Foreign Workers Sustain Economic Growth in Eastern Germany

Eastern Germany is facing a critical shortage of skilled labor, a problem that has become increasingly evident in recent years. According to a study by the Institute of the German Economy (IW), foreign workers are playing an essential role in filling this gap, particularly in states like Saxony and Brandenburg. As the number of native German workers declines, international employees have not only compensated for this loss but have also contributed to overall employment growth, helping to keep the region’s economy afloat.

A Growing Dependence on Foreign Labor

The study highlights a significant trend: from 2022 to 2023, the number of German workers in all eastern states, excluding Berlin, decreased. This decline is partly due to an aging population, with many entering retirement, and a lack of younger generations to fill these roles. In Saxony, for example, the workforce shrank by approximately 7,500 German workers over the period. However, an influx of 14,800 foreign workers more than made up for this shortfall, leading to a net increase in employment. Of these, around 8,700 came from non-EU countries, underscoring the crucial role that international labor plays in the region.

Economic Contributions and Misconceptions

Foreign workers are not just filling gaps; they are driving economic growth. The IW study found that international labor accounted for 62% of employment growth in Germany between 2022 and 2023, while German nationals contributed only 14%. This growth is vital for the economy, as an increasing number of employed individuals translates into higher consumer spending and more significant investments by businesses, which in turn stimulates further economic activity.

The presence of foreign workers is especially critical in eastern Germany, where many businesses are struggling to find qualified personnel. The notion that foreigners “steal” jobs from Germans is a misconception. As IW expert Fabian Semsarha points out, “Foreigners are not taking jobs from Germans; they are contributing significantly to employment growth and, therefore, to our overall prosperity.”

The Broader Impact on Germany’s Economy

Germany’s broader economic landscape is also heavily influenced by the contributions of foreign workers. Nationwide, there were 570,000 open positions for skilled workers in 2023, with no suitable candidates to fill them. The aging workforce and the retirement of the baby boomer generation exacerbate this problem. Without an adequate influx of foreign talent, these gaps would likely widen, threatening the country’s economic stability.

Moreover, the need for skilled workers is not just a national issue but a European one. Many EU countries face similar demographic challenges, making it increasingly important for Germany to attract workers from non-EU countries. The current reliance on foreign workers is set to grow as the demand for skilled labor intensifies across Europe.

Political and Social Considerations

The findings of the IW study come at a time of increasing political tension in Germany, particularly in the east, where anti-immigrant sentiments are gaining ground. With regional elections approaching, businesses are voicing concerns about the potential impact of political shifts on their ability to attract and retain foreign workers. The rise of the far-right Alternative for Germany (AfD) party, which advocates for stricter immigration controls, poses a threat to the economic stability that foreign labor has helped to maintain.

Business leaders are urging policymakers to recognize the indispensable role of foreign workers in sustaining economic growth, particularly in regions like Saxony, where the local economy is more dependent on immigration than most other parts of the country. The IW study makes it clear: without continued and increased immigration, eastern Germany’s economy could face a severe downturn, with dire consequences for the region and the country as a whole.

As Germany grapples with these challenges, the importance of foreign labor cannot be overstated. Ensuring a steady flow of skilled workers from abroad is not just a matter of economic necessity—it is crucial for maintaining the country’s prosperity and preventing the further decline of its industrial base.