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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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WORKING IN GERMANY

EXPLAINED: The legal steps for starting a business in Germany

Whether it's a small start-up or a much bigger venture, there's obviously legal steps to bear in mind when starting up a for-profit business in Germany.

EXPLAINED: The legal steps for starting a business in Germany

Starting up a for-profit company in Germany follows different procedures than either forming a non-profit foundation (a Verein) or registering as self-employed.

If you need to register as a corporation, the first step is to figure out which of two general company types your venture would fall into in Germany. The first is a Gesellschaft mit beschränkter Haftung (GmbH), which is a limited liability company. This is by far the most common option. Another is an Aktiengesellschaft (AG) – or a joint stock company or corporation. While these two tend to be the most common, there are a few others as well.

EXPLAINED: How to start up your own verein in Germany

Setting up a GmbH

A GmbH is very common in Germany – and under it shareholders in the company aren’t personally responsible for the firms debts. You can set up a GmbH with only one person or shareholder. If you have more than one, you’ll need to draw up a notarised agreement between them.

A GmbH must also appoint at least one Managing Director (Geschäftsführer). The Managing Director is allowed to have shares in the company and is entitled to represent the company legally, whereas other board members are ordinarily not able to.

Shares in a GmbH are ordinarily only represented in notarised documents. There are no certificates which confirm that you have shares and those shares cannot be listed on stock exchanges. Shares, however, can be transferred through notarised documents.

The minimum start-up capital needed to form a GmbH in Germany is €25,000. If founders don’t have this, they can start up as an Unternehmergesellschaft – or entrepreneurial company – for €1. However, these are considered as vehicles to get to the financial capital of a GmbH. As such, UG’s are expected to set aside at least 25 percent of any annual surplus as savings. Once they hit the €25,000 mark, they need to change to a GmbH.

A GmbH is generally the most common type of corporation in Germany because the capital and administrative requirements tend to be less onerous – making it suited for small enterprises, for example. As soon as a GmbH enters the Commercial Register (Handelsregister), it legally exists as a company.

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

Grounding an AG

A German AG is a company at a different level – and tends to be more for mid-sized to larger-sized business ventures.

In contrast to a GmbH – which needs only one member – an AG needs to have a minimum of five members.

The capital requirements are also twice as much as for setting up a GmbH. You’ll need €50,000 for an AG. These shares can be listed on stock exchanges – although they don’t have to be.

Choosing which legal model of company for your business in Germany depends on its size, your available capital – and how much liability you’re comfortable with. Photo: Getty Images

You’ll need articles of association, authenticated by a notary, to set one up too. As with a GmbH, an AG legally exists when it enters the commercial register.

An AG must also have a managing board (Vorstand). Members are officers of the company and make its day-to-day decisions. They do, however, answer to a supervisory board (Aufsichtsrat). They must also hold general meetings (Hauptversammlungen) to allow for shareholders to exercise control over overall policy.

READ ALSO: What’s the outlook for the German job market in 2024?

Other types of German companies

In general, GmbH and AG companies are the most common ones you’re going to see in Germany. But other – mostly more complex models – exist.

These include an Offene Handelsgesellschaft (OHG), or General Partnership. This would often be for a company of two partners who had each contributed half the capital. They would share in half the profits but also each be liable for the firm’s debts – to an unlimited amount. You may find that certain family-run businesses use this model. The risk here is that the partners would be personally liable – down to their own assets – for the firms debts.

A variation of this is a Kommanditgesellschaft (KG) – or a limited partnership. This happens when one partner is entirely liable for the firms debts – down to their personal assets, while the other one is not. The limited liability partner would still be liable for the firm’s debts up to and including the amount they had invested in the company itself though. This model might be common for family-owned businesses that bring in outside experts to run day-to-day administration – for example.

Another complex arrangement is a combination of a GmbH and a KG – to a GmbH & Co. KG. Essentially this joins a GmbH and a KG together in a partnership agreement. While very complex and not often used, this kind of partnership may serve as a way to limit the recourse a company creditor has to go after a company member’s personal assets – with more liabilities tied up in the GmbH, which has limited liability.

More complex arrangements are available too for companies that want to have a presence in Germany but their head office might be abroad. These include a subsidiary (Töchtergesellschaft) and Zweigniederlassung – or a branch office. If you’re dealing with these kinds of entities, it’s recommended you seek tax and compliance advice to confirm which one is necessary. In general though, a subsidiary will manage many of its own affairs apart from its parent company. A branch office is likely to have only a small presence in Germany while the bulk of administrative tasks are handled elsewhere.

Knowing which one is applicable is important as it helps establish whether you need to make an entry in the commercial register or not – and what taxes will have to be paid.

Articles in The Local are not meant to replace professional legal or tax advice. We recommend speaking to an appropriated professional in case of further questions.

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