According to the Director of the Institute for Employment Research (Institut für Arbeitsmarkt- und Berufsforschung - IAB), Bernd Fitzenberger, very soon it will no longer be possible to maintain the current number of employed people in Germany. The reason is that the maintenance would require an annual increase of 400,000 people which is hard to attain, especially taking into consideration the fact that demographic conditions in Germany make it impossible to fill in this gap using the national labor force only. Thus, there is an obvious need to attract international workers to join the German job market.
Germany was always considered to be one of the prestigious countries to work and live in, still, according to the OECD study published in May 2019, Germany is only 12th among the most attractive destinations for skilled workers with a Master's degree or Doctor’s degree, well behind Australia, Switzerland, and Sweden. The data shows that it is quite challenging to ensure that the necessary annual demand of 400,000 people will be satisfied. And if the strategy for long-term employee level maintenance doesn’t succeed, then even some of the most successful industries in Germany will need to look for perspectives abroad.
Current Developments
According to the German Federal Employment Agency (BA) at IAB, the proportion of young people with an affinity for migration is declining in the EU, making this region a highly improbable source of workers to satisfy the German labor gap. Given this tendency, it becomes obvious that to address the potential decline in the labor force, further immigration would have to come from non-EU countries.
At the same time, immigration from third countries to Germany for professional reasons is not that significant. In 2016, it represented only 8.5% of total non-EU migration, according to IAB. The percentage taken by non-EU students coming for studies and vocational training is not that big either with 8.3% respectively. So there is certainly a considerable potential here to meet the long-term demand for skilled labor.
Speaking of the employment of refugees in Germany, according to the IAB figures from July 2019, the employment rate of this group is 38%, with 82% being employed subject to social security contributions, which thus only fills a small part of the gap. Taking the previously mentioned facts into consideration, we can conclude that the current number of third countries’ nationals that work in Germany or are planning on joining the job market after studies is not enough to fix the skilled workers shortage in the country, still leaving space for new people to join the German workforce.
Expatrio’s perspective
In order to satisfy the potential demand for qualified workers, Germany needs to become much more attractive as a destination for skilled labor. For example, by offering more attractive career entry opportunities and de-bureaucratizing the recognition of qualifications for international graduates.
The increasing number of students from third countries is already promising a great potential, but there is still a lot of space to grow further. For example, by broadening educational opportunities for international scholars, further establishing the quality of German education as a brand name and emphasizing the transition from Universities into the job market. This will allow the country to attract even more international talent and grow it internally.
Expatrio is committed to keep facilitating the development of the German market, continuously pointing out potential developments in dialogue with decision-makers from politics, diplomatics, and business.
Alex Ruthemeier
Co-Founder of Expatrio Global Services
