Migrant Entrepreneurs Face Challenges in Germany's Tough Conditions
In the face of challenging circumstances, including the Ukraine war, energy crisis, inflation, and economic downturn, migrants in Germany have seen a decline in business start-ups, according to a study by KfW. In 2021, migrants accounted for 98 start-ups per 10,000 people in the labor force, slipping below the total population's start-up rate of 108. Nevertheless, over one-fifth (22%) of all start-ups in Germany can be attributed to migrants, indicating their persistent interest in entrepreneurship.
When the coronavirus pandemic hit in 2020 and caused a recession, start-up activity among migrants saw its first downturn since data collection began. However, despite the challenges of the following two years, the desire for self-employment among migrants remains strong, with around a third expressing interest in starting their own businesses, significantly higher than the overall population's rate.
"It was mainly external conditions that had a negative impact on the start-up activity of migrants during the crisis years," concluded KfW Chief Economist Fritzi Köhler-Geib. As the overall economic climate improves, she expects start-up activity to pick up again.
Germany's ongoing challenges have made it more challenging for migrants to navigate the business landscape. However, the high rate of migrant-led start-ups demonstrates their persistent drive to become entrepreneurs, despite the obstacles.
Enriching Insights
The start-up activity of migrants, especially those from Ukraine, has been shaped by a combination of challenges and supportive measures. The ongoing war in Ukraine has caused economic disruption, including a shrinking GDP and increased poverty rates, which could affect migrants' ability to start businesses. Nevertheless, Germany has been actively supporting Ukrainian refugees through various initiatives, such as financial assistance, integration services, job placement, and social security benefits.
Political uncertainty surrounding future election outcomes and potential policy changes on immigration and social benefits might impact migrant entrepreneurship. Parties with plans to cut financial assistance and restrictions on housing and healthcare could discourage migrant start-ups, while others, like the SPD and Greens, aim to maintain supportive policies.
Integration services, such as the "Germany4Ukraine" digital support portal and the "Move" project, which promotes sports integration, could help mitigate these challenges and encourage more migrants to pursue entrepreneurship. These initiatives aim to facilitate migrants' settlement and provide a stable foundation for business ventures.
In conclusion, while external factors may pose challenges to migrant entrepreneurs, supportive measures and policies could help overcome these hurdles and empower more individuals to pursue their entrepreneurial aspirations in Germany.
