Many sectors in Germany have long relied on immigrants from abroad to expand their human resources. Economists see the shortage of labor as the greatest risk to economic growth and social security in Germany. Therefore, Germany has initiated a reform of the Skilled Immigration Act, which came into effect on June 1, aimed at encouraging more qualified workers from non-EU countries to migrate to Germany.
Labor Minister Hubertus Heil has pointed out that the German population is aging rapidly, as the baby boomer generation is set to retire in the coming years, leading to a looming shortage of skilled workers. It is expected that Germany will need to replace 7 million skilled workers by 2035.
The labor shortage is particularly acute in the healthcare and hospitality sectors, and there is also a lack of IT professionals in many areas. Approximately 700,000 open positions are reported at employment agencies. In recent surveys, companies indicated that they could not find suitable candidates for about 1.7 million open positions.
The first phase of the new legislation for skilled worker immigration will come into effect in November 2023. This new legislation is expected to be implemented in the coming months, focusing mainly on simplifying the procedures for the "EU Blue Card" and recognizing skilled workers.
Starting from June 1, 2024, the German Opportunity Card will come into effect. Both the now simplified EU Blue Card and the German work visa will require a priority check.
In contrast, the German Opportunity Card provides a way for individuals to apply directly for a position in Germany without the need for a German employer to sponsor the job application.
What is the German Opportunity Card?
The German Opportunity Card is a measure designed to attract people from around the world to Germany.
Holders can travel to Germany to search for work, even if they do not have a job contract.
The maximum duration of the Opportunity Card visa is one year. During this time, the holder is allowed to take an unlimited number of trial jobs part-time, up to 20 hours per week, to support their living expenses. Once a suitable job is found, a change of residence permit can be applied for, such as switching from an Opportunity Card to a work visa or an EU Blue Card.
The policy aims to alleviate the shortage of skilled workers. To this end, the German Bundestag passed the Skilled Immigration Act on July 7, 2023. The Opportunity Card will come into effect on June 1, 2024.
Issuance of an Opportunity Card requires meeting the criteria for skilled workers, which are defined in a points system. After fulfilling the criteria and achieving a sufficient score, an Opportunity Card will be issued, allowing entry into Germany, residence there, and the ability to search for a job.
How do experts and the economy assess this issue?
Holger Bonin, a labor market researcher, expresses skepticism regarding the functionality of the Opportunity Card. In his assessment, the system is too complicated. Establishing a comprehensive bureaucracy to verify compliance with the required criteria involves significant effort. Such a system could deter potential workers. Furthermore, the annual quota set would lead to uncertainty abroad.
According to Bonin, reducing existing barriers to migration from third countries is more important than acquiring a new Opportunity Card. He also pointed out that the recognition of professional qualifications is of great importance. The Skilled Immigration Act already offers skilled workers with vocational training the opportunity to enter Germany for job searching for up to six months. However, this requires the recognition of foreign professional qualifications in Germany. In practice, it often turns out that linking these two factors is not possible, as certification is fraught with difficulties. Germany places too much emphasis on official certificates and is less confident that employers can find suitable candidates.
Employer associations emphasize that the recognition of skills acquired abroad is made more difficult if these were not obtained through formal education but rather through practical learning in the workplace. Problems can also arise even without a certificate from a recognized German institution. In a position paper, employers suggest that, as an alternative to formal recognition, "relevant work experience" could be demonstrated through employment references for qualified positions.
How many qualified migrant workers does Germany need to meet demand?
Since the mid-2000s, Germany has been opening its labor market to skilled workers from non-EU countries (so-called third countries). Since then, a number of legislative reforms have been implemented to facilitate the immigration of skilled labor. However, the number of incoming skilled workers remains limited.
The introduction of the Skilled Immigration Act in 2020 did not lead to any significant improvements in this matter. However, the new crown epidemic has resulted in a further restriction on the number of qualified migrants. In 2020, the epidemic caused a halving of labor migration. In 2021, there was only a slight increase, with levels not reaching those of 2019.
According to the Federal Statistical Office, by 2036, 12.9 million workers will have reached retirement age. This corresponds to nearly 30 percent of the workforce in 2021. Younger generations will not be able to fill this gap.
The Skilled Labor Monitor from the Ministry of Labor predicts that around 240,000 open positions are expected by 2026. The Institute for Employment Research (IAB) estimates that a long-term net migration balance of at least 400,000 people per year will be required.
The shortage of skilled workers has become one of the biggest business risks for many companies. In a business survey conducted by the Association of German Chambers of Commerce and Industry (DIHK) in early summer 2022, around 56 percent of companies expressed concerns about not being able to find enough qualified employees in the next twelve months.
The Institute for Employment Research (IAB) confirms that there are significant bottlenecks in many professions. This includes, among others, the skilled trades, construction, metal and mechanical engineering, nursing, education, and IT professions.
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