The rise of the AfD threatens Germany's ability to attract the workforce it needs

Germany increasingly needs foreign workers to compensate for its aging population, but the rise of the far-right Alternative for Germany (AfD) party across the country and its entry, for the first time, into a regional government following its victory in the Saxony-Anhalt elections may hamper efforts to attract qualified staff from other countries. There is a lack of hands to develop the country's economic activity, but the ultra party rejects them coming from other places.

In accordance with its regional electoral program, the AfD encourages the return of Germans to Saxony-Anhalt to address this shortage of workers, which currently stands at a deficit of almost 14,000 in this eastern state and is expected to increase to 32,000 by 2031, according to a study by the Leibniz Institute for Economic Research in Halle IWH. Until the fall of the Wall, Saxony-Anhalt had a population of slightly over three million. In the last ten years it has lost nearly 130,000 inhabitants, reaching 2.1 million people. It is in this narrow margin where the AfD aspires to attract the native population to return to the territory.

To encourage the return of Germans, AfD – it obtained 43.8% of the votes in the elections on September 6 in this region – wants to offer economic bonuses and help to find housing or places in daycare centers. But economists doubt these measures will work. The IWH warns that a policy against immigration could increase the deficit of workers in this State to 46,000 by the end of the new legislature if the AfD finally manages to form a government. That Executive is taken for granted after the recent election of Tobias Rausch as the first far-right president of a German parliament since Nazism. Furthermore, it must be taken into account that not only foreigners would be reluctant to settle in this area, but also the Germans themselves who are opposed to the AfD and worried about the rise of the extreme right.

“A xenophobic policy would considerably aggravate the labor shortage in Saxony-Anhalt,” states IWH President Reint Gropp in the study. "Saxony-Anhalt has one of the oldest employment structures in Germany: if politicians encourage the rejection of immigration, thousands of additional jobs will remain unfilled. The State would lose significantly in well-being," he warns. The lack of labor would be more difficult to fill in sectors such as food processing, hospitality, civil engineering, logistics, medicine and dentistry. For example, one in five doctors in Saxony-Anhalt is a foreigner.

Not only does that territory need qualified labor; also the rest of the country. The aging of the population, the low birth rate and the retirement of the baby boom generation represent an enormous challenge. According to a recent study published by the Institute of German Economics IW, the German labor market could be short, nationwide, of around 723,000 qualified workers between now and 2029, which is almost twice as many as in 2025. The most important shortfall could be among sales personnel, followed by the sectors of child care and education, social work and social pedagogy, as well as healthcare and nursing.

“Currently, we are losing between 430,000 and 440,000 people of working age per year due to demographic change and that means that, if we want to keep the supply of labor constant, we would need a net immigration of that magnitude, that is, about 430,000 people,” explains by phone Herbert Brücker, professor at the Humboldt University of Berlin and director of the Migration, Integration and Research on the International Labor Market area at the reputed IAB scientific center. Instead of a restrictive immigration policy as advocated by the AfD, Germany would need a “selective recruitment of labor and the liberalization of labor immigration.” Measures such as encouraging older people to work beyond retirement or reducing the high rate of part-time work, in addition to being complicated, would not compensate for the large gap in demographic change, according to the expert.

It would also destroy “the good reputation that Germany had until now” as a workplace, something that was already in the doldrums due to the economic crisis. “But if the political climate hardens now with respect to immigration, Germany's attractiveness will decrease further,” warns the expert. Foreigners who are already in the country may not leave it, but “people who are now considering emigrating will be less willing to come.” Although, as Brücker points out, the alternatives are not very attractive either, because, “after all, we have right-wing populist parties practically everywhere”, but Germany has long been “one of the few countries” whose stability could be trusted. Currently, the AfD is in first position in voting intention polls at the federal level with 30% support, followed by the conservatives with 18.5%, according to the most recent data from the survey carried out by INSA. In last year's general elections, the AfD was the second most voted party with 20.8% of the votes, behind the CDU (22.6%).

The economist Wido Geis-Thöne, an expert on migration issues at the IW economic institute, sees it the same way. "Currently, in Germany we are in a quite serious industrial crisis. We still do not know how we are going to get out of it. Furthermore, we still do not know if, due to AI, the production processes that until now were carried out by people could be taken over by machines. But, broadly speaking, for the German economy to continue growing, foreign workers will continue to be needed," he analyzes by phone from his office.

In the September regional elections in Mecklenburg-Western Pomerania — where the AfD was the party with the most votes with 38.2% — and in Berlin — where it was third with an increase of more than seven percentage points to 16.3% — the party also defended an anti-immigration stance and opted to increase the birth rate of German families, something that Geis-Thöne considers insufficient, since even if the birth rate were increased, “those children would not arrive to the labor market within 20 or 25 years.”

In his opinion, “it is totally counterproductive to toughen policies in this area” and he warns that the AfD could make some regions even less interesting, especially in the east of the country, not only if it reaches the Government, but also due to its strong support in society. “Voting AfD is an additional deterrent factor in areas that are already unattractive for immigrants as they are very rural areas and rather small cities,” he explains.

Likewise, this rise of the extreme right represents a discouraging effect for foreign investments both due to doubts about how to deal with the workforce and due to the fact that "AfD is so extremist that it would have to be taken into account that 70% of the laws approved by the AfD Government would be subject to judicial reviews, so the Government would be completely blocked, something that affects both foreign and national investments," says Geis-Thöne. Added to this is the instability of the coalition government of the conservatives led by the German chancellor, Friedrich Merz, with the social democrats. The CDU has been left out of a regional parliament for the first time in its history, obtaining only 4.9% of the votes in Mecklenburg-Western Pomerania.

Big businessmen such as the president of the energy company RWE, Markus Krebber, have already warned of the risk that the AfD poses to the German economy. Krebber has warned that “with an isolationist policy by the populists of the AfD, Germany would be further weakened as an economic center.” The president of the German Bundesbank, Joachim Nagel, was also concerned after the elections in Saxony-Anhalt. "Does this help attract foreign investors to this country? Absolutely not. I think they will be reluctant, they will shy away from doing business here. So yes, I am worried," he said. Meanwhile, the chairman of the board of directors of Siemens Energy, Christian Bruch, described it as “absolutely critical.” "Our company and our jobs in Germany depend on us exporting, on attracting international professionals to Germany and on foreign investors being able to rely on political stability. And if that does not happen, it is detrimental to Germany as an economic center," he told the DPA agency.