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IMMIGRATION

Will immigration reform be enough to combat Germany’s worker shortage?

Despite record levels of immigration, Germany still faces a huge worker shortage. Federal Labour Minister Hubertus Heil has put forward plans to reform immigration law and, the government has approved a new Skilled Worker Strategy.

An employee of an electric motor and fan manufacturer, works on a fan in production.
An employee of an electric motor and fan manufacturer, works on a fan in production. Photo: picture alliance/dpa | Christoph Schmidt

picture alliance/dpa/dpa-tmn | Kirsten Neumann

Germany is currently facing a significant worker shortage and, in the last quarter alone, there were nearly 2 million vacant positions on the country’s job market. 

The German government currently expects that, by 2026, there will be 240,000 jobs in Germany for which there will be no qualified candidates.

One of the ways in which Germany intends to tackle this impending labour force crisis is by replacing the current immigration system similar to the points-based model used in Canada. But this is not the only way.

Last week, Germany’s Federal Cabinet approved a new Skilled Labour Strategy which lays out various ways in which Germany will try to plug the worker shortage.

PODCAST: Germany’s plans to modernise citizenship and immigration laws, and is cash still king?

Which immigration reforms are currently on the table?

In September, Federal Labour Minister Hubertus Heil presented his initial plans for a new Chancenkarte – a so-called “opportunity card” which will offer foreign nationals the chance to come to Germany to look for work even without a job offer. 

Under the plans, internationals will be able to come to live in Germany as long as they fulfil at least three of the criteria of having a university degree or professional qualification, professional experience of at least three years, a language skill or previous residence in Germany and are under 35.

READ ALSO: What you need to know about Germany’s points-based immigration plans

This means that, unlike at the moment, proof of qualification and work experience abroad will suffice for entry into Germany.

This would open up the labour market to foreign specialists who don’t yet have a qualification recognised in Germany, as they would be able to obtain these qualifications with the help of a German employer, who would sign a contract with them and also pay for some of their language courses.

It is still not clear, however, when the new points-based immigration system will come into effect.

According to the Skilled Worker Strategy paper, other important goals are to enable immigrants to make greater use of the employment and training opportunities in Germany and for the recognition procedures for foreign educational and professional qualifications to be simplified. 

READ ALSO: ‘More jobs in English’: How Germany could attract international workers

The Strategy Paper also talks about “a goal-oriented pre-integration policy” which would include providing information and advice on immigration procedures, language courses, and orientation services in the country of origin for the potential skilled workers themselves as well as for their family members.

What else is Germany doing to deal with skilled worker shortage?

Along with simplifying immigration procedures, the German government also wants to combat the shortage of skilled workers with measures to stimulate workforce participation by those already living in Germany.

A metal worker works with a vice in Nordrhein-Westfalen. Photo: picture alliance/dpa/dpa-tmn | Kirsten Neumann

Due to the high part-time employment rate, the average annual volume of paid work done by women in Germany is about 30 percent below that of men. Therefore, the aim, according to the Strategy Paper, is to encourage more women to work full-time with measures such as expanding childcare and reducing financial disincentives – such as Ehegattensplitting (“marital splitting”).

READ ALSO: Ehegattensplitting: How did Germany’s marriage tax law become so controversial?

The government also wants to do more to promote training and study courses in sectors and occupations most affected by the skilled worker shortage. This applies, for example, to the skilled trades – such as plumbers, electricians and carpenters – where a high proportion of employees are approaching retirement age.

The government also wants to open up continuing education programs and to provide incentives to encourage low-skilled, unemployed and benefits recipients to catch up on their vocational qualifications.

Another crucial issue to be addressed is the training of migrants who have been living in Germany for some time. From January 1st, 2022 those who have been living in Germany for at least five years are allowed to stay and work. 

According to the Strategy Paper, the federal government is also offering support and further vocational training for immigrants who still need qualifications to gain a foothold in the German labour market.

READ ALSO: German cities warn of growing refugee crisis

Speaking to the Labour Minister on a visit to Berlin last week, Klaus-Dieter Müller, managing director of a construction company with around 170 employees, criticised what he sees as a shortage of young talent. Many of the worker shortage issues, he said, could best be solved by better training for migrants.

Builders work on a building site in Baden-Württemberg. Photo: picture alliance/dpa | Bernd Weißbrod

According to Müller, a lack of technical language classes for migrants is a key reason “why motivated and talented people fail their craft training”. Just recently, he said, his company lost two apprentices because they failed to get their vocational degrees due to language difficulties. 

“These are enormous losses in our industry, demographic change is having an extreme impact on us, we need people with a migration history, I don’t know anyone who says otherwise,” he said. 

Klaus-Dieter Müller also said that bureaucratic hurdles also have a paralysing effect on his industry. In the case of his trainees from Syria and Lebanon, it took almost two years for the authorities to recognise their school certificates, he said.

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READER INSIGHTS

‘Prepare for lots of paperwork’: What it’s like to be self-employed in Germany

Being self-employed or freelance in Germany has lots of positives but it can also be costly and difficult - especially during an economic slump. The Local readers share what it's like working for yourself in Germany in 2024 along with their advice.

'Prepare for lots of paperwork': What it's like to be self-employed in Germany

Working for yourself in Germany can be a rewarding experience. But it’s fair to say that being self-employed is not for the faint-hearted.

With a lot of bureaucracy to wade through and high costs, those who decide to go it alone – whether through setting up a business or as a freelancer – can face hurdles.  

And it can get even more tricky during a cost of living crisis. A recent survey found that many self-employed people are facing difficulties finding assignments as Germany’s economy has slumped. 

READ ALSO: Almost half of freelancers in Germany struggling to find assignments

The Local asked readers to share their experience of being self-employed in Germany, what changes they’d like to see and their tips for others who are considering going down this path.  

‘Golden era is over’

There were mixed views on how the situation stands at the moment, although most said they had seen a dip in the market.

Freelance language teacher Joe, 54, based in Munich, said demand was still there “but less budget seems to be affecting some clients”. 

Andrew, 39, in Berlin, who is a freelance web developer, said “The tech market is tough right now, with the ‘golden era’ of the 2010s being over.

“I blame massive VC over-investment creating unrealistic demand in 2020 and now companies are cutting back.”

READ ALSO: Everything you need to know about becoming a freelancer in Germany 

Others said the slowdown was improving.

“I have a steady work stream for now and the market seems to be slowly improving, but there was a sharp downturn towards the end of 2021 and the market has been very noticeably harder since then,” said Michele, 33, who’s based in Berlin and is a freelance software engineer.

‘More difficult finding German clients’

Lots of people said they were looking for clients outside Germany.

Haylee, 34, a copywriter in Berlin, said competition was “super high” right now. 

“Luckily I can look for jobs in my home country (Australia) as well,” she said. 

Luc, 58, who’s based in Munich and works in business development for life sciences said it has been “more difficult to find German clients, but easier finding clients located in Asia that are looking for European entry and support”.

Self-employed or an employee? Being self-employed can be tricky but rewarding in Germany.

Self-employed or an employee? Being self-employed can be tricky but rewarding in Germany. Photo: picture alliance / dpa-tmn | Andrea Warnecke

For Erica, 40, looking outside Germany has also been a way for her to keep a steady stream of work.

The self-employed copywriter in Berlin said: “I have had a lot of prospects, new projects and clients in the past two years. I work across the US, UK and EU markets, among others, so I am not directly reliant on German clients. While other freelancers limited to the tech or generic marketing sectors have faced a downswing, my sector (corporate sustainability) is very active.”

Another respondent, Alex, 40, in Berlin, who works as a consultant for digital product development said it was harder to find assignments and that there was a higher expectation on creating content. 

Advances in technology are also a factor. A writer and journalist who has been freelancing for several years told us: “Several side gigs have been replaced by generative AI (blog posts and white papers).”

‘Everything falls on the freelancer’

When asked how Germany fares as a country to be self-employed in, respondents said it isn’t easy. 

“Compared to being a salaried employee it’s not that great,” said language teacher Joe in Munich. 

Most people mentioned the high cost of health insurance and other insurance contributions, as well as the extra paperwork. Others said it has become more difficult to find a tax advisor, and urged Germany to make processes around self-employed and freelance policies simpler. 

Gordon Barnes, 50, in Munich, who is an IT consultant said the biggest problem about being self-employed in Germany is “around pension and retirement planning”

“Everything is on the freelancer without any support,” he added. 

Jason Wright, 46, a freelance motorsport design engineer based in North Rhine-Westphalia said those going it alone need to be “prepared for a lot of paperwork and strict constraints on how you operate on a day-to-day basis”.

He said he’d like to see more support available in English “especially from the tax authorities”. 

READ ALSO: How to get a freelance visa for Germany from outside the EU

A woman working on her laptop.

A woman working on her laptop. Photo by Marcus Aurelius: https://www.pexels.com/photo/woman-using-macbook-pro-4063697/

Consultant Mike Moseley, 66, in Mülheim un der Ruhr, said he found the process of registering as self-employed and doing tax returns “intimidating”. 

Michele in Berlin said taking the first steps to becoming a freelancer in Germany is hard.

“This is not my first freelancing stint, so I’m quite accustomed to the processes, but the entry barrier is still fairly high,” said Michele.

Andrew in Berlin said, however, that once you get a tax advisor and fill in the correct registration forms, “it’s generally pretty straight-forward”.

Get a tax advisor, save and network

Many respondents advised getting professional advice on taxes. 

Alex in Berlin recommended networking to meet and talk with other freelancers, getting a separate bank account and trying to get a tax advisor “as soon as possible”. 

A few respondents to our survey recommended those who are eligible to apply for Germany’s artist social insurance fund, known as the Künstlersozialkasse (KSK), which provides artistic freelancers with an affordable way into the social insurance system.

“You can get copies of the application form in English if you need it, said a writer who wished to remain anonymous.

READ ALSO: KSK – How creative freelancers can pay less for German health insurance

The Local readers also recommended saving.

“Be sure to put something aside each month for retirement,” said Richard, 70, in Frankfurt.

Andrew in Berlin said people should set aside 25 percent of their income from the start for taxes, adding: “Another 20 percent will likely go to the Krankenkasse!”

Meanwhile, Erica in Berlin advised people to “think strategically through all aspects of business” when they venture into freelancing.

“Explore different pricing models beyond hourly, which doesn’t reward high experience or efficiency,” she said. “Connect with high-earning freelancers in your field and learn from them. Set boundaries with clients on timelines, scope, and service offers. Develop your own policies and processes to lead client engagements.”

Ultimately, the additional effort required to freelance makes some question if it’s worth it. Joe in Munich said: “Do whatever you can to avoid it…there is a lot of administration.”

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