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‘Immigration miracle’: How Germany’s foreign STEM workforce has grown in a decade

The number of foreign employees with STEM jobs in Germany has significantly gone up over the last decade. A new study reveals where workers originate from, where they're settling and how they are contributing to the economy.

Published: 25 August 2023 16:45 CEST
Two Blue Cards for foreign skilled workers are on a table at the Federal Office for Migration and Refugees in Bavaria.
Two Blue Cards for foreign skilled workers are on a table at the Federal Office for Migration and Refugees in Bavaria. Photo: picture alliance/dpa | Daniel Karmann

Immigration has long been a hot-button topic in Germany. And with the anti-immigration party Alternative for Germany (AfD) seeing rising support recently, foreign nationals may be feeling a little concerned. 

However, a new study highlights the contribution that foreign nationals have made in the workforce – specifically in STEM (science, technology, engineering and maths) professions, an acronym known as MINT in Germany. 

‘A small German immigration miracle’, is how business magazine WirtschaftsWoche described the phenomenon of the rising number of employees in technical and scientific professions from abroad.

“When global corporations like Intel or TSMC come to Germany, they also need experts to work for them,” said WirtschaftsWoche in a report published on Friday August 25th.

“The planned Intel plant is expected to create up to 20,000 new jobs in Magdeburg alone. In Germany, a country with a shortage of skilled workers? This is a problem. But a study by the Institute of the German Economy (IW), which is exclusively available to WirtschaftsWoche, shows what an important contribution immigration already makes. In the past 10 years, Germany has experienced an immigration miracle, albeit a relatively small one.”

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How have foreigners contributed to STEM in Germany?

According to the study, the number of employees from abroad in STEM professions in Germany has increased by around 190 percent from around 70,000 at the end of 2012 to almost 202,000 professionals at the end of 2022.

The 132,000 additional foreign employees – with jobs such as IT specialists, industrial engineers and scientists – contribute about 16 billion euros per year to Germany, the research found. The proportion of foreigners within STEM has almost doubled within 10 years from 6.5 to 12.7 percent. 

Tesla workers put the finishing touches on a new car

Tesla workers put the finishing touches on a new car at the company’s Brandenburg plant. The number of foreign employees in this area has risen due to the car manufacturing setting up there. Photo: picture alliance/dpa | Patrick Pleul

Overall, employment in STEM professions in Germany rose from over one million to more than one and a half million, an increase of almost 50 percent.

Where are workers coming from – and which areas are they settling in?

Immigration from non-EU countries to Germany’s STEM workforce is particularly high. It has more than quadrupled from over 30,000 in 2012 to almost 122,000 by the end of 2022. The front-runner for origin countries is India with an increase of 635 percent – from 3,750 to over 27,500 skilled workers at the end of 2022.

READ ALSO: Germany sees ‘over 550 percent ‘ increase in IT workers from India 

People from Central and South America are next, increasing from 2,310 in 2012 to 9,870 workers in 2022. North Africa is the third highest origin country – going from 1,270 STEM workers in 2012 to 8,050 in a decade. 

A similar picture emerges among engineers. Here, the proportion of foreigners in Germany grew from 6 to 10.5 percent between 2012 and 2022. But there are large regional differences. The proportion of foreigners in engineering professions is particularly high in Starnberg (27.4 percent), the Main-Taunus district (22.3 percent), Munich and the surrounding area (22.6 percent) and Berlin (19 percent).

It’s a mixed picture in eastern Germany. The share of foreigners in engineering jobs is much lower in Mecklenburg-Western Pomerania (3.9 percent), but in Brandenburg it’s almost twice as high at 7.4 percent.

The Ilm district in Thuringia, where the share of foreign engineers has grown from under five percent to over 22 percent in the past 10 years also stands out. According to the authors of the study, this is due to the many graduates of the TU Ilmenau and foreign companies setting up there. 

The example of the Tesla plant in Grünheide in the Oder-Spree district shows that large international companies are reinforcing the trend. There, the proportion of foreign engineers rose abruptly after the car manufacturer set up shop. 

Whether this is also to be expected in Magdeburg or Dresden, where the chip companies Intel and TSMC want to launch remains to be seen. At the end of 2022, the proportion of foreigners in engineering professions in Magdeburg was just 4.7 percent.

Meanwhile, Germany is continuing its push to increase immigration from abroad to help ease the worker shortage. 

In June, the government approved a new skilled immigration law designed to cut red tape and encourage more immigration from abroad. 

READ ALSO: When will Germany’s new immigration rules come into force?

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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.

Published: 13 June 2024 14:52 CEST
Updated: 15 June 2024 09:07 CEST
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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