German firms are suffering from a huge shortage of skilled labour which could see businesses miss out on £27billion (€30bn) in revenue, a study by the Cologne Institute for Economic Research shows.
To plug the massive gap, nearly half a million workers need to move to Germany every year, according to the IAB Institute for Employment Research.
The revelation comes as EU countries continue in their attempts to enact a bloc-wide policy to handle the migrant crisis despite fierce disagreement between member states.
Germany is one of the architects behind the EU’s latest plans to manage refugees and asylum seekers by setting up ‘processing centres’ in North Africa.
Chancellor Angela Merkel’s open-door migration policy has seen more than one million asylum seekers arrive in Germany since 2015.
But the divisive decision has stoked social tensions in the country and contributed to the rise of the right-wing Alternative for Germany party, which won 12.6 percent of the vote in last year’s elections.
In response to the labour shortage, Ms Merkel’s government is pushing through a new law designed to help skilled workers move to Germany.
Visas for employees from non-EU countries currently take up to six months to process – something which would be sped up under the new rules.
The law is also designed to control the influx of low-skilled workers who might take advantage of the country’s generous welfare system.
But critics have warned the proposed changes will not solve the issue.
Wido Geis, a senior economist at the Cologne Institute, said: “The planned legislation is a first step, but not what Germany really needs.
He added that “a truly modernized German immigration law would need a restructured administration” which centralises approval processes rather than relies on local authorities.
Meanwhile, the SPD, Ms Merkel’s junior coalition partners, has demanded the bill include provisions for refugees to be able to switch out of asylum status if they find a job.
This so-called “lane change” has already been rejected by Ms Merkel, who is faced with ensuring businesses can attract the talent they need while also keeping her other government partners, the Christian Social Union (CSU), happy.
CSU leader Horst Seehofer, who also serves as Germany’s interior minister, this week branded migration “the mother of all problems”, German media has reported.
Mr Seehofer has publicly clashed with Ms Merkel in recent months over the issue as he pushes for tighter controls at Germany’s borders.
His latest comments came after far-right demonstrators took to the streets in the city of Chemnitz last week.
The violent protests followed the fatal stabbing of a German man, allegedly at the hands of two refugees.