The state development bank KfW is not known for shrill or alarmist warnings.

When the bank's research department speaks of a "turning point", "permanent loss of prosperity" and "distribution conflicts", one should therefore listen carefully.

These warnings can be read in an as yet unpublished study by KfW, which is available to the FAZ.

The central message: Germany urgently needs millions of additional workers and must work more productively if the country is not to become poorer in the long term.

Johannes Pennekamp

Responsible editor for business reporting.

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The analysis begins with an inventory.

Prosperity in Germany has grown almost continuously for more than 70 years.

It was enough for the German economy to keep up with international competition and digest temporary shocks.

"Those days are over.

The foundation for further growth in prosperity is crumbling,” says the analysis.

It is no longer possible to continue like this, since every second company is already being slowed down because it lacks skilled workers.

This deficiency is also not compensated for by the fact that productivity in the companies increases somewhat - for example because better machines and new technology are used.

Labor productivity per employed person has only increased by 0.3 percent per year over the past ten years.

"If productivity growth remains so weak and at the same time the decline in the domestic supply of skilled workers increases, this will mean a turning point," the authors warn.

"A Unique Challenge"

In this decade, Germany would then enter an era of persistently stagnating, possibly gradually declining prosperity.

Increasing distribution conflicts and increased competition for the use of scarce resources are to be expected.

KfW chief economist Fritzi Köhler-Geib warns of a problem of historic proportions: "The combination of long-term shrinking domestic labor supply and weak productivity development represents a unique challenge that is new to us in the post-war period."

The experts at the development bank see three recipes for averting the misery: first, get more people into work in Germany, second, attract more immigrants to the country, and third, increase labor productivity.

KfW analyzes that none of these recipes alone will be able to solve the problem of skilled workers.

The changes in the individual areas would have to be so far-reaching and take place so quickly that the economists would not consider it possible.

According to the bank's scenarios, the labor force participation in Germany of people aged 15 to 64 would have to increase from almost 80 percent today to almost 90 percent by 2035 in order to close the gap.

Net immigration would have to increase from 330,000 in 2021 to 1.8 million immigrants of working age per year if this lever alone were used.

"Net immigration of this magnitude seems unrealistic," says the study.

The figure calculated by KfW is higher than a much-quoted figure from the Institute for Labor Market and Occupational Research (IAB), which considers a net immigration of 400,000 workers a year to be necessary to keep the labor supply stable in the long term.

In its calculation, however, the IAB already takes into account a higher number of women and older people in Germany.

More German courses for immigrants

Specifically, KfW is campaigning for a whole range of measures.

In order to increase the employment rate in Germany, the cultural and financial hurdles for women, which have so far prevented them from working more hours, would have to be dismantled.

"A reform of spouse splitting that makes it financially attractive for both spouses to take up work would reduce the false incentives," says chief economist Köhler-Geib.

The KfW also calls for “free and inexpensive professional child care and nursing” to be expanded.

Compulsory early childhood education can significantly improve later career opportunities.

"It is also important to motivate people with a low level of general education to undertake vocational training as early as possible," the paper says.

According to KfW, in order to integrate more immigrants into the German labor market, it is necessary, among other things, to offer them German courses more quickly so that they can gain a foothold in the profession more quickly.

The recognition of qualifications obtained abroad must also be made easier.

According to research by the FAZ, tens of thousands of applications from potential workers are still unprocessed in the German immigration authorities.

The federal government wants to eliminate such abuses and fundamentally strengthen immigration through an amendment to the Skilled Immigration Act.

KfW believes that this is the right way, but the law alone is far from enough.

Increasing labor productivity should also not be overlooked if prosperity is to be secured: Less bureaucracy, a better "company-related infrastructure" and greater promotion of innovation are the keys to this.

KfW concludes from all this: "Securing prosperity and further growth in prosperity therefore require a comprehensive mix of measures."