A new study by the Institute for Employment Research (IAB) has found that Germany’s labour force will decline by 11,7 percent by 2060. The federal republic must look beyond the EU and offer immigrants a path into the national labour market, IAB economist Enzo Weber has urged.

Germany’s workforce heading for decline

Changes to Germany’s population demographic mean that by 2060, 1 in 10 people in the federal republic’s working population will have disappeared, according to new findings by the IAB. 

When changes to birth, retirement, immigration and emigration rates in Germany are considered, “The results show that companies will have significantly fewer workers available in the coming decades,” IAB economist Enzo Weber explained.

If new measures are not urgently employed by the government, such as a significant increase in immigration to fill vacant jobs, the IAB expects Germany’s workforce population to drop by 7 million people.

Higher birth rates and increased migration will grown working population

According to the IAB study, the trend of more women working and the birth rate increasing should lead to positive developments in the coming years. By 2060 the labour force participation rate among women under 55 is expected to rise from 87 to 93 percent, while the birth rate is likely to increase from 1,5 to 1,7 children per mother.

Weber warned that if Germany wants to avoid shrinking its workforce, “We must step it up at least two notches in terms of countermeasures”. Weber also pointed out that when looking for people to join its workforce, it is becoming increasingly important for Germany to look beyond the EU. So far, the federal government’s in-development Chancenkarte policy seems to signal a move in the direction Weber is urging.

“The hurdles [into work] must therefore be further reduced, but at the same time more must be done to ensure that immigrants gain a foothold in the labour market and find long-term prospects in Germany," the economist emphasised.

The IAB report comes after a similar study by the Cologne Institute for Economic Research (IW) found that, to remedy its already record-breaking worker shortage, welcoming new migrant workers is essential for Germany.

In the IW report, Federal Employment Agency director Andrea Nahles pointed out that “even if [Germany] leverage[s] all domestic potential, this will not be possible without further immigration, also for demographic reasons. We need both labourers and skilled workers.”

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