Chancellor Angela Merkel's cabinet passed new immigration laws on Wednesday to make it easier for lower-skilled foreigners to seek work in Germany and offer rejected asylum seekers who can't be deported a path to residency.
The laws are risky for Merkel's conservatives and their Social Democrat (SPD) coalition partners, who have been losing voters to the far-right Alternative for Germany (AfD) over her 2015 decision to welcome almost 1 million refugees.
Approval of the laws shows a willingness to risk political fallout from liberalising immigration rules in order to ease a labour shortage that companies say could hurt future growth.
The new rules are designed to allow workers from outside the European Union with lower qualifications to search for work in Germany for a period of six months, if they have the means to fund their stay and have knowledge of the German language.
Under old rules, that opportunity was reserved for highly qualified workers like doctors, engineers, IT professionals and academics.
Nine years of growth, low unemployment and falling birth rates have created a record 1.2 million job vacancies in almost all sectors in Europe's economic powerhouse, including leaving shortage of plumbers, electricians and carpenters.
"Germany has a very open system for highly qualified migration, but was quite closed for medium-qualified," said Thomas Liebig of the OECD group of industrialised nations. "This is the area where labour shortages are particularly strong. The new law opens up in the mid-skilled segment."
The BDA association of German employers welcomed the immigration law, urging parliament not to amend the blueprint before it ratifies the law next year.
If they are still working once their work permit expires and their German language skills have improved they can apply for a residency permit.
The anti-immigration Alternative for Germany (AfD) said the new laws would encourage migrants to come to Germany seeking asylum with the hope of finding a job, which would allow them to stay even if their applications are rejected.
"Even cleaners at the Doner Kebab joint have an employment contract," said AfD lawmaker Lars Herrmann. "Germany needs an immigration law that regulates and limits immigration." (Reporting by Joseph Nasr and Holger Hansen Editing by Edmund Blair)
(With inputs from agencies.)