Germany’s Demographic Challenge and the Central Role of Migration
Migration already constitutes a structural component of Germany’s labour supply, and this role will intensify as demographic change accelerates. A commentary by Yuliya Kosyakova
Yuliya Kosyakova is Professor of Migration Research at the University of Bamberg and Head of the Research Department at the Institute for Employment Research (IAB). She was one of the speakers at the IEP@BU event “Migration in Europe: Perspectives from Italy and Germany”, held on November 24, 2025. The event was co-organised by IEP@BU and the German Consulate in Milan.
Germany’s demographic and labour market developments over the past decade reveal a structural transformation with long-term implications. Declining fertility, population ageing, and a shrinking domestic workforce have increased the importance of migration as one key component of labour supply, economic performance, and system sustainability.
Using recent administrative statistics and new panel survey data, this commentary summarises the empirical evidence on Germany’s demographic pressures, the contribution of migrants to labour market dynamics, and emerging patterns in onward and return mobility.
Projections indicate a substantial contraction of Germany’s labour force potential in the coming decades. Under a zero-migration scenario, the working-age population will decrease by approximately 16 million individuals by 2060, even when assuming rising employment rates among women and older workers.
Maintaining a stable labour force would require an annual net migration of around 400,000 individuals, implying even more gross inflows. These estimates highlight the scale of demographic adjustment necessary to support current levels of economic activity and social protection.
Migration has already played a central role in stabilising the labour force. Since 2010, the native working-age population has declined by about 10 percent, while the number of foreign nationals of working age has roughly doubled, resulting in an overall stable labour supply. Employment has grown by nearly 20 percent during this period, and almost 70 percent of this increase is attributable to workers with foreign nationality.
Immigrants’ employment rates have risen more strongly than those of the German-born population, indicating that labour market integration processes have been effective for many groups.
At the same time, the structure of immigration has changed. For many years, EU mobility contributed significantly to Germany’s labour supply. However, net migration from EU member states has declined and turned negative in 2024. The potential for additional labour supply from within the EU appears limited, meaning that third-country migration will play an increasingly important role in meeting labour market needs.
Germany has undertaken several reforms to facilitate skilled migration, most recently through the Skilled Immigration Act. These reforms introduce new entry pathways, broaden recognition procedures, and expand opportunities for job search.
Nonetheless, the quantitative impact remains modest: Only 15,000 additional visas were issued in 2022 compared to 2019, with 31% of this increase attributable to the Skilled Immigration Act 1.0. In 2024, 53,000 out of 610,000 residence titles granted to third-country nationals were employment-related.
Recent international survey data also show that Germany continues to be a relevant destination for potential migrants from third countries, but its relative position has weakened.
According to the Gallup World Survey 2024, 6 percent of respondents naming a preferred destination selected Germany, placing it behind the USA (24 percent), Canada (10 percent) and France (7 percent).
This represents a decline from the 8–9 percent range observed in the previous decade. In addition, countries such as Canada, Australia and the USA attract substantially higher shares of labour-motivated migration. These patterns suggest that Germany faces increasing competition for internationally mobile workers and that its future labour supply cannot be assumed to materialise automatically.
One central challenge in this context lies in the qualification assessment system, which is based on equivalence to German standards. This creates barriers for applicants from countries with different educational structures, even when their skills are adequate for labour market participation.
A second set of findings concerns onward and return mobility among migrants already residing in Germany. New evidence from the International Mobility Panel (IMPa) shows that 26 percent of immigrants have considered leaving Germany within the past year, and 3.1 percent have concrete plans to emigrate in the next twelve months – roughly 312,000 individuals when projected to the population. Emigration intentions are not limited to returns to the country of origin; onward migration to other destinations (e.g., Switzerland, the Netherlands, the UK) is similarly frequent.
The determinants of these intentions show clear patterns. Individuals who arrived for work or study, those with higher education, and those with strong labour market integration exhibit higher-than-average emigration tendencies. This indicates selective mobility, with potential implications for Germany’s skill base.
At the same time, the IMPa data emphasize several factors that correlate with lower emigration intentions. These include the presence of close family members in Germany, regular social contact with German-born individuals, strong subjective feelings of being welcomed, and high job satisfaction.
Conversely, political dissatisfaction, experiences of discrimination, and persistent ties to the country of origin are associated with higher mobility intentions. These findings underscore the multidimensional nature of settlement processes, which depend on institutional, social, and individual-level factors.
Further insights arise from the integration trajectories of refugees. Longitudinal data from the IAB-BAMF-SOEP Refugee Survey show that refugees who arrived in 2015 have achieved employment rates close to the German average within nine years of residence.
Approximately 90 percent of employed refugees work in jobs subject to social security contributions, and many are concentrated in sectors classified as essential or experiencing shortages.
This catch-up occurred despite comparatively unfavourable initial conditions, such as limited pre-migration preparation, constrained early access to the labour market, and differences in education systems.
For Ukrainian refugees, labour market integration has also progressed, though from a higher starting point. Employment rates increase steadily with duration of residence, and recent administrative statistics indicate further upward trends in 2024–2025.
The experience of both groups highlights the relevance of early and continuous access to language courses, recognition procedures, qualification measures, and employment services.
Taken together, the empirical evidence points to three overarching conclusions. First, migration already constitutes a structural component of Germany’s labour supply, and this role will intensify as demographic change accelerates.
The scale of projected labour force decline cannot be counteracted by domestic measures alone.
Second, labour migration from third countries will become increasingly central, but current regulatory and administrative frameworks – especially qualification recognition processes – limit the potential inflow.
Third, settlement and retention are critical dimensions of migration’s long-term contribution. The IMPa findings demonstrate that mobility does not end with arrival. Understanding the drivers of onward and return migration is therefore essential for developing effective policy responses.
Germany’s demographic trajectory is well understood, and the evidence summarised here points to the importance of viewing migration not as a short-term adjustment mechanism, but as part of a long-term structural process shaping labour supply, human capital development, and social participation.
IEP@BU does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.
