment minister Norbert Rottgen, who failed to say whether he would stay in Dusseldorf to lead the opposition if he lost. He was simply no match for the campaign led by a minority SPD-Green coalition, which has held NRW since 2010.

Mrs Merkel remains Germany’s most popular politician, largely thanks to the German economy. German GDP expanded by 0.5% in the first quarter of 2012, and has kept unemployment well below the EU average. They have done this with the help of their much coveted ‘Mittelstand’ economic system. This comprises a group of small and medium sized businesses that cluster themselves around big manufactures and work closely with Universities and researchers. It is the perfect complement to Germany’s love of apprenticeships, which helps to keep the flow of qualified workers pouring in. Unsurprisingly, Germany is seen by investors and financial markets as Europe’s safe haven, keeping the cost of borrowing to below 2% for 10 year bond yields.  Read more of this post

France’s General Election: Whoever wins, it won’t be for the right reasons.

Daniel Crump 

Image © Nicolas SAL1

For a time, it appeared as though someone was benefitting from the 2008 financial crisis. A perception that the political left cannot be trusted in times of recession meant that voters across Europe unseated left of centre governments in favour of the centre right. Put simply, it appeared as though the advocates of small government and austerity had won themselves at least a decade of uncontested control.

A mere two years later, it has become clear that this picture was never going to be as simple as it once appeared. Most opinion polls in Britain place the opposition Labour Party ahead of the ruling coalition. In Spain, strikes are as common as siestas, due to a widely unpopular €27 Billion austerity package. In the Netherlands, a major cheerleader of Merkel’s austerity drive, the government has lost majority support in parliament due to disagreement about budget cuts.

In further contrast, it is almost certain that the centre right will be the ones who are defeated in the second round of the French Presidential election a week today, in favour of a self professed socialist. If Mr Hollande does what many are expecting him to do and unseats Sarzoky, he will be bringing with him a radically different set of policies from ones we have come to expect in times of economic stagnation. He has promised a 75% top rate of income tax, a reversal of Sarkozy’s rise in the retirement age and a separation of retail and investment banking to curb France’s dependency on the financial sector.

To make matters a little more complicated, the perception of economic credibility does not appear to be translating into overall public support. The unpopular British Conservative party continues to lead Labour on questions about economic competency. They score 44% in opinion polls as opposed to Labour’s 31%. A similar picture is found in France where the otherwise trailing incumbent leads Hollande by 14% in terms of ability to make difficult economic decisions.

The French election gives some insight into why such a confused picture has blanketed Western Europe. Several economic commentators, including the Economist, have been arguing for some time that the Presidential contenders were all doing a brilliant job of avoiding the existential problem that France is facing. France’s public spending accounts for 65% of GDP as opposed to an OECD average of 43%. Public debt is slowly reaching 90% and could conceivably reach 100% by next year. Once one takes into account France’s lack of competitiveness, in terms of exports, social charges and youth unemployment, it becomes utterly baffling that perceived economic competency is not translating into votes for France’s centre right President. Instead, they prefer to see a reversal of Sarkozy’s modest economic reforms and yet more public spending, paid for by taxing 75% of the earnings of the wealthiest few.

Put bluntly, Europe’s politicians are failing to convince their electorate of the long term necessities for economic reform. Their chosen economic philosophy, which they presumably believe in wholeheartedly, is failing to persuade citizens. As a result, far too many European elections are becoming either referendums on personality or unnecessary, unhealthy and divisive squabbles over class or race.  Read more of this post

Greece: Shades of Weimar?

Nikhil Venkatesh

After the Treaty of Versailles, an unstable, war-wearied and poor Germany (with a new government based in Weimar) was made to pay £284 billion (in today’s money) to the Allied powers. Germany was humiliated; throughout the next decade its economy was run not in the interests of the German people, but in the interests of paying back its foreign creditors. This led to crippling hyper-inflation, an economy vulnerable to the Wall Street Crash (1929), an upsurge in nationalism and communism, and ultimately the rise of Hitler. Amazing as it may be, some people predicted that the harsh financial terms of the treaty would mutilate the German economy, endanger its fledgling democracy, and lead to another war in about 1940. JM Keynes wrote about it in The Economic Consequences of the Peace, and even the cartoonist in The Daily Herald had an inkling of a ‘second world war’ (see picture) – he was a year out.

The moral of the story is that if a country’s economy isn’t run in the interests of the people (what Chomsky calls ‘economic sovereignty’), the people will not be happy. They will revolt, riot, and go to war.

The most terrible thing about the bail-out agreement with Greece is that the Greek people do not feature in it. The policies are designed to stop (mainly French, German and British) banks from losing the money they rashly lent to the Greek government. Greece will be forced to impose austerity measures that may well make their citizens’ lives worse – but this is secondary to keeping the bankers afloat. Any money the Greek government has will have to go into paying off debt ahead of being spent on public services. Foreign economists, like the French troops occupying Germany’s Ruhr valley in 1923, will remain until the debtor country can be trusted to uphold its side of the bargain. The Greek people don’t get a choice; Greek economic policy is unaccountable to its own taxpayers; money will be transferred from some of Europe’s poorest people to some of its wealthiest. Read more of this post


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