Germany’s Labour Market Is Declining: What This Means for Expats and Visa Holders

Germany is no longer experiencing its much-publicised “skilled labour shortage”. Instead, the country is currently in a labour market downturn with rising unemployment and lower hiring rates throughout multiple industries. This declining labour market has a direct impact on third-country nationals and visa holders, whose residency rights typically rely on their employment status.

If you’re an expat or considering applying for a work visa, the current state of the German labour market may have you consider the practicalities of your visa renewal or your potential job security. In this article, we’re exploring what the decline of Germany’s labour market means for expats and visa holders from the UK, US, and Australia.

What Is Happening in the German Labour Market?

The Federal Employment Agency (Bundesagentur für Arbeit) has reported an increase in unemployment across almost all qualification levels, explaining that Germany’s weak economy is not just impacting low-skilled workers. 

For years, Germany was promoted as having a universal skilled worker shortage, known as “Fachkräftemangel”. While this skill shortage still exists in some sectors, there are multiple industries, such as marketing, technology, and some academic fields, where we’re currently seeing a hiring freeze. At the same time, employers are also becoming more selective. It’s important to understand these changes, especially as demand for work visas from third-country nationals continues to rise.

Why Labour Market Conditions Matter for Visa Applications 

Most German residence permits for non-EU nationals, including those from the UK, US, and Australia, are conditional on their employment. If you’re an expat in Germany and lose your job, your residence status may be at risk. Labour market conditions will influence the likelihood of having your work permit approved, being able to change jobs, and getting extensions on a work visa. 

Impact of the German Labour Market on Work and Student Visa Holders                                                                      

Losing your job does not automatically cancel your residence permit as an expat in Germany. However, you’ll need to inform the Ausländerbehörde of your change in status, and you’ll typically be given a 3-6 month period to find another job. The amount of time you’re given for your job search will be at the discretion of the registration office and depends on your qualification level and previous employment duration.

The current labour market is also leading to increased scrutiny for new work visa applications, with growing delays for approvals. Expats now face a higher risk of having their application rejected if their salary or role does not meet the legal thresholds for their visa. 

International students are also impacted by the declining labour market. Most student visa holders are given up to 18 months to find qualified employment after graduating, but there are now fewer entry-level jobs available with growing competition from domestic and EU graduates. If student visa holders are unable to find a qualifying job, their residence permit may expire. 

Does This Mean Germany Is ‘Closing the Door’ to Foreign Professionals?

Germany is not ending its work visa programs, but employers are becoming increasingly more selective in the face of growing demand for visas from third-country nationals. The current political goal of achieving controlled migration, which benefits the German economy, means that there are fewer margins for error in visa applications. 

If you’re an expat or considering moving to Germany, working with an immigration lawyer in Berlin can help you navigate this changing economic landscape. You can explore our blog for more advice on applying for a work visa or book a virtual appointment with a VISAGUARD lawyer for advice on your immigration journey.