Why is Germany struggling to retain foreign talent?

  • jeune femme en Allemagne
Published on 2023-03-21 at 10:00 by Asaël Häzaq
In early March, the German federal government officially introduced its new bill to attract international talent and, more importantly, to retain them in Germany. Because while they enjoy living in the country – especially students who love Germany – expats usually don't stay in the long run. Germany has a severe shortage of international talent. The country's growth is threatened by labor shortages and an aging population. But why don't foreigners settle in Germany permanently, and how can the government make the country more attractive?

Labor shortages within the German labor market worsen

The German government is currently faced with uncertainty. Figures are coming in, one after the other, confirming the prevailing gloom. According to the Institute for Employment Research, which operates under the aegis of the federal government's employment agency, about 400,000 qualified immigrants are needed each year to cope with the labor shortage. Healthcare, construction and information technology are among the hardest hit sectors by these shortages. According to the latest federal government statistics, the estimated shortfall of 3.6 million workers is quite likely to spike to 7 million by 2035. Hubertus Heil, the Minister of Labor, acknowledges that the labor shortage could become "a permanent problem".

So, why are there so many shortcomings? The latest OECD report, which studies the attractiveness of different countries (Indicators of Talent Attractiveness), shows that Germany is losing ground. It has dropped 3 places, from 12th in 2019 to 15th currently (out of 38 OECD countries). International students like Germany, which makes it the 2nd best country to study in (behind the US). On the other hand, skilled workers prefer New Zealand, Sweden, Switzerland and Australia where, in their opinion, there are more career opportunities for a career and better quality of life for families. Germany only comes in 15th. Entrepreneurs also prefer New Zealand, Sweden, and Switzerland to Germany, which ranks 13th. The country climbed up one spot thanks to votes from startup founders but still needs to catch up to Canada and the United States. 

While international students like in Germany, many of them aren't likely to stay there in the long run. Foreign talents usually choose to pursue careers and families elsewhere. Therefore, the federal government understood the need to increase its efforts to attract foreign talent, but it is also aware that the biggest challenge is retaining them. Foreigners leave Germany after only 3 or 4 years.

Why do foreign talents leave Germany?

While Germany is doing its utmost to attract qualified foreigners, it is failing to make them stay in the country permanently. The first people to respond to this important question regret the fact that the way in which they were welcomed made it more difficult for them to settle down instead of facilitating it. They consider this situation to be counterproductive and not an incentive to stay. A study conducted by the Institute of Applied Economic Research reveals several causes that would explain these departures. 

Complex bureaucracy

Although Germany is recruiting, expatriates admit that setting foot in Germany is an obstacle race. One rule follows another with sometimes no clear logic. Foreigners often have the impression of going in circles instead of moving forward, often because they do not have the necessary documents to carry out certain procedures. Getting an appointment to obtain a work permit is a painstaking process. Be it for creating a bank account, finding an apartment, or settling down, everything in Germany is complicated, even discouraging, for expatriates who are already stressed by the culture shock in a new country. The cumbersome German bureaucracy is often pointed out. The lack of English translation is also pointed out. While expats do know that they must have basic German language skills, they still expect better support during the first moments of their stay, for instance, when filling out their administrative documents. Some expatriates conclude that "It's too hard to settle in Germany. There's too much paperwork."

Expiry of residence permits

This is the most common and seemingly simple issue, especially in times of labor shortage. In fact, expiring permits could simply be extended. But for the foreigners participating in the study, that was not the case. Their permits to stay for training or employment were not renewed. For what reasons? It's hard to say whether these candidates did not make the cut in the end or whether it was purely administrative. Still, the fact that many expatriates point out this legal status issue seems revealing and complements the negative opinions concerning the administrative burden.


Unlike the case of the residence permit, discrimination does not appear among the leading causes of expatriates leaving Germany. However, this should not disregard the seriousness of the problem. 5% of the respondents explained that discrimination was the reason for their departure. Two-thirds of the non-European skilled workers even confided that they had been discriminated against by the authorities or at work. A recent study by the Federal Institute for Population Studies shows that foreign children have less access to daycare; the same is true for disadvantaged children. In 2020, 35% of German children had a place in daycare. Only 24% of non-German children and 23% of disadvantaged children had a place in daycare. The study was repeated earlier this year with similar results. Other forms of discrimination were also noted at school. The German system appears to clearly disadvantage children who are not born with German nationality. In view of these results, the Federal Institute for Population Studies urged the federal government to tackle this problem of inequality at the Education Summit held on 14 and 15 March.

Family reunification

How to build a lifelong project abroad without a family life perspective? Expatriates regret that Germany does not take a broader view on the subject. In their opinion, Canada's approach is more focused on building a life on the territory, from schooling to work, including family, activities, and leisure. In Germany, the focus seems to be more on strengthening the workforce. But what about housing or schooling? How do children and spouses get the necessary support? How do schools prepare to welcome children from different backgrounds? Departing expatriates, Germany should remember that "the workforce" comprises people who have a life outside of work. 

Lack of consideration

This problem is directly related to family reunification, where some expatriates say they experience a sense of disregard. The labor shortage should not undermine human relationships. Burnout is never far away. In 2022, it affected 37% of Germans and 42% of foreign professionals. Some of them say they feel more pressure. Their stay in Germany depends on their working abilities. They sometimes feel that they are constantly being re-evaluated, that they have to prove themselves in order to be allowed to stay, but that they are not necessarily appreciated for their work. The high flexibility of the work is also pointed out as a reason for burnout.

Insufficient attention

The last element raised by the study is the lack of attention, welcome and sharing structures. Some of the expatriates surveyed admit that they would have stayed in Germany if they had better assistance. Of course, one could say that it's easy to make friends at university, the workplace, or in sports and leisure clubs. But the truth is that making strong connections is more difficult than expected and takes time. Foreigners don't talk about these solid friendships or even acquaintances but rather about professionals who could answer specific questions they might have about their status. They wish they could have shared their concerns, problems, and expectations.

Germany's strategy to attract and retain foreign talent

Since March 2020, Germany has proposed an immigration reform to facilitate the entry, work and stay of immigrants. A first version of the law was submitted in early March to the states and relevant associations. For Hubertus Heil, Germany has no time to lose if it wants to attract international talent: "We have a lot of job offers, we have a lot of very good jobs, and we need to strengthen this image internationally."

Making it easier for non-European immigrants to move

While free movement is allowed within the European Union, lengthy procedures and delays are common for non-EU nationals. The ministers want to change this. They want to make it easier for people to come to Germany and start working. Europeans can come to Germany to look for work. Non-Europeans should be able to do so as well.

Creating an "Opportunity Card"

Germany is banking heavily on this new card, which would be obtained before arrival in the country. This can be a first step to accelerating the procedure and curbing the administrative burden. For example, foreigners could come for one year to look for work and carry out trial periods of 2 weeks. They could even come and work part-time (20 hours/week).

The "opportunity card" would be available on a points-based permit with 5 categories: qualifications, German language skills, professional experience, connections with Germany (for those who already have acquaintances living in the country) and age. Hubertus Heil, the Minister of Labor, specifies that foreign applicants who meet at least 3 or more criteria will be eligible for further processing. 

For now, there are no details about the system for calculating points. Heil insists that professional experience should be emphasized and that there should be more flexibility. For example, the government could validate diplomas that are not recognized today and applications of foreigners who do not have a degree but have 2 years of experience in a sector. Finally, it could also hire foreigners who are not qualified but wish to work in sectors under pressure.

Flexibility in language skills

The "opportunity card" could accept applications from foreigners who do not speak German but collect points in other areas. At present, this is not possible. But associations warn about the German language requirements, pointing out that language is not only a simple communication tool but also facilitates integration. It also protects the expatriate against possible abuses (e.g., concerning work).

Changing Germany's image internationally

What is the global perception of Germany like? The country is a cosmopolitan one, but people tend to forget that. Frankfurt, Berlin, or Cologne are known for their multiculturalism which is one of the keys to their attractiveness. But that same pluricultural character of Germany does not seem to be emphasized enough. This is the federal government's conclusion in its attempt to boost the country's image. Canada is known around the world for its multiculturalism. It is cited as an ideal destination, thanks to its spirit of sharing, and its peaceful and quiet environment. Australia also enjoys a good reputation internationally. Germany is therefore looking to enhance its image and promote its openness worldwide.  

Understanding the reasons for leaving

All these measures aim to make Germany more attractive in the international job market. But as evidenced by expats' testimonials, coming is one thing, and staying is another. Even if the opportunity card is designed to facilitate the entry of foreign talent into Germany, how can it guarantee that they will not leave after 3 or 4 years? That is the whole point of long-term support, which would begin with more in-depth studies to understand where the problem lies. The federal government already recognizes the administrative burden. It yet has to resolve the issues of residency and strengthen the fight against discrimination. The assistance provided to expatriates (help and resource centers) could also be strengthened to facilitate their integration into Germany.

Useful links:

Federal Foreign Office: working and living in Germany

German Government Information Portal: Immigrating to Germany

Make it Germany: official website for skilled workers