Germany agrees on immigration law to tackle labour shortages

Germany's coalition parties agreed on a new immigration law on Tuesday to attract more skilled workers from countries outside the European Union, in a politically risky push to fill a record number of job vacancies and stabilise the public pension system.

Record-high employment and falling joblessness have led to a tightening labour market in Europe's largest economy, with employers struggling to staff more than a million positions and work-related bottlenecks limiting overall economic growth. 

As Germany's workforce is expected to shrink over the next decades due to an ageing population and low birth rates, more migrants are seen as crucial to help firms find workers whose pension contributions support the growing number of retirees.

But the new immigration law, agreed over night by centre-right Chancellor Angela Merkel, hardline Interior Minister Horst Seehofer and Social Democrat Labour Minister Hubertus Heil, risks angering those voters who already feel neglected following the arrival of more than a million refugees since 2015.

The unprecedented influx of asylum seekers, mainly from Muslim countries in the Middle East, has already caused a popular backlash and propelled the...