New study “Labor market and immigration in transition” confirms tight labor market

With the publication of the new study "Labor Market and Immigration in Transition," researchers present one of the most comprehensive analyses to date of the current state of the German labor market. The results paint a picture that is as clear as it is alarming: The structural shortage of skilled workers is worsening – despite rising unemployment . The study shows that short-term economic weaknesses are compounded by long-term demographic challenges. Rising unemployment figures are coinciding with a shrinking working-age population. An increasing number of employees are retiring, while significantly fewer young workers are entering the workforce. The sectors most affected are nursing, skilled trades, industry, logistics, and education.

Immigration patterns are shifting – less EU, more third countries

A key finding of the study is the profound shift in the structure of immigration. While Germany benefited significantly from workers from other EU member states for many years , this trend has now reversed for the first time. In 2024, Germany recorded a negative migration balance of EU citizens for the first time. More people left the EU than immigrated. At the same time, immigration from third countries is growing significantly – both through refugee migration and targeted labor migration . People from Ukraine , from traditional asylum-seeking countries, and from other non-EU third countries are now particularly prominent in shaping the employment landscape. This is fundamentally changing not only the origins of immigrants but also their skill set.

While EU immigrants often have completed vocational training , among third-country nationals the proportion with academic degrees is just as high as the proportion without any formal training. Refugees, in particular, often lack recognized qualifications, even though they possess professional credentials.

Employment is growing – but only thanks to third-country nationals.

According to the authors of the study, employment trends in recent years reveal a clear pattern: the meager growth in the German labor market is driven almost entirely by non-EU nationals. While the number of German employees is declining in many sectors and EU employment is also decreasing, the number of non-EU nationals continues to grow at a double-digit rate. This effect is particularly pronounced for both men and women, in both East and West Germany. In small and medium-sized enterprises, job losses would have been significantly more severe without immigration from non-EU countries. The study makes it clear: without international workers, the decline in employment would already be undeniable.

Care is growing, industry is losing – the shift in sectors

According to the study, the personal services sector is currently experiencing particularly strong growth. This includes nursing , education, social services, healthcare, and the hospitality industry. In many of these sectors, the proportion of non-German employees already exceeds 40 percent. Without immigration, maintaining essential public services would be largely impossible. At the same time, manufacturing jobs continue to shrink. Industry, construction, and metalworking are losing skilled workers, primarily from Germany and Europe, due to demographic change. While the proportion of third-country nationals is also growing in these sectors, it is not yet sufficient to fully compensate for the losses. The risk of a permanent reduction in capacity is therefore becoming increasingly real.

Recognition, bureaucracy and discrimination as systemic obstacles

The study also clearly reveals the structural weaknesses of labor market integration . Recognition procedures for foreign qualifications – especially for third-country nationals – remain lengthy, costly, and subject to regional disparities. In many cases, a lack of recognition leads to years of employment below one's actual qualifications. Added to this are bureaucratic hurdles related to residence permits, work permits , and changing employers. Small businesses, in particular, shy away from the administrative burden. At the same time, current studies show that applicants with foreign-sounding names have significantly lower chances of being hired, even with the same qualifications – especially in rural areas.

Another key problem clearly identified in the study is the below-average labor force participation of immigrant women – especially those from traditional asylum-seeking countries. This represents one of the largest untapped labor potentials . At the same time, the analysis shows that investments in language support, childcare, and skills development can significantly increase employment rates. Integration works – when it is pursued consistently.

Legal perspective on skills shortage

From a migration law perspective, the study confirms what daily practice demonstrates: The German labor market is structurally dependent on immigration – however, this need repeatedly clashes with a residency law that is too slow, too complex, and too inflexible in its implementation. Securing skilled workers is currently failing not due to a lack of demand, and often not even a lack of applicant pool, but rather due to overburdened immigration authorities, lengthy visa procedures , inconsistent recognition decisions , and unclear responsibilities. Third-country nationals, in particular, who could work in occupations on the shortage list, lose months or even years in these procedures. The study makes it clear: Without a radical acceleration of labor migration, without reliable and legally sound recognition procedures, and without a genuine reduction in bureaucracy regarding residence and work permits, Germany will not be able to overcome the skilled worker shortage.