The shrinking population and increasing digital transformation in Germany have led to a decline of individuals in the country’s population and labour force today. Facing the massive labour shortages, Germany is aiming to boost the influx of foreign skilled professionals with its new immigration law and increase the minimum wage.
On January 11th, 2022, Robert Habeck, leader of the ‘German Green Party’ and ‘Federal Minister for Economic Affairs and Climate Action’ mentioned “We have 300,000 job openings today and expect that to climb to a million and more.” If the severe labour shortage continues, Germany will be suffering from “real productivity problems.”
Germany has had a low birth rate for decades due to its conservative social norms. The shrinking workforce has not only reduced the country’s productivity but has also slowed down the economy. According to Reuters, the employer-friendly ‘German Institute for Economic Research’ estimates the workforce will shrink by more than 300,000 thousand this year, as there is a surpass of retiring older workers, that exceed the younger ones entering the workforce. If the problem is not solved as soon as possible, it is also expected the gap will be widened to more than 650,000 by 2029.
To solve the continuing acute labour shortage and have a qualified workforce, Habeck pointed out that greater immigration is essential. Germany needs to increase its imported skilled professionals in all fields, such as engineers, nurses, truck drivers etc. He also suggested having a “better combining of qualifications, training, and possibilities for families and jobs”.
To reduce the impacts of an ageing society on the economy, “We can only get the ageing labour market under control with a modern immigration policy,” said Christian Duerr, who is the parliamentary leader of the co-governing Free Democrats (FDP). “We have to reach the mark of 400,000 skilled workers from abroad as quickly as possible.”
Raising the national minimum wage can also be another way to help mitigate the crisis today in Germany. The Greens have proposed an increased on Germany’s minimum wage, from €9.19 per hour to €12 per hour, in 2019.
On January 21st, 2022, Olaf Scholz, the new German Chancellor stated that his ‘Social Democrats’ (SPD) were working on their election promise to raise the national minimum wage to 12 euros an hour. He also tweeted, “For me, raising the minimum wage to 12 euros is one of our most important legislative projects and it’s a matter of showing respect for the achievements of employees. I’m glad it’s on its way now!“
However, the increase of minimum wages is only been seen as a way to attract more foreign workers. Local companies may not be able to afford higher wages, leading to layoffs.
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