The green card programme, which was scheduled to finish at the end of this month, will allow more than 15,000 cardholders, largely from India and Eastern Europe, to remain in Germany through the end of next year.
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After that deadline, the left-of-centre government of Chancellor Gerhard Schröder hopes to replace the green card initiative - introduced as an interim solution to remedy an acute shortage of software and network engineers - with a more broadly defined immigration policy.
"Under the proposed new law, highly trained workers not only from the IT sector but also from all other sectors will be able to work and live in Germany without a time limit," said a spokeswoman from the Federal Ministry of the Interior.
By comparison, the green card targeted IT professionals only and granted them permission to work in Germany for a set period of time.
In August 2000, the German government introduced the US-style green card to lure IT talent into the country and help overcome a growing deficit of skilled computer professionals in local companies. At that time, the skill shortage was particularly acute among programmers and software developers.
Even though the IT and telecom sectors in Germany have been affected by the global economic downturn, the country is still need of computer and networking experts, albeit at a noticeably lower level than over the past two years, according to Germany's main IT industry association, the Bundesverband Informationswirtschaft, Telekommunikation und neue Medien (BITKOM).
"The high-tech sector has definitely been hit by the economic slump and some green card holders have been affected by layoffs and bankruptcies, but many companies continue to struggle to find qualified IT professionals, especially in the area of IT security," said an association spokesman. "Believe it or not, Germany has only one professor specialised in this area."
A survey conducted by BITKOM in June revealed that around 12.5% of the companies polled were unable to find the right people to fill their IT job openings, compared with 41.3% for the same period in 2002 and 45.6% the year before, the association said.
Around 60% of the green card holders are employed in companies with less than 100 employees.
John Blau writes for IDG News Service