People With a Migration Background and Refugees in Bavaria and Their Importance for the Bavarian Labor Market

Demographic change will pose major challenges for Bavaria in the coming decades. Without immigration, the population of Bavaria would decline by 5 percent by 2040. To maintain economic growth in Bavaria, substantial immigration is necessary. Germany is currently facing an unprecedented shortage of skilled workers, and the number of job vacancies in Bavaria reached an all-time high in the summer of 2022. In the last ten years, the number of employees with foreign citizenship subject to social security contributions in Bavaria has already more than doubled. Immigrants play a crucial role in many system-relevant occupations. To increase the attractiveness of Germany and Bavaria in particular, the availability of public services in English should be improved. In addition, recognition bodies for foreign qualifications should be strengthened to make the recognition process faster and more transparent. The unemployment rate is higher among foreigners than among Germans. Of the foreign unemployed, almost 75% have no vocational qualification, considerably more than among Germans (36%). Unemployment among foreigners could be reduced by increasing vocational training and investment in further qualifications while employed. There is also significant scope for improving refugees’ labor market outcomes. Of the 213,000 asylum seekers living in Bavaria, slightly more than 10 percent have a toleration status. The employment rate among tolerated persons is very low. To promote the labor market integration of refugees, the residency requirement should be eased for all refugees. The Königsteiner Schlüssel should be replaced by a distribution rule that uses the number of vacancies as an additional distribution criterion.