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German labor market and demographic shifts

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2026-10-04 15:33 UTC → 2026-10-04 17:06 UTC · added ~~removed~~

Germany continues to face complex labor and demographic shifts. In Eastern Germany, the Institute of the German Economy warns of a severe demographic crisis; without migration, the working-age population in eastern federal states is projected to decline by approximately 22 percent by 2045. Specific regional risks are emerging in Sachsen-Anhalt, where the Leibniz Institute for Economic Research (IWH) projects a labor deficit of up to 32,000 workers by 2031, a gap that could expand to 46,000 if immigration policies become more restrictive. On a national scale, the skilled labor shortage is projected to widen. The Institute for Employment Research (IAB) forecasts a contraction in employment, predicting a drop of 210,000 workers in 2026 and a further 140,000 in 2027, driven by retiring baby boomers and decreasing net migration. Recent data from the Federal Statistical Office (Destatis) highlights the critical role of migrants in addressing these shortages. Workers with a migration background constitute approximately 27 percent of all employees, but represent over half of the workforce in several bottleneck sectors, including cooks (56 percent), food manufacturing (55 percent), and meat processing (51 percent). Newer data indicates a significant shift in entry-level opportunities. An analysis by Indeed shows that job advertisements for beginners have fallen by 46 percent compared to 2019 levels, with sharp declines in marketing, IT, and project management. ~~Recent reports confirm this trend, noting that entry-level postings have dropped significantly since 2022, particularly in IT and marketing, which returns more leverage to employers.~~ Furthermore, despite high demand for foreign skilled labor, structural inefficiencies persist; approximately 12.5% of foreign workers with university degrees are currently employed in unskilled roles due to complicated recognition processes. ~~The~~ Addressing migration policy, the federal government has decided to halve the annual quota of work visas under the Western Balkans Regulation from 50,000 to 25,000, effective January 1, 2027.

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