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BERLIN (Reuters) - When Indian programer Mohan Sahadevan wanted to quit his job at engineering giant Siemens to join a Berlin software company, he was told he would have to leave Germany as his work permit could not be transferred.
The 40-year-old software engineer ultimately was able to make the move without leaving the country, but only after five idle months and much legal wrangling.
"The thing was that when I resigned, my work visa became invalid," he told Reuters, frustrated by the hoops he was forced to jump through to stay.
Germany's strict rules on employing skilled workers from outside the EU is at odds with the acute shortage of engineers and other highly skilled workers, a problem expected to worsen due partly to the aging population and low birth rates.
"Every time we decide to hire someone from outside the European Union (EU) we have to deal with so much bureaucracy and many hurdles appear along the way," said Stefan Dahlke, vice president of software engineering at Datango, who hired Mohan.
"It is very time-consuming and sometimes costly," he added.
Under current German rules, a firm wanting to hire a foreign worker has to first prove it could not find someone suitable in the EU. In addition, non-EU residents are issued a visa only if their German employer guarantees them an annual wage of at least 66,000 euros ($94,000) -- more than double the average annual salary.
The rules are stricter than in most EU states and immigration experts say this is pushing foreign skilled workers to look for employment in more welcoming places, like the United Kingdom and Ireland.
In fact, a mere 691 highly skilled non-EU citizens applied for permanent residency last year, a jarring number given the reality of the German labor market.
The Association of German Engineers (VDI) reported there were more than 76,000 unfilled engineering vacancies in June, up from 30,000 in 2009. The Federal Labour Office says the shortages have spread to include physicians, pharmacists, IT specialists, social workers and other healthcare professions.
A survey by the German Chambers of Industry and Commerce (DIHK) found 32 percent of companies viewed labor shortages as the single greatest risk to their future prosperity -- double the 16 percent that expressed that concern a year ago.
"German companies have increasing difficulties in filling open jobs with skilled people," DIHK president Hans Heinrich Driftmann told Reuters via email.
Immigration is a highly sensitive and politically charged issue in Germany, which with more than 10 million immigrants has quietly become home to the world's third largest immigrant population after the United States and Russia.
Both East and West Germany took in millions of low-skilled "guest workers" in the 1960s and 1970s, and in the three-million-strong Turkish community -- the second largest group of immigrants after ethnic Germans from Eastern Europe and former Soviet states -- many have struggled to integrate.
German sentiments on immigration were exposed last year after the publication of a book by former central banker and local Berlin political leader Thilo Sarrazin that asserted that families of Turkish and Arab origin sponge off the state and threaten Germany's indigenous culture.
Right-wing politicians and the Confederation of German Trade Unions (DGV) want the government to train unemployed Germans to fill labor shortages and oppose changes to the immigration laws.
The unemployment rate, at 7 percent, is the lowest since figures for a unified Germany were first published two decades ago.
"I do not believe that --- in a labor market encompassing the entire EU and in which there are after all 20 million people without jobs --- we need to seek workers from outside the EU," Georg Nuesslein, a member of parliament from the conservative Christian Social Union, told Reuters.
But immigration experts say people are wrong to conflate the issue of low-skilled immigration and the easing of entry rules for high-skilled workers.
"We always talk about the immigration problems of the past but the challenge for the future is that we need immigrants," said Reiner Klingholz, director of the Berlin Institute for Population and Development.
"When people hear this they think, 'this is more of the old problem.' But we need those people. We depend on them."
The government is aware of the issue but so far has been unable to find a solution.
Chancellor Angela Merkel has backed changes allowing firms to hire engineers and doctors, where the shortages are especially dire, from non-EU states without having to prove they could not find EU candidates.
She also wants to cut the minimum annual salary that German employers have to pay non-EU workers to 40,000 euros.
Experts say those measures are helpful but are not enough.
Experts like Herbert Bruecker, an economist and immigration specialist with the Federal Labour Office, advocate a points system using such criteria as education, work experience and language skills, as exists in Canada.
"These measures for doctors and engineers will not lead to mass immigration," he said. "We would be doing well if we could attract even 1,000 workers like this each year."
A Berlin Institute study projects Germany's population of 81.8 million will shrink by 12 million by 2050. That's equivalent to emptying Germany's 12 largest cities. The German workforce is forecast to fall by over 30 percent by 2050.
"We will lose productivity if we don't get workers from abroad," said the institute's Klingholz. "The overall gross domestic product in Germany will shrink if demographics continue this way to 2050."
As for Sahadevan, he would like to invite his 17-year-old son to join him in Germany to study computer science.
"But I am not sure I can get him a visa," he said.
Additional reporting by Holger Hansen and Thomas Krumenacker; Editing by Erik Kirschbaum and Sonya Hepinstall