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Wido Geis-Thöne IW-Report No. 1 4. January 2022 Immigration from India: A great success for Germany

With the retirement of the baby boomers from the labour market, Germany will be increasingly dependent on skilled workers from abroad in the coming years in order to stabilise its economic performance.

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A great success for Germany
Wido Geis-Thöne IW-Report No. 1 4. January 2022

Immigration from India: A great success for Germany

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With the retirement of the baby boomers from the labour market, Germany will be increasingly dependent on skilled workers from abroad in the coming years in order to stabilise its economic performance.

Moreover, the new EU member states will most likely become increasingly less important as regions of origin for immigrants, as they are also strongly affected by demographic change. At the same time, experience shows that not every form of immigration is equally successful in securing skilled labour. People from India make a particularly large contribution here. In March 2021, 57.6 per cent of Indians subject to social insurance contributions in Germany worked in specialist or expert jobs that typically require a university degree or an advanced vocational degree such as master craftsman. In contrast, the corresponding share for all foreigners was only 16.5 per cent and for nationals 28.3 per cent. Indians were particularly well represented in the expert occupations in the STEM fields, which are particularly affected by shortages of skilled workers. Their share here of 1.3 per cent was about seven times higher than in total employment.

If we look at the development of immigration from India, we see a dynamic increase in recent years. Between 2010 and 2020, the number of people with Indian citizenship in Germany rose from 48,000 to 151,000, and their share of the total foreign population increased from 0.7 per cent to 1.6 per cent. At the same time, the routes of entry have shifted significantly. Whereas at the beginning of the decade Indians came to the country primarily as labour migrants, a significant number of them are now (initially) pursuing university education in Germany. This is certainly to be endorsed, as the qualifications thus more closely match the requirements of the German labour market and Germany participates in the investment in training. Nevertheless, the danger of a brain drain does neither exist with the immigration of fully educated people. With around 44.8 million highly qualified persons between the ages of 25 and 34 alone, the skilled labour base in India is so large that even from Germany's point of view very strong migration movements would be of little consequence.

The fact that immigration from India has developed so positively in recent years is by no means self-evident. Rather, Germany is in strong competition here with the Anglo-Saxon countries, which have the two major advantages of the English language and strong Indian communities. In addition to an increasingly positive image of Germany in the world, an important factor may have been the targeted approach of people in India interested in immigration, especially through the online platform "Make it in Germany". These activities should be further expanded. Since India's share of the world's population aged 15 to 24 is 20.5 per cent and the country is currently still demographically strong, unlike China, which follows in second place with 14.0 per cent, it would make sense in the long term to recruit a very large proportion of one-third or more of the immigrants needed in Germany here. At the same time, one should work towards ensuring that migration flows are not strongly concentrated on single regions and social groups in India, but that diverse German-Indian social networks and Indian communities in Germany emerge. In this way, the effects of economic and social shifts in India on migration flows can be minimised.

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A great success for Germany
Wido Geis-Thöne IW-Report No. 1 4. January 2022

Immigration from India: A great success for Germany

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Possible Developments in the Supply of Skilled Workers up to the Year 2040
Wido Geis-Thöne IW-Report No. 11 7. April 2021

Possible Developments in the Supply of Skilled Workers up to the Year 2040

The German labor market is on the verge of a fundamental upheaval. While the number of people in the labor force has risen steadily in recent decades, it is likely to drop significantly as soon as the baby boomers retire.

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Alexander Burstedde / Ruth Maria Schüler IW-Trends No. 4 6. January 2021

Are Wages in Germany Responsive to Skilled Labor Shortages?

The demographic transition is confronting Germany with a growing shortage of skilled workers. In a simple, static labor market model, wages in occupations where the demand for labor is high should rise at an above-average rate to restore market equilibrium.

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