Germany is one of the oldest countries in the world. Demographic change is already clearly evident and will have an even greater impact on the labor market in the coming years—as the so-called baby boomers gradually retire. However, well-qualified skilled workers are essential to the innovation and competitiveness of industry in Germany.

What is needed is a coherent, comprehensive strategy to tap into all domestic potential, as well as the immigration of skilled workers and labor from other EU countries. This is because migration from the EU cannot solve the German economy’s skilled-labor shortage in the long term, as many EU countries are themselves affected by demographic change.

Domestic labor potential—including that of women, older adults, the long-term unemployed, and people with a migrant background—must be mobilized even more effectively. Further progress in balancing family and career would, above all, enable women to work closer to full-time hours. Early retirement incentives and the goal of keeping older people in the workforce longer are incompatible.

Increased labor migration to Germany and reduced out-migration from the country are further building blocks for addressing skilled labor shortages. The legislative changes in recent years are moving in the right direction in many areas and can help alleviate the labor and skilled worker shortage. However, the following remains true: Labor migration to Germany stands or falls with an effective immigration administration. The reform will only be effective if practical implementation can be significantly and swiftly improved. Administrative procedures must be noticeably simplified, accelerated, and digitized. Otherwise, even the legal reforms will come to nothing. Germany must also become an attractive destination overall for foreign skilled workers. A genuine culture of welcome is crucial to this end.

Separate from labor-market-oriented immigration, which aims to secure the workforce and skilled labor base of the German economy, is the immigration of refugees. It stems from the constitutionally protected right to asylum and the Geneva Convention on Refugees. As such, it is not a substitute for controlled labor migration as a response to the skilled labor needs of German companies. Nevertheless, it is right to integrate those who have the right to remain in Germany into the labor market as quickly as possible.