It seems that the development and modernization projects that Germany intends to move forward face many obstacles, and with the government allocating 500 billion euros to modernize infrastructure, the lack of skilled workers in Germany prevents the implementation of these projects.
A study issued by the German Economic Institute (IW) indicates that the availability of funds alone is not enough to create the necessary capabilities to implement these projects, and that their success “depends critically on the availability of a sufficient number of qualified personnel to plan, build and operate them,” according to the website of the German magazine WirtschaftsWoche.
According to the study, the skilled labor deficit between July 2025 to June 2026 reached an average of 148,047 skilled workers, representing 44 percent of the total skilled labor gap across various professions, especially in professions related to the infrastructure sectors, energy transformation, and digitization.
According to researchers at the German Institute for Economics (IW), the shortage is represented by workers with specialized vocational training, with the largest deficit concentrated in areas including: “structural electricity, sanitary systems, heating and air conditioning, and operational electrical engineering, in addition to mechanical and operational engineering.”
Last September, the German Parliament and the Council of States agreed to establish a special fund worth 500 billion euros dedicated to infrastructure and climate neutrality, with the aim of financing additional investments in infrastructure and achieving climate neutrality by 2045, according to the official website of the German Federal Government.
How does immigration affect the skilled labor shortage in Germany?
The German Economics Institute (IW) explains that the main reason for the shortage of skilled workers is due to demographic changes. A large portion of current workers belong to the “baby boom” generation and are expected to retire within the next fifteen years or so, according to the German Federal Statistical Office (Destatis).
The Institute confirms that this shortage can only be compensated through immigration, one of the biggest structural problems in Germany. The Institute believes that the presence of vacant jobs that no one fills will lead, in the long run, to a decline in the ability to innovate and a slowdown in economic growth, according to the German magazine “Wirtschaftswoche.”
The shortage of skilled workers in Germany not only hampers current projects, but could worsen in the future unless measures are taken to reduce the problem. The Institute of German Economics (IW) currently expects a shortage of about 723,000 skilled workers by 2029. It is an indication that this challenge is not a passing phenomenon, but rather is developing into a serious crisis, according to the Verdi union.
Germany is trying to compensate for the shortage of skilled workers
To fill the deficit, the German government is working to facilitate the arrival of skilled workers from outside the European Union, by enacting new laws, such as those approved by the government in 2023 during the era of then-Federal Interior Minister Nancy Weiser and then-Federal Labor Minister Hubertus Hill.
By the end of 2025, the number of foreigners coming to Germany to work reached 471,000 people, according to the German Federal Statistical Office (Destatis).
However, Germany has not reached its full need for skilled workers, and according to estimates by the Bertelsmann Foundation, by 2040, Germany will need an annual net migration of between 288,000 and 368,000 people to meet the needs of the labor market. Currently, immigration rates are much lower, according to the Information Center for Immigration and Integration.
In estimates issued in 2021 by the Institute for Labor Market and Occupations Research (IAB), it was indicated that in the long term, Germany will need net migration of no less than 400,000 people annually, in order to compensate for the consequences resulting from the aging of the population.
Although the term “skilled labor migration” is referred to in this context, there is also an urgent need for non-professional or non-specialized labor in many economic sectors as well, which means that Germany needs specialized and non-specialized labor.
According to the Wirtschaftswoche magazine, a specialized body has been assigned to address this problem, and it intends to allocate 15 million euros over the next five years to alleviate the shortage of skilled workers in the German handicrafts sector, and it is expected that 5,000 people will benefit from this.
