As U.S. Companies Beg for Applicants, Germany to Admit 400,000 Skilled Immigrants Annually

Western nations are facing significant labor shortages in 2022, as they grapple with changing demographics and the retirement of an older generation of workers.

"The shortage of skilled workers is now so serious that it is dramatically slowing down our economy," Christian Duerr, leader of Germany's Free Democratic Party said in an interview with WirtschaftsWoche.

The German Economic Institute estimates that without significant interventions, the labor force in Europe's biggest economy will shrink by more than 300,000 people this year, as older workers are retiring at a faster rate than younger ones are entering the labor market. This gap is expected to widen to more than 650,000 by 2029, leaving a sizable shortage of working-age people compared to available jobs.

"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."

Germany has sought to address this shortage by inviting skilled workers and lowering the barriers to legal immigration.

"We can only get the aging labor market under control with a modern immigration policy," Duerr added.

Recently, the German legislature has pushed to again expand the size and scope of their immigration system. It passed the Skilled Immigration Act in 2020 to expand the number of opportunities for qualified professionals and make it easier for skilled workers from non-EU countries to migrate to Germany for work.

However, the policy's success was stunted due to COVID-19 restrictions and lockdowns. Last year, the agency's International Placement Services (ZAV) helped just 3,200 skilled foreign workers enter the German labor market — 700 more than in 2020, but far too low to meet Germany's needs for skilled labor.

A global survey of 917 CEO'S and 1,614 C-suite executives conducted by the Conference Board confirms that labor shortages are a rising concern not only in Europe, but in the U.S. as well. European CEO's ranked it fourth on their list of concerns (after inflation, recession and supply chain disruptions) when asked about the top external challenges in 2022.

American CEO's ranked it first.

The labor shortage in the U.S. and Europe have similar causes. Pandemic policies have had a dramatic effect on the U.S. labor market; disqualifying millions from the labor force, pushing older workers into retirement and significantly decreasing the number of people who have immigrated for work.

Labor participation for workers in the U.S. over 55 reached a 14-year low in 2021. Between 2008 and 2019, the retired population aged 55 and older grew by about 1 million per year, but in the past two years, the ranks of retirees in that age group have grown by 3.5 million.

Some 10.6 million jobs are currently available, according to the United States Bureau of Labor Statistics, but with only 6.3 million currently unemployed workers, the gap between job openings and the number of available workers has never been higher. The shortage has been especially significant in industries like construction, transportation and hospitality.

"The pandemic has had a limited negative effect on the growth of industries that often rely on high-skilled foreign workers due to chronic labor shortages," a report by New American Economy found.

"Failure to enable employers to fill critical workforce gaps hampers their ability to fulfill their economic potential, stymieing economic growth nationwide," the report said.

There are about two million fewer working-age immigrants in the United States because of COVID immigration restrictions, Giovanni Peri, an economist at University of California Davis, told Axios. This is a substantial loss of workers, equal to about 1.2% of all individuals working in the country.

"We have lost two years of immigration and there is nothing in our system that allows us to catch up," he added.

While Germany is looking to attract 400,000 qualified workers from abroad each year, there are only 140,000 employment-based immigrant visas currently available to qualified applicants under the provisions of United States immigration law.

The U.S. Chamber of Commerce, the world's largest business organization, has publicly identified this as a major problem. In a report entitled, The America Works Agenda: Policy Solutions to Address the Nation's Worker Shortage, the organization calls on elected officials to take immediate action to help address this "economic crisis."

"Our nation has far too many people without jobs, far too many jobs without people to fill them, and as a result, far too many businesses that can't grow and thrive," the report read,

The document urges Congress to take action and labels "immigration reform" as a key policy solution.

"Sensible immigration policies will ensure that the American economy remains the envy of the world where the best and brightest from here and around the world have an opportunity to contribute," the report said.

The Chamber has asked Congress to take a variety of measures, including doubling the cap on employment-based visas, eliminating Per-Country Caps, and providing international students who graduate from American universities better opportunities to receive employment-based green cards upon graduation.

Unfortunately, the infrastructure to attract and receive immigrant workers is the weakest it has been in decades, a source told Newsweek under the condition of anonymity. While the Biden administration has made promises to rebuild the system, the continued spread of COVID-19 and subsequent policy actions have severely limited America's ability to bring in new, highly skilled workers.

Despite efforts to increase visa limits and change the public facing tone around immigration, as of the end of 2021, the number of working-age foreign-born people in the United States is still somewhat smaller than it was in early 2019.

The loss of millions of skilled immigrants may leave the U.S. economy with lower productivity and lower growth, wrote FWD.us, a non-partisan organization focused on "fixing the failing immigration and criminal justice system."

"The United States' economic future is deeply tied to the makeup of its population," the report read.

It asserts that without increased immigration, the coming decades will see an increasingly older population, putting the country at a significant disadvantage.

"If current U.S. population trends continue," the report said, "the U.S. economy will fall behind China's by 2030, and be only three-quarters of China's economy by 2050."