Refugees and the shadow economy

"Shadow economy" or "work off the books" - Germany has several evocative phrases when it comes to describing work that happens outside the regular job market. These jobs are often located in private households or on construction sites and come without contracts. The employer doesn't pay for any kind of insurance and the employee does not pay taxes.

When refugees enter Germany, they are not allowed to work right away. Even men and women from Syria, whose chances for being granted asylum are pretty good, have to wait until their asylum applications have been processed before they can look for work. That takes months.

For people from Eastern Europe or some African states, finding a regular job in Germany is even less likely. That's why it could come as a surprise that job market experts don't predict a sharp increase in illegal employment for Germany in 2016.

Shrinking shadow economy

"The growing number of people employed in the regular economy and the positive economic growth will lead the shadow economy to shrink by about 1 percent in 2016," the Institute for Applied Economic Research (IAW) in Tubingen announced in a statement.

Taken together, estimates of the number of refugees to enter Germany this year plus those already here are expected to add up to roughly 600,000 migrants of employable age in Germany in 2016, according to job market researcher Herbert Brücker.

But even taking into account the "potential growth" in illegal employment from the influx of refugees, the shadow economy would still shrink, Bernhard Boockmann, IAW's research director, told DW. His institute puts the number of refugees who could enter the shadow economy by illegally working on a construction site or as a cleaner at anywhere between 100,000 and 300,000.

Illegal jobs are hard to find, too

To Brücker, who is an economics professor at the University of Bamberg in southern Germany, the maximum estimate seems unrealistically high.

"I don't see almost 50 percent of employable refugees entering illegal employment," he said. "It's hard to get a foot in the door in the shadow economy, too. Illegal jobs aren't necessarily easy to come by."

Brücker points out that many jobs in the shadow economy are allocated on the basis of trust and via personal networks. A family looking for a cleaner or a handyman, for example, is much more likely to let someone into their home who comes with a recommendation from a neighbor or family friend. A construction site manager is more likely to employ someone who has been vouched for by other employees.

If you just entered the country, don't speak German and don't have a solid support network, happening on such opportunities is rather unlikely.

Asylum chances play great role

Of course, opportunity is not the only factor in play. For many refugees, looking for illegal employment is the last thing on their minds, because it could endanger their asylum application. A Syrian who escaped his war-torn country has good chances of being granted asylum in Germany. He isn't likely to risk it all to make a few euros while his asylum application is being processed, when he could enter the regular job market a few months later, Brücker explains.

For refugees from the West Balkan, the situation looks a little different. "The appeal of getting an illegal job is a lot higher when your chances of being allowed to stay in Germany long-term are small anyway and being caught wouldn't change much," the job market expert said. "Migrants who come to Germany from eastern EU states are also more likely to look for work in the shadow economy, because nothing can happen to them - they can't be deported."

Brücker also stressed, however, that even those with little chance of remaining in the country would still be extremely careful. If someone went off the grid to escape deportation, he said, the last thing they'd want would be to attract attention by working illegally.