Germany needs greater immigration to avoid labour shortages: minister

Germany will need large-scale immigration to prevent severe labour shortages from undermining productivity and endangering a successful energy transition, its economy minister said as Europe's largest economy faces a demographic crisis.

"We have 300,000 job openings today and expect that to climb to a million and more," Robert Habeck, a leader of the Greens party, told a news conference. "If we don't close that gap, we will have real productivity problems."

While improving training and flexibility on combining jobs with family would help, greater immigration will be essential "for engineers, craftsmen, for carers. We have to organise this," said Habeck, who is also Vice Chancellor in Germany's new three-way ruling coalition led by Social Democrat Olaf Scholz.

The employer-friendly German Economic Institute estimates that the labour force will shrink by more than 300,000 people this year as there are more older workers retiring than younger ones entering the labour market.

This gap is expected to widen to more than 650,000 in 2029, leaving an accumulated shortage of people of working age in 2030 of roughly 5 million. The number of Germans in employment grew to nearly 45 million in 2021 despite the coronavirus pandemic.

After decades of low birth rates and uneven immigration, a shrinking labour force poses a demographic time bomb for Germany's public pension system, in which fewer employees are burdened with the task of financing the pensions of a growing mass of retirees who are enjoying longer life expectancy.

The governing parties agreed in their coalition negotiations to lower the hurdles for skilled workers from abroad and make working more attractive again with various measures, including lifting the national minimum wage to 12 euros ($13.60) per hour.