Just before the elections: 68 billion euros thanks to foreign workers? How an IW study can be politically instrumentalized in eastern Germany

Immigration and the economy: Why the IW's figure of 68 billion is misleading

Just weeks before the crucial state elections in eastern Germany, one figure dominates the headlines: 68.3 billion euros. According to the German Economic Institute (IW), this is how much foreign workers are expected to contribute to eastern Germany's economic output. The media message conveyed seems unambiguous: without immigration, the region faces economic collapse. However, a closer analytical look reveals a massive methodological blind spot. While the productive output of working migrants is prominently showcased, the study systematically ignores the fiscal costs of transfer payments, integration, and infrastructure. What is presented to the public as an objective assessment of prosperity turns out, upon closer inspection, to be a highly selective projection – and a politically effective tool in a highly polarized election campaign. This in-depth analysis reveals why the much-cited figures only tell half the story and why the debate surrounding migration and the economy urgently needs to be conducted more honestly.

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The East, the number, and the election campaign: What the IW billions really mean

Just weeks before two pivotal state elections, a business-oriented research institute published two short reports that quickly became national headlines. On August 14, 2026, the German Economic Institute (IW) announced that in 2025, foreign workers in the six eastern German states, including Berlin, had generated approximately €68.3 billion, or 10.5 percent of total gross value added. Including indirect and induced effects, the figure was even higher, exceeding €90 billion, or 14.3 percent. A week later, on August 21, the second report followed: Without immigration, the working-age population (15 to 66 years) in the eastern German states would shrink by almost 22 percent by 2045. Both papers were published in the midst of the election campaigns for the state elections in Saxony-Anhalt on September 6 and in Mecklenburg-Western Pomerania on September 20, 2026, and both were picked up by the German Press Agency and disseminated in almost identical wording by Handelsblatt, MDR, Die Zeit, Der Spiegel, and numerous regional newspapers. The message reaching readers, in simplified terms, is: Without migrants, the East would collapse economically. This oversimplification, however, obscures the fact that two completely different issues are being conflated, issues that an economic analysis must strictly separate.

The IW study is not a fiscal balance sheet. It answers the question: "What share of gross value added is generated by employees subject to social security contributions who do not hold German citizenship?" The methodology is a projection based on assumed productivity, supplemented by input-output multipliers for supply relationships and consumption. What is structurally absent from this calculation are: transfer payments, integration costs, infrastructure, education, administration, and pension entitlements. The denominator of the balance sheet is completely missing. Anyone who concludes from "68.3 billion in value added" that immigration is economically advantageous is committing a category error.

The study's outcome is predetermined by this selection logic. It considers only employed individuals. Unemployed immigrants—around 61 percent of Ukrainian nationals and roughly half of asylum seekers from other countries—are excluded by definition. This is like a profitability analysis that only includes profitable branches. The study accurately demonstrates the contributions of working migrants but remains silent on the overall cost to the system.

The most interesting finding is that the scientific community is deeply divided on this issue – not along the lines of "reputable versus disreputable," but rather along fundamental methodological lines. Martin Werding, a member of the German Council of Economic Experts, concludes that 200,000 additional immigrants per year would reduce the public budget deficit by approximately 2.5 percent of GDP, or 104 billion euros annually – a relief of 7,100 euros per person per year. Bernd Raffelhüschen, using the generational accounting model, arrives at precisely the opposite conclusion: the fiscal balance of future immigration would be negative, amounting to roughly one and a half times the annual economic output, or approximately 5.8 trillion euros in absolute terms.

The fiscal balance depends almost entirely on the motive for migration and the level of qualification. The Konrad Adenauer Foundation summarizes the current state of research as follows: Skilled labor migration brings fiscal benefits, while below-average qualifications generally result in fiscal costs for the welfare state and are not suitable for mitigating the consequences of demographic change. The Dutch Van de Beek study provides the most precise quantification: Labor migrants aged between 20 and 50 make a positive net contribution of over €100,000, asylum seekers a negative contribution of approximately €400,000, and family migrants around €200,000. Raffelhüschen himself emphasizes that the negative balance is "primarily attributable to uncontrolled and irregular migration.".

The IW study is thus a production calculation presented as proof of prosperity, and it systematically remains silent on the net fiscal effect of immigration, which plays a significant quantitative role in East Germany. For a critique that can be substantiated in the media, one should therefore not attempt to categorically dispute the reported €68.3 billion in gross value added, but rather expose the limited explanatory power of this figure: It is contrasted with federal spending on refugees and migration of almost €25 billion nationwide in 2025; including state and local government expenditures, the total national burden is sometimes estimated at around €50 billion. However, these figures cannot be directly compared because they encompass different regions, time periods, population cohorts, and accounting levels: The IW figure relates to the value added by foreign workers in East Germany, while the expenditures relate to refugees, accommodation, transfers, integration, and administration throughout the entire country. This lack of comparability is precisely the crux of the problem. In political debates, positive gross value added contributions and net fiscal costs are juxtaposed, even though they do not result in a single, unified balance; both sides can draw their own conclusions from this. An analysis only becomes credible when it clearly separates labor migration, educational migration, family migration, and refugee migration, considers employment and benefit receipt as well as taxes, social security contributions, education, housing, administrative and integration costs, and discloses the long-term demands placed on social security systems. It must also transparently reflect the considerable range of research – from Martin Werding's optimistic relief calculation to Bernd Raffelhüschen's negative generational balance – instead of creating the illusion of a definitive overall balance sheet from a single value added figure.

The real point of contention can be precisely defined. The IW (German Economic Institute) measures the gross value added contribution of already employed foreign workers, i.e., a pure production calculation based on total wages and industry shares. The opposing position, formulated primarily by economically liberal and migration-critical commentators, asks, however, about the net fiscal balance of all immigrants, that is, the difference between taxes and social security contributions on the one hand and transfer payments, education, healthcare, and infrastructure costs on the other, relating not only to employed persons but to all immigrants, including those who are not employed. These two calculation objects are mathematically not the same, and the conflation of them in the public debate is generating precisely the polarization that has been erupting on social networks and in alternative media channels since mid-August.

Two IW reports and their actual significance

The key figure in the debate comes from IW Short Report No. 53, authored by Wido Geis-Thöne and Benita Zink. The calculation is based on a simple but consequential assumption: For each foreign employee, it is assumed that their productivity corresponds exactly to the average of all employees in their respective industry. This assumption is methodologically convenient because it requires no individual productivity data, but it is substantively flawed as soon as one knows that foreign employees in Germany earn significantly less on median wages than German employees. In response to a parliamentary inquiry, the German government confirmed that the median gross monthly wage of full-time employees with German citizenship was €4,396 in December 2025, while for foreign employees it was only €3,358 – a difference of approximately 24 percent. If actual productivity, measured by wages, is systematically below the industry average, then the IW methodology overstates the actual value added contribution of foreign employees.

Despite this methodological weakness, one key finding of the report remains undisputed and economically significant: Between the end of 2023 and the end of 2025, the eastern German states lost approximately 141,000 employees with German citizenship, while the number of employees without German passports increased by about 90,000 during the same period. The decline in the employment of German citizens amounted to 2.5 percent over this two-year period, while overall employment in the east fell by only 0.8 percent, because foreign employment partially offset the demographic-related decline. Nationwide, employment even rose slightly overall by 0.2 percent, while the decline among German citizens was only 1.4 percent. These figures show a real compensation pattern, but not a complete one: The net loss of employment in eastern Germany over two years is over 50,000 people, which refutes the thesis of complete substitution. The proportion of foreigners in employment subject to social security contributions in the east rose from 4.8 percent in 2015 to 13.3 percent in 2025, with a figure of around 845,000 people, with two-thirds of the measured value added contribution coming from employees who have joined the workforce since 2015, according to the IW.

The second short report, authored with the collaboration of Philipp Deschermeier, shifts the perspective from the present to the future. Without any migration, the working-age population in the eastern German states (excluding the special case of Berlin) would shrink by more than an eighth by 2035 and by just over a fifth by 2045. Specifically, this means a decline to approximately six million people of working age, a decrease of 22.4 percent, compared to a decline of 17.4 percent in the west under the same scenario. This figure is demographically plausible because the eastern German states have a particularly unfavorable age structure resulting from the low birth rates following reunification and the significant outmigration of young people in the 1990s and 2000s. The report becomes problematic, however, where it draws an economic policy conclusion from a purely headcount projection, namely that a lack of migration automatically leads to a loss of prosperity and jeopardized provision of care, skilled trades, and medical services. This statement conflates demographic projections with a normative assessment that fails to consider wages, capital intensity, productivity growth through automation, the skill structure of immigrants, or the fiscal costs of providing care itself.

The unspoken counter-calculation: Who pays for whom?

The core criticism is that the IW (German Economic Institute) only considers a subset of the population, namely foreigners already employed, while systematically ignoring how many immigrants are unemployed, what transfer payments they receive, and how significantly the different groups of origin vary in their economic self-sufficiency. This criticism can be partially verified using official data and confirmed in key aspects.

Nationwide, the SGB II rate—that is, the proportion of recipients of basic income support within a given population group—was approximately 4.6 to 5.3 percent for German citizens in 2025, while it was around 19 to 19.2 percent for foreigners, more than three times higher. For Saxony-Anhalt, one of the two states participating in the federal election, the SGB II rate among foreigners was reported as 26.3 percent in March 2026, compared to just 7.7 percent for Germans in the same state. The IAB Immigration Monitor from July 2026 further clarifies this picture: The SGB II assistance rate among foreign nationals was 17.1 percent for men in April 2026, although there are significant differences within the foreign population depending on the country of origin. A Bundestag document even cites more drastic figures for individual groups: The highest rate of SGB II (unemployment benefit II) recipients is reported at 59 percent for people of Ukrainian nationality, followed by people from the eight main countries of origin for asylum seekers. These figures show that enormous differences are hidden behind the collective category of "foreigners," which the IW (German Economic Institute) communication does not reflect in its public summary.

On the other side of the fiscal equation are concrete expenditure items. Net expenditures under the Asylum Seekers' Benefits Act amounted to approximately €5.90 billion for Germany in 2025, with the eastern German states spending their own, sometimes considerable, billions on accommodation, care, and integration. The Federal Ministry of Finance's Refugee Costs Report put federal migration-related expenditures for 2025 at €24.8 billion, a decrease of €3.2 billion compared to the previous year, which at least suggests a reversal of the trend in absolute costs. However, this figure represents only one cost component, not the complete national fiscal balance, because it does not fully include education expenditures for children from immigrant families, municipal integration costs, and indirect healthcare expenditures.

Academic research on generational balances offers a methodologically more rigorous, but equally controversial, counter-model. Bernd Raffelhüschen and the Market Economy Foundation conclude in their model calculations that, based on today's average immigration profile, additional immigration increases, rather than reduces, the fiscal sustainability gap of the German state. Specifically, a publication by the foundation identifies a negative fiscal effect that is considerable in relation to the gross domestic product. This opposing view directly contradicts the thesis that migration can avert the demographically driven collapse of the social security system. On the other hand, economists like Martin Werding argue using a different methodology that focuses more on the demographic relief effect of younger immigrants on the pay-as-you-go social security system and tends to arrive at more positive results. This methodological dependency is itself a key finding: whether migration relieves or burdens the state budget depends significantly on which immigrant population, which time horizon, and which expenditure categories are included in the respective model. There is currently no official net fiscal balance sheet in Germany, broken down by immigration channel, specifically for the eastern German states between 2023 and 2025, which could empirically resolve this dispute.

Selectivity as an underestimated variable

One aspect that is almost entirely overlooked in the public debate is the selectivity of immigration, specifically the question of which legal channels people use to enter Germany, and particularly the eastern German states. The IW figure of an increase of 90,000 foreign workers in two years is an aggregated figure that lumps together intra-EU migration, labor migration from third countries via the Blue Card or the Western Balkans Regulation, refugee migration from Ukraine, and asylum seekers from the eight main countries of origin. The IAB Immigration Monitor provides more nuanced employment rates: Nationwide, the employment rate of foreigners was 58.4 percent in May 2026, with rates for people from asylum-seeking countries and for Ukrainian nationals being significantly lower than the average. This heterogeneity means that the blanket statement "immigration supports prosperity" is a considerable oversimplification because it equates groups with very different employment and transfer profiles.

Also of interest is a contrasting trend, which the IW itself documents but hardly emphasizes in public discourse: Since 2024, around 7,800 workers from the new EU member states have left the eastern German states again. This number is small compared to the increase of 90,000, but in migration-critical circles, it is condensed into a separate narrative. According to this narrative, skilled, intra-EU migrant workers are leaving again due to wage convergence in Poland, a lack of a welcoming climate, or better economic prospects in their home countries, while low-skilled immigrants from asylum and refugee contexts remain and are more dependent on social welfare. Reliable migration balances, broken down by qualification and residency status, that could empirically confirm or refute this narrative are not yet available with sufficient differentiation. This is precisely where the crucial gap in the current debate lies: The IW's political conclusion that more targeted immigration from third countries is necessary is not necessarily supported by the available value creation figures if it is not simultaneously clarified what proportion of the previous employment increases actually occurred via controlled skilled worker channels and what proportion via other, less selective immigration routes.

The labor market as a stage for two narratives

The latest nationwide labor market data provides the backdrop to this debate, and the data itself is ambivalent. At the end of August 2026, the Federal Employment Agency reported that, for the first time, more than six million foreign nationals were employed in jobs subject to social security contributions—specifically, 6.02 million in June 2026. BA Chairwoman Andrea Nahles described these employees as indispensable to the German labor market, given the retirement of the baby boomer generation. At the same time, however, the overall labor market shows clear signs of weakness: The number of unemployed rose to 3.061 million in August 2026, an increase of 54,000 compared to the previous month, and the unemployment rate climbed to 6.5 percent. This simultaneous record employment among foreigners and rising overall unemployment cannot be definitively linked causally, but it does demonstrate that the German labor market is structurally divided: growth in foreign employment in certain sectors and regions alongside economic weakness in other areas of the overall economy.

In addition, the ifo Institute reported on August 24, 2026, that the German social budget reached a record high in 2025, identifying age and illness as the main drivers of this spending, not primarily migration. This finding puts the migration-centric debate into perspective in an important respect: The demographic aging of the native population places a considerable burden on social security systems, independent of the immigration issue. This relativizes both the argument for increased immigration to relieve the burden on pension funds and the argument against additional social costs due to migration, because both effects could be quantitatively overshadowed by the sheer aging dynamics of the baby boomer generation.

Between plausible suspicion and demonstrable mandate: The politics of numbers

The close timing of the two IW (German Economic Institute) short reports on the state elections in Saxony-Anhalt and Mecklenburg-Western Pomerania is a fact that can be unequivocally proven by the calendar. The first report appeared on August 13th and 14th, 2026, respectively, just over three weeks before the Saxony-Anhalt election on September 6th; the second a week later, in the midst of the heated election campaign and before the Mecklenburg-Western Pomerania election on September 20th. Thus, the publication clearly fell within the decisive phase of the election campaign and not during a politically neutral summer lull. However, a serious assessment must clearly distinguish between a plausible suspicion of strategic timing and a demonstrably motivated political mandate, as these two categories are frequently conflated in public debate.

The temporal findings and their limitations

The topic of the two short reports is highly relevant to the regional election campaign. It addresses East Germany as a study area, uses labor shortages, demographics, and a looming "loss of prosperity" as a warning backdrop, and, with the issue of immigration, it occupies the very heart of the most politically polarizing point of contention in the East German state election campaigns. This finding is further intensified by an explicitly normative concluding sentence in the second report, according to which the region must not signal to foreign workers that they are "not welcome." Thus, this is no longer a purely technical publication of statistical findings, but rather an interventionist form of communication in which data is directly embedded in a policy recommendation and a political interpretation.

The hard, verifiable statement is this: The IW (German Economic Institute) published a study tailored to East Germany on a key campaign issue just weeks before two state elections in East Germany and communicated its political conclusion. This is a fact, not an allegation; the study was therefore positioned to be relevant to the election campaign, at the very least. The timing alone suggests that the publication was planned not only for scientific reasons but also for strategic communication purposes; however, this timing does not provide direct proof of partisan political influence.

Why strategic timing is plausible

The IW (German Economic Institute) is not a government statistics agency that publishes data according to a fixed, politically neutral schedule, but rather an employer-affiliated economic policy institute whose organizational structure is closely linked to the employers' associations BDA and BDI. Employers have a legitimate interest in making labor shortages publicly visible and promoting easier immigration for the labor market, as this directly facilitates their recruitment efforts. This does not mean that every single IW study is "commissioned" or manipulated, but it does mean that the selection of the research question, the regional focus, the publication date, and the public presentation of the results are not conducted in a neutral environment.

The framing mechanism before the election

The decisive mechanism of action is not that the IW (German Economic Institute) openly issues an election recommendation. Instead, it operates through a chain of smaller, individually plausible steps: A heightened, extreme scenario is chosen, according to which a loss of prosperity and social security is imminent without immigration. This scenario is deliberately focused on those regions where migration is a particularly contentious issue in elections. A high, easily communicable gross value added figure is prominently highlighted, while the fiscal costs and the differences between labor, refugee, family, and educational migration are not considered in the same level of detail. A socio-political appeal is then derived from this one-sided analysis. The result is a framework in which anyone who critically assesses immigration easily appears to be jeopardizing prosperity, social security, skilled trades, care services, logistics, and overall economic stability. This is highly effective politically, even if it does not formally constitute an explicit election recommendation.

The contrast between the subject of the study and the media message is particularly striking. The study focuses exclusively on employees subject to social security contributions who do not hold German passports; it therefore examines neither the total number of immigrants nor unemployment, benefit receipt, the burden on municipalities, or the long-term net fiscal balance. The media message derived from this, however, is the sweeping assertion that without immigration, a loss of prosperity is imminent. This is a clear and methodologically unfounded expansion of the original, narrowly defined statement.

Why this doesn't necessarily mean a coordinated campaign

It would be a mistake to automatically conclude from this finding that there is a coordinated political campaign or a secret agreement. In such cases, institutions often do not act through covert arrangements, but rather according to a perfectly ordinary logic of self-interest, which can be traced in several steps. Employers' associations articulate their labor needs, employer-affiliated institutes provide studies that quantify these needs, the media publish sensationalized press releases because striking figures and warnings have high news value, politicians and associations cite the results to suit their respective positions, and the more complex, methodologically controversial, and communicatively more inconvenient cost side remains in the background. This process can have the effect of targeted political agenda-setting, without the need for a secret master plan. This is precisely why transparency regarding the source, the underlying research interest, and the unexamined cost items is crucial for an informed public debate.

A balanced assessment

A serious assessment should not claim that this constitutes proven election interference, as there is simply no evidence for that. However, it can certainly be stated that the publication is conspicuously election-campaign-oriented, highly political in its content, and not neutral in its communication. The IW (German Economic Institute) does not present a comprehensive macroeconomic or fiscal balance sheet, but rather an employer-centric perspective on the labor market and value creation. This perspective is legitimate in itself; however, the problematic aspect is its media translation into the general statement that Germany or East Germany therefore urgently needs more immigration, as this translation is clearly an oversimplification.

Also noteworthy is the explicitly political undertone in the second short report, which warns of a "vicious circle" should state policies perceived as hostile to migration induce younger, qualified people to emigrate. This formulation crosses the line between empirical findings and political recommendations, which is problematic from a philosophy of science perspective. A research institute can legitimately calculate demographic scenarios, but it should transparently distinguish between the pure model calculation and the normative conclusions drawn from it in the political arena. The critical core question should therefore not be whether immigration is fundamentally necessary, but rather what kind of immigration, in what quantity, according to which criteria, with what integration and employment trajectories, and with what overall net impact on the state, municipalities, social security systems, the labor market, and social stability is actually required. If a study fails to answer these questions, it cannot serve as comprehensive evidence for the claim that more immigration is, overall, the economically imperative solution. It merely proves that foreign workers already employed contribute to production, which is true, but only a part of the overall balance.

What the debate has not yet answered

Despite the abundance of figures circulating in recent weeks, key empirical questions remain unanswered, and their resolution is essential for a serious response to the core issue of the debate. A transparent breakdown of employment growth in eastern Germany, categorized by immigration channel, is lacking. This means a differentiation between EU freedom of movement, Ukrainian refugee migration, asylum seekers from the main countries of origin, the Western Balkans Regulation, and managed skilled worker immigration via the Blue Card. Furthermore, a more reliable wage statistic for eastern Germany, broken down by nationality and industry, is missing. Simply extrapolating the nationwide median wage gap of 24 percent to the eastern German situation is insufficient. Similarly, a comprehensive, nationwide net fiscal balance sheet for the eastern German states is missing. This balance sheet would offset tax and social security contribution revenues against all migration-related expenditures, instead of focusing solely on the production side of employment, as the IW calculation does.

The migration dynamics themselves are also insufficiently explained. Why exactly 7,800 workers from the new EU member states have left Eastern Europe since 2024—whether this is related to wage convergence, housing costs, the social climate, or economic alternatives in their countries of origin—has not yet been systematically investigated. Finally, a more realistic range of scenarios than the extreme zero-migration scenario of the second IW report is lacking. More interesting and politically relevant would be model calculations that differentiate between a scenario with exclusively controlled labor migration and one with predominantly protective and family migration, because these would allow for significantly more nuanced fiscal and labor market policy conclusions than the blanket comparison between current immigration and a complete halt to immigration.

A balancing act between two valid but incomplete truths

The economically honest assessment of the current debate is that the IW figure of €68.3 billion can be both accurate as the gross figure for the number of foreigners already employed and inadequate as a complete balance sheet for prosperity or the welfare state. These two characteristics are not mutually exclusive; they merely describe different aspects of the same reality. The crucial question is not whether the headline "Without immigration, prosperity is threatened" sounds sensational, but whether the institute transparently discloses its methodological assumptions and whether the resulting political demand for more targeted immigration from third countries is actually supported by the measured figure. According to the available evidence, this support is only partial: The demographic necessity of a working-age population is undisputed, but the leap from this headcount requirement to a concrete economic policy recommendation overlooks the crucial question of selectivity and the overall fiscal balance.

For the upcoming state elections in Saxony-Anhalt and Mecklenburg-Western Pomerania, this means that both political camps, those pro-migration and those critical of migration, can rely on fragments of the same complex reality without either position being fully refuted or fully confirmed by the available data. A serious economic policy debate would have to consider both dimensions—the production side of employment and the overall fiscal balance, including all immigrant groups—together and transparently, broken down by source. As long as this integrated data basis is not publicly available, the debate remains susceptible to selective citation by all political actors involved, which ultimately serves less to promote economic understanding than to mobilize the respective electorates in the eastern German states.