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Rising racial tensions cost German businesses skilled foreign labour

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Rising racial tensions cost German businesses skilled foreign labour

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Manager Joerg Engelmann says he has pulled out all the stops to attract skilled foreign workers to his chemical engineering company in Chemnitz, east Germany. But once they arrived, the racial slurs and exclusion they experienced in the town have driven some of them away.

His firm is one of five German medium-sized companies that told Reuters their foreign staff recently moved on or switched locations due to xenophobia, even as Europe’s biggest economy suffers a shortage of skilled labour.

Many large companies in Germany and the Netherlands have expressed concern about the difficulty of hiring due to anti-immigrant sentiment. Some employers go a step further, saying they are actually losing staff because of it.

CAC Engineering GmbH, the family-owned company Mr. Engelmann runs, has lost around five of its 40 foreign employees over the past 12 months because of discrimination, he told Reuters.

“We do what we can. But we can’t become bodyguards,” said Mr. Engelmann, 57.

CAC did not give details, but xenophobic hate crime cases recorded across Germany by the interior ministry more than tripled between 2013 and 2022 to more than 10,000. Overall, Mr. Engelmann said, high energy costs pose a bigger challenge. Official German estimates suggest the country as a whole will be short of seven million skilled workers by 2035, compared with a labour force of around 46 million.

The climate is more hostile in eastern Germany, where after the fall of communism plant closures and layoffs saw an exodus of young people and a lower birth rate.

Chemnitz, in the state of Saxony near the Czech border, is trying to attract skilled workers—Mr. Engelmann’s firm says it helps arrange temporary housing, language and driving lessons to encourage foreign employees to settle.

But Chemnitz has become a focus of anti-immigrant feelings since 2018 when anti-migrant protests in the city turned to riots.

City spokesman Matthias Nowak said the majority of people in Chemnitz are against extremism, adding that Chemnitz would “fall apart” without immigrants—for instance, 40% of staff at the hospital are foreigners.

‘Remigration’

Channelling the anti-immigrant mood are political parties including Alternative fuer Deutschland (AfD), which is on track to win three regional state elections in September this year including in Saxony.

The AfD has said it wants to reverse mass migration that occurred in 2015, create asylum centres outside the European Union, introduce strict controls on German borders, sanction migrants who do not integrate fully and create incentives for economic migrants to return home.

Germany’s domestic intelligence agency, which has said it is monitoring the AfD on suspicion of extremism, says AfD party officials propagate racist theories such as the “Great Replacement,” which holds that political elites are deliberately engineering the replacement of Europe’s white population with non-white immigrants.

The AfD says its policies won’t damage the economy. “The government and state-owned companies are distracting from the home-made problems and using the AfD as a scapegoat,” it said in a statement to Reuters, citing high energy prices worsened by Germany’s nuclear exit and renewables drive.

But Germany’s corporate executives took to the media to warn about the risks of anti-immigrant sentiment, following a January report by investigative portal Correctiv of a fundraising meeting in Potsdam where a “masterplan” for deportations of people of foreign origin—dubbed “remigration”—was discussed.

‘Capital of culture’

The hardening climate extends beyond Chemnitz, and does not only target people from outside Europe.

“Two of our foreign employees have left Germany because they said that they no longer feel comfortable and safe here,” said Detlef Neuhaus, CEO of solar firm SolarWatt, based in the east German city of Dresden. He said one had moved back to England.

Germany’s economy shrank by 0.3% in 2023, the weakest performance globally among large countries. A survey carried out over 2022 and 2023 by the OECD has highlighted that while Germany remains very attractive to foreign workers, discrimination is a problem.

Tracking the careers of 30,000 highly qualified people who wanted to come to Germany as migrant workers since August 2022, the survey found that people who had already moved to Germany experienced more discrimination compared to the expectations of those still abroad.

Chemnitz city spokesman Nowak said it had increased funds for anti-racism and pro-democracy projects since 2018 and wants to use plans for its coming role as a European Capital of Culture in 2025 to activate the “silent middle,” addressing the issue of racism head-on.

Far-right parties have said they will protest this. One, Pro Chemnitz, has suggested the city should instead be the “capital of remigration.”

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