Germany's Fachkräftemangel — or skilled worker shortage — has reached crisis levels. German companies can't afford to wait for government immigration reforms and vocational training programs to scale. They need talent solutions that work today, not years from now.
The fastest path forward for many German employers is using an Employer of Record (EOR) to hire remote global employees.
While traditional approaches require months of visa processing and years of workforce development, an EOR enables German businesses to employ qualified professionals from all over the world within days — without the legal complexity, compliance risks, or massive upfront costs of establishing international entities.
Key takeaways:
- Germany's shortage of skilled workers affects over 387,000 positions, with IT and engineering roles prime candidates for remote global hiring.
- Traditional solutions like the Skilled Immigration Act and vocational education programs address long-term needs in Germany, but can't fill immediate talent gaps.
- An EOR enables German companies to hire qualified professionals globally while complying with local employment laws.
Understanding Germany's Fachkräftemangel
The German labor market is experiencing an unprecedented skills shortage. As of 2025, research shows that Germany’s workforce is short approximately 387,000 skilled workers. Recent analysis indicates that 28.3% of firms are currently suffering from a shortage of qualified workers, and the German government reports that more than 50% of companies see this shortage as the biggest threat to business development.
The economic impact is staggering. According to the German Economic Institute, Germany’s skilled worker shortage results in EUR 49 billion in lost production capacity per year. Companies delay projects, turn down contracts, and struggle to innovate when they can't find the talent they need in the job market.
Germany’s labor shortage is primarily driven by demographic change, with an aging population at the center. Current forecasts predict the working-age population will shrink by 3.9 million, falling to 45.9 million by 2030.
The sectors hit hardest include healthcare, IT, engineering, and manufacturing. While nursing positions and construction jobs require physical presence, many roles in technology, software development, and engineering can be performed remotely — making them ideal candidates for global hiring.
Traditional Solutions Aren't Enough to Fill Vacant German Jobs
Germany hasn't ignored this crisis. The government has introduced several initiatives to attract foreign workers, including revising its immigration policies.
The Skilled Immigration Act, implemented in 2020 and updated in 2023, has streamlined pathways for qualified professionals from non-EU countries to come live and work in Germany. After the new regulations rolled out, about 200,000 visas were issued in the first year, representing an increase of more than 10% over the previous year.
The Act also lowered EU Blue Card salary thresholds from 66.6% to 50% of the annual contribution assessment ceiling. It also introduced the Opportunity Card system, which enables job seekers to enter Germany for up to one year to search for employment.
Germany also continues to expand vocational training programs and encourages women to re-enter the workforce full-time (47% of German women only work part-time).
These efforts are necessary for long-term workforce stability. However, they share a critical limitation: time. Processing visa applications, training new employees, and implementing policy changes takes months or years. Companies with urgent staffing needs can't afford to wait for these solutions to scale; they need workers now.
This is where global remote hiring becomes invaluable. Instead of waiting for talent to come to Germany, German companies can access skilled professionals anywhere in the world.
Global Hiring Is a Practical Solution for Fachkräftemangel
Expanding recruitment beyond Germany's borders opens doors to vast talent pools. Countries like Poland, Ukraine, India, and Brazil produce thousands of skilled software developers, engineers, and technical specialists annually.
Consider the numbers: While Germany struggles to fill IT positions, Romania alone is home to approximately 192,000 developers, with around 40,000 students and over 9,300 graduates in the ICT sector, representing almost 20% and 65% growth, respectively, compared to 2015.
Poland's tech sector also continues to grow rapidly, producing highly qualified developers fluent in German and English. Even further afield, countries like Argentina and Mexico offer exceptional engineering talent at competitive rates.
Global hiring delivers several key advantages:
- Access to specialized skills: Need a machine learning expert or blockchain developer? The global talent pool offers specialists that might be challenging to find locally.
- Cost optimization: While cost savings isn’t necessarily the primary motivation for many companies, hiring globally often delivers better value without compromising quality.
- Faster scaling: Companies can often identify and hire qualified international professionals within weeks instead of waiting months to find local candidates.
- Cultural diversity: Global teams bring varied perspectives that drive innovation and help companies better serve international markets.
Global hiring can be transformative, especially for German startups and scale-ups. A Munich-based fintech might find the perfect senior developer in Bucharest, while a Berlin software company could hire an entire development team from Kraków.
The Challenge of International Hiring
Getting started with global hiring isn't as simple as posting a job listing. Most countries require companies to establish a local entity before employing workers. Setting up subsidiaries involves substantial costs, often ranging from EUR 10,000 to EUR 50,000 per country, plus ongoing compliance expenses. The process typically takes three to six months, assuming no regulatory complications.
The exact costs vary significantly by jurisdiction. For example, establishing a limited liability company in Poland requires minimum share capital of PLN 5,000 (approximately EUR 1,200), but total setup costs including legal fees, registration, and compliance can reach EUR 15,000-25,000.
Romania offers more affordable options with minimal capital requirements, though the National Trade Register Office oversees a complex registration process that still involves significant professional service costs.
Ukraine presents unique challenges despite lower direct costs, with complex regulatory requirements that can extend timelines to several months even for basic business formations.
In addition, managing legal entities creates operational complexity. Companies must navigate different employment laws, tax obligations, payroll systems, and benefit requirements for each country. A software company hiring developers in three countries might need separate legal, HR, and accounting teams for each jurisdiction.
Then there's the risk factor. Employment misclassification, incorrect tax withholdings, or failure to provide mandatory benefits can result in significant financial or criminal penalties. Many companies lack the expertise to ensure compliance across multiple international jurisdictions.
For businesses facing immediate talent shortages, these barriers often prove insurmountable. By the time they've established entities and hired locally, competitors have already captured market opportunities.
How EORs Help German Employers Hire Abroad
An Employer of Record solves these challenges by acting as the legal employer of international staff on behalf of German companies. The EOR handles all formal employment responsibilities — payroll, benefits, compliance, and contracts — while the German company maintains day-to-day management of their team members.
Here's how it works:
- A German company identifies a qualified developer in, say, Romania.
- Instead of establishing a Romanian entity, they partner with an EOR that already operates there.
- The EOR employs the developer, processes their salary, provides required benefits, and ensures full compliance under Romanian labor laws.
- The German company manages the developer's work, assigns projects, and maintains the employment relationship.
EORs provide comprehensive employment and HR services, including:
- Legal compliance: Ensuring employment contracts meet local requirements and workers receive all mandatory benefits and protections.
- Payroll processing: Managing salary payments, tax withholdings, and social contributions in local currencies and in accordance with each country’s pay cycle.
- Benefits administration: Handling the details of any statutory health insurance, retirement contributions, and other benefits required by local law.
- Risk mitigation: Protecting companies from misclassification risks and compliance violations through expert local knowledge.
- Intellectual property protection: Ensuring employment contracts include appropriate IP assignment clauses that protect company assets.
This approach offers tremendous flexibility. German companies can hire one developer in Poland, three engineers in Ukraine, and a marketing specialist in Mexico — all without establishing any local entities. If business needs change, they can scale teams up or down without the constraints of permanent legal structures.
Why EORs Are the Solution to Germany's Talent Shortage
EORs address the three critical challenges German companies face when trying to fill skilled positions: speed, compliance, and scalability.
Speed matters most during a talent shortage. While establishing a legal entity takes months, an EOR can often onboard international employees within days. A Frankfurt-based fintech needing blockchain developers immediately can hire qualified professionals from Estonia or Lithuania and have them onboarded and contributing to projects within a week.
Compliance provides peace of mind. German businesses prioritize regulatory adherence and risk management as core business practices. EORs extend this same compliance-focused approach globally, ensuring international hiring meets the rigorous legal standards that German companies require for their operations.
Scalability enables growth. Startups can test new markets and talent pools without massive upfront investments. A Cologne logistics company might hire two developers from Portugal to build a new platform feature. If the project succeeds, they can quickly expand the team. If priorities shift, they can redirect resources without unwinding complex legal structures.
Consider a Hamburg-based startup needing senior React developers. The local market offers few candidates, and salaries have reached unsustainable levels. Through an EOR, they identify experienced developers in Poland and the Czech Republic who speak excellent English and work in compatible time zones. Within two weeks, they've doubled their development capacity at a fraction of the local hiring cost.
Build Your Global Team With RemoFirst
RemoFirst enables German companies to employ the best talent from 185+ countries without the complexity of international entity setup. Our platform ensures workers are classified correctly, employment contracts protect intellectual property, and all local compliance requirements are met.
Whether you're a Düsseldorf startup that needs specialized developers, a Stuttgart scale-up building international teams, or an established German company exploring global talent pools, RemoFirst simplifies the entire process. We handle payroll processing, benefits administration, tax compliance, and employment contracts while you focus on growing your business.
Our services include comprehensive global payroll management, ensuring your international team members receive accurate, timely payments in their local currencies. We also provide global workforce management tools that give you complete visibility into your distributed team's performance and compliance status.
Don't let Germany's talent shortage limit your economic growth potential. Book a demo to discover how RemoFirst can help you build a world-class global team while fully complying with international employment laws.
