Eastern Germany Faces Labor Shortage Without Immigration, Study Warns

Eastern German states are confronting a severe demographic challenge, risking a drastic decline in their working-age population without continued immigration. A study by the Institute of the German Economy (IW) predicts that without migration, the number of potential workers in these federal states could shrink by more than an eighth by 2035 and by over a fifth by 2045.

The study highlights that the demographic crisis in eastern Germany is already advanced. Between the end of 1995 and the end of 2025, the population aged 15 to 66 in the eastern German states decreased from 10.05 million to 7.74 million, a drop of 23%. Concurrently, the population aged 67 and over surged from 1.82 million to 3.06 million. This shift reduced the proportion of the working-age population from 70.9% to 62.7% of the total.

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With technical progress, especially in the field of artificial intelligence, tasks that previously required human labor could be automated on a larger scale in the future.

Immigration has played a crucial role in mitigating this decline. Following a period of outward migration after reunification, eastern German states have seen net migration gains since 2012. The number of foreign nationals aged 15 to 66 increased from 265,000 in 2010 to 765,000 by the end of 2025, boosting their share of the working-age population from 3.1% to 9.9%. However, the study warns that if migration were to stop, the working-age population could decline by 13.0% by 2035.

Economists Philipp Deschermeier and Wido Geis-Thöne from IW caution that even with technological advancements like artificial intelligence automating tasks, a region where less than half the population is active in the labor market would face significant economic challenges. This is particularly true for service sectors like healthcare and crafts, which are difficult to automate. The study warns of a potential vicious cycle: an aging population and reduced services could make these regions less attractive to younger people, leading to further out-migration and reduced in-migration.

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Nevertheless, even in ten to 20 years, it will still be very problematic for the economic performance of a region if far less than half of the population is active in the labor market.