Have you ever eaten at a Chinese restaurant? Or bought a döner from a Turkish shop? When people think of immigrants as entrepreneurs in Germany, they probably think of traditional industries like the restaurant business or retail as their main areas of employment. But for quite some time now, immigrants have also been active as entrepreneurs in other sectors.
As a study by the Bertelsmann Foundation shows , 48 percent of self-employed immigrants now work in the service sector outside of retail and the restaurant industry. Retail and the restaurant industry now account for only 28 percent—a decline of ten percent compared to 2005. During the same period, the share of the manufacturing sector increased: one in five self-employed individuals with an immigrant background works in the construction or manufacturing industries.
In general, it is evident that people with a migrant background are driving Germany’s economy forward—whether as employees or as entrepreneurs. As the study shows, companies with foreign roots increased the number of jobs from 947,000 to 1.3 million between 2005 and 2014. At the same time, the number of self-employed entrepreneurs with an immigrant background also rose from 567,000 to 709,000 during the same period.
Other studies had already identified this trend. According to a special analysis of KfW’s 2015 Startup Monitor, approximately 179,000 migrants in Germany started their own businesses in 2014. According to the KfW report, roughly one in five founders was a foreign national or had acquired German citizenship only after birth. The researchers also point out that migrants often become entrepreneurs because they lack more attractive employment alternatives.
Migrants as entrepreneurs bring significant benefits to the economy. In 2014, approximately 2 million people were employed thanks to the entrepreneurial activities of people with a migrant background. Compared to 2005, this figure has increased by 33 percent. What is truly remarkable about this is that the proportion of migrants in Germany grew by only just under 9 percent during the same period.
Self-employment, as the study also shows, leads to higher income. Self-employed migrants earn an average net monthly income of 2,167 euros—40 percent more than employed migrants with a migrant background. As business owners with multiple employees, migrant entrepreneurs earn nearly twice as much (2,994 euros) as employed individuals with a migration background. Compared to German self-employed individuals, however, they lag behind: On average, migrants in Germany earn about 30 percent less than German entrepreneurs.
The contribution of migrant entrepreneurs to employment varies by region: North Rhine-Westphalia has the highest total number of jobs created by foreigners, at 300,000. In comparable large states, however, the number of jobs rose even more sharply between 2005 and 2014: by 81,000 in Hesse, by 113,000 in Bavaria, and by as many as 145,000 in Baden-Württemberg. This can be explained by differences in economic momentum and the scale of immigration. The study shows, however, that educational attainment is the decisive factor. The more highly qualified people with a migrant background are, the higher the rate of self-employment in the state tends to be. This, in turn, has a positive effect on the number of jobs created and the income of the self-employed.
