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Ifo Institute Increases Estimates of Refugee Costs to 21.1 Billion Euros for 2015 Alone

Nov 10, 2015

The Ifo Institute has increased its estimates of German government expenditure on refugees. It now expects the costs to amount to 21.1 billion euros for 2015 alone, based on the assumption that 1.1 million people will flee to Germany by the end of the year. “That figure includes accommodation, food, creches, schools, German courses, training and administration,” said Gabriel Felbermayr of the Ifo Institute in Berlin on Tuesday. The Institute previously estimated the costs for the state at 10 billion euros for the first twelve months, just to cover accommodation and food for 800,000 people.

“The keys to costs and integration are qualifications and the labour market,” added Felbermayr. Many refugees are poorly educated. Over 40 percent of Western German manufacturers surveyed by the Ifo Institute feel that refugees could only be employed as unskilled labourers; the figure is just under 40 percent in construction (in the West) and distribution (in the West). The figures for Eastern Germany are far lower. However, on average and across all branches of manu-facturing, 29 percent of companies see the minimum wage as a major con-straint. The minimum wage is particularly problematic for branches in the east. Here around 60 percent of firms in distribution and construction see the mini-mum wage as a barrier to recruiting refugees.

The Ifo Institute is therefore calling for a complete abolition of the minimum wage in Germany; and not only for refugees, but for all young employees with-out qualifications at the very least. Refugees should be able to work immediately and to attend German language courses at the same time. There also needs to be a huge increase in support for refugees in Syria’s neighbouring countries. The borders of the Schengen Area also need to be secured to keep the internal market functional. Effective entry checks at the German border would be useful.


Prof. Gabriel Felbermayr, Ph.D.

ifo Institute
ifo Center for International Economics
Phone: +49(0)89/9224-1428
Fax: +49(0)89/985369
Email: felbermayr @

Press contact

Harald Schultz

ifo Institute
Press, Publications, Conferences
Phone: +49(0)89/9224-1218
Fax: +49(0)89/9224-1267
Email: schultz @

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