Germany is overhauling its immigration rules to bolster a rapidly shrinking workforce

Germany’s parliament is poised to pass a new nationality law to ease the path to citizenship for migrants and attract more skilled foreign workers to the country.

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BERLIN — Germany is poised to pass a new nationality law that will make it easier for foreigners to gain German citizenship as part of a wider shake-up of immigration policy aimed at bolstering the country’s shrinking workforce.

The draft law, which will be put to lawmakers in the coming months, would allow people to apply for citizenship after five years of German residance, instead of the current eight. Those who have made particular efforts to integrate, for instance by becoming proficient in German, would be eligible to apply after three years.

It would also lift a ban on dual citizenship for people from non-EU countries, meaning immigrants would no longer have to surrender their home country nationality — a red line for many. Currently, only people with EU passports, or those who have one parent from Germany, are eligible to hold German citizenship.

Immigration reforms based on Canada’s points system, meanwhile, will make it easier for skilled workers to enter the country without having professional qualifications recognized in Germany. Instead, having suitable work experience and a job offer will suffice.

[Germany] is facing immense demographic pressures.

Natalia Banulescu-Bogdan

associate director at the Migration Policy Institute

The plans represent the biggest overhaul of German’s nationality rules since 2000, when children born to immigrant parents in Germany automatically qualified for citizenship for the first time.

They are one of a series of socially progressive policies proposed by the country’s three-party coalition government, which has said it wants to attract 400,000 skilled foreign workers each year to rebalance its aging population and labor shortages in key sectors.

“Germany, like a lot of other countries today, is facing immense demographic pressures and is aiming to get in more highly skilled workers to make up for an aging population,” Natalia Banulescu-Bogdan, associate director at the Migration Policy Institute, told CNBC.

“The patterns around the world show that all of these countries are trying really hard to attract those who can contribute to their economies,” she said, adding the moves would aid Germany’s goal of becoming “a modern country of immigration.”

‘A modern country of immigration’

Germany’s population hit a high of 84.3 million in 2022, fueled by a record increase in net immigration, including of Ukrainian refugees. Yet it is battling a labor crunch as older workers tap out of the workforce.

A January survey showed that more than half of German companies are struggling to fill vacancies due to a lack of skilled workers.

Meantime, the country’s naturalization rate lags behind that of its European peers, with citizenship granted to 1.3 in every 1,000 people in 2020 compared to an average of 1.6 across the EU. That can make it harder for foreign workers to become fully embedded in the economy and in society as a whole.

“There is a correlation between higher labor market outcomes and citizenship. So there’s the economic integration angle. Then there’s the political [and social] angles,” Banulescu-Bogdan said.

An estimated 10 million people — around 12% of the country’s 80 million population — are currently living in Germany without a German passport, which rules out basic privileges like the right to vote or work in certain government jobs.

In the country’s capital Berlin, a city celebrated as an international melting pot, as many as one-third of residents were precluded from voting in elections over recent years due to existing citizenship laws.

It’s a benefit for me, but it also has an intrinsic benefit for the country.

Manuel Sanchez

founder and chief executive of Tendbe

For Mexican-born tech entrepreneur Manuel Sanchez, the changes mark a welcome shift, which he said could help more migrants like him better integrate into the country.

“It’s a benefit for me, but it also has an intrinsic benefit for the country,” said Sanchez, who worked as a software engineer in Germany for almost a decade before eventually becoming eligible to gain citizenship in 2021.

“Before, you are like a guest and it’s as though they’re doing you a favor. Now, I can finally say: ‘OK, I pay taxes as well, but I am now an equal.’ It’s important for your psychology,” Sanchez said last month, noting that he was looking forward to participating in Berlin’s local elections for the first time.

Attracting talent and new businesses

The plans come as Germany seeks to reinvent its reputation following 16 years of conservative rule, and become more attractive to foreign workers amid widespread international competition.

With its eight-year residency requirement, Germany is currently on the more restrictive end of citizenship laws in Europe. Countries including France and Ireland request only five years, while Spain and Italy require 10 years.

“The future of Germany doesn’t look very promising for the labor force, especially in the areas of tech and health care,” said Ana Alvarez Monge, founder and CEO of Migration Hub Network, a Berlin-based non-profit for migrant entrepreneurs.

An employee prepares a customer’s order at Mustafas Gemüse Kebap in Berlin, Germany. Germany granted citizenship to more Turkish and Syrian migrants in 2020 than those from any other single nation.

Adam Berry | Getty Images News | Getty Images

“It is not that attractive compared to other countries right now,” she said. “The language, integrating and finding a place to live, getting through the visa process, it’s too bureaucratic and too old fashioned. This is not appealing for a highly skilled couple from India, for example.”

Deniz Ates, a German-born entrepreneur of Turkish immigrant parents who co-founded his company two years ago to help relocate tech talent to Germany, is hopeful that the plans are a step in the right direction.

“The change is the only way to get these huge numbers of people to Germany. Many companies are suffering right now really trying to get people. It will be easier than ever for international talent to come to Germany,” Ates, chief executive of Who Moves, said, noting that some companies have already lowered their application requirements.

The number of people who can come and set up businesses will be huge and a huge benefit for the country.

Deniz Ates

co-founder and chief executive of Who Moves

That could also have big implications for new business starts in the country. Studies suggest that willingness to found a new business is particularly strong among people with immigrant backgrounds.

“Many of these people wanted to found a company but they could not do because of citizenship,” said Ates. “The number of people who can come and set up businesses will be huge and a huge benefit for the country.”

That is of particular importance for Germany’s business replacement rate, as older workers — and their businesses — retire, according to Matthias Bianchi, head of public affairs at Deutscher Mittelstands-Bund, one of Germany’s biggest organizations for small- and medium-sized enterprises.

“In the next couple of years, there will be a lot of established businesses whose owners will have to retire. Usually they were passed down to children, but less so now. We need a lot more new businesses to level out the closures,” Bianchi said.

Bureaucracy challenges ahead

Berlin’s proposals are set to be put to a vote by lawmakers in the coming months with a view to being enshrined by summer 2023.

The government is likely to face a pushback from some critics, including those in the opposition Christian Democratic Union Party, who say the plans risk watering down Germany citizenship.

That comes even as the country’s far-right Alternative for Germany party suffered heavy losses in the 2021 national elections, suggesting a waning of anti-immigration attitudes within the country.

“Selling off German citizenship cheap doesn’t encourage integration — it aims for exactly the opposite and will trigger additional ‘pull effects’ for illegal migration,’ senior CDU lawmaker Alexander Dobrindt said in November.

Perhaps more troublingly, though, lawmakers will also have to confront German bureaucracy, which has already delayed existing applications.

There are currently around 100,000 citizenship applications awaiting processing in Germany, some dating back three years, according to a report from the German newspaper Welt am Sonntag. Some 26,000 of those are held up in Berlin alone.

The report estimates that the reforms could see new applications increase by 50% to 100%, and with it, wait times.

“The processes are so bureaucratic, and it seems like no one has put attention on how to optimize this process,” Sanchez said.

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