Germany Follows Netherlands in Offering Tax Breaks to Immigrant Workers

In a controversial move that has sparked debate across Europe, Germany is set to introduce significant tax incentives for skilled foreign workers. This decision mirrors similar policies already in place in the Netherlands, raising concerns about the potential impact on domestic workers and the broader implications for European education and training systems.

According to reports from Deutsche Welle (DW), the German government plans to offer substantial tax relief to skilled immigrants who take up employment within the country. The proposed scheme would provide a 30% tax reduction in the first year of employment, followed by 20% in the second year, and 10% in the third. This strategy aims to address Germany’s growing skills shortage, despite the nation’s reputation as a highly skilled country known for exporting high-end products.

However, the policy has not been well-received domestically. Politicians and trade unionists have voiced strong opposition, labelling it as blatant discrimination against domestic workers. Critics argue that the move poses a danger to social cohesion and demonstrates utter indifference towards the native workforce. The German Green Party has gone so far as to suggest that the policy could potentially violate the German constitution by allowing one group of workers to earn more than others for performing identical jobs.

The situation in Germany reflects a broader trend across the European Union (EU), where member states are grappling with significant skills shortages. Despite the EU’s open borders and freedom of movement for workers across its 450 million-strong population, the bloc continues to face a substantial skills gap. This has led to an increasing reliance on offering visas and tax breaks to workers from outside the EU to keep their economies afloat.

The irony of this situation is not lost on observers, particularly in light of the EU’s educational statistics. Over 30% of EU citizens aged 16-64 hold university degrees, with this figure rising to 43% for those aged 25-34. In some countries, such as Luxembourg, Cyprus, and Ireland, the percentage of degree holders in the younger age group exceeds 60%. Despite these impressive figures, the persistent skills shortage raises questions about the relevance and effectiveness of the education being provided.

The United Kingdom, despite having left the EU, faces similar challenges. The country is frequently reminded of its skills and productivity gap, a legacy perhaps of its time within the EU. However, instead of addressing the root causes of these shortages, there are concerns that the UK may follow in the footsteps of its European neighbours by importing skilled workers rather than investing in domestic education and training.

Critics argue that if industries and public bodies are aware of their skill requirements, this information should be continuously communicated to educational and training establishments. The fact that this doesn’t appear to be happening effectively points to a systemic failure in aligning education with the needs of the job market.

A recent report by the Edge Foundation sheds light on the specific areas where skill shortages are most acute in the UK. These include doctors, nurses, and various digital skills such as AI and machine learning specialists, digital transformation experts, project managers, robotics engineers, and machine repairers. The report attributes these shortages to a combination of factors, including economic uncertainty, geopolitical instability, the ongoing repercussions of Brexit, the recent pandemic, the need to reach net-zero emissions, and the consequences of the fourth Industrial Revolution.

However, critics argue that these circumstances are not unique to the UK and that the entire EU is suffering from similar challenges. They suggest that the UK might be better positioned to recover from these events if it had a government willing to take bold action rather than exacerbating the situation through policies such as accelerating the shutdown of North Sea oil and gas production and the last remnants of coal mining.

The EU Commission itself acknowledges the widespread nature of these shortages. A recent survey found that nearly two-thirds (63%) of small and medium-sized businesses across the EU struggle to find the talent they need. The Commission has identified 42 occupations facing shortages across member states.

This situation raises questions about the role of businesses in addressing these shortages. Critics argue that it shouldn’t have reached this stage before governments felt compelled to intervene. They also point out the irony of a trade bloc like the EU, which often prioritises social issues, failing to ensure that its workforce has the necessary skills to support trade and economic growth.

In the UK, the situation is further complicated by the issue of student debt. Many students accumulate substantial loans to obtain degrees that may not provide a return on investment, either for the individual or for the taxpayer who ultimately foots the bill if the loans are not repaid.

Individuals could potentially benefit from taking the initiative to acquire these in-demand skills through avenues such as evening classes, given the potential earnings associated with filling these skill gaps.

For those in the UK who argue that rejoining the EU would solve the country’s problems, the article points out that the EU faces the same skills gap issues. It suggests that neither the UK nor the EU have found effective solutions to these challenges over the past 40 years of implementing similar policies.

By criticising what it describes as a “political woke dogma” that relies on mass immigration as a solution to skills shortages. It argues that the perpetual skills gap serves as a convenient excuse for continuing these immigration policies.

Finally, this takes aim at the higher education system, suggesting that if substantial taxpayer money is being spent on education that has no direct commercial application (as evidenced by the persistent skills gap), then perhaps critics are justified in their use of terms like “Mickey Mouse degrees” to describe some qualifications.

In conclusion, this is part of a Europe-wide challenge in aligning education and immigration policies with the needs of the modern workforce. It suggests that current approaches, both in the EU and the UK, may be perpetuating rather than solving these issues, calling for a fundamental rethink of how skills are developed and deployed in the economy.