The German government announced on Wednesday that it plans to ease entry rules for immigrants from outside the European Union with a reform of immigration law, in order to meet Germany's demand for skilled workers.

Experts say Europe's biggest economy needs about 400,000 skilled immigrants each year as the country's ageing workforce shrinks, particularly to fill vacancies in the health care, IT and construction sectors.

Lack of workers endangers Germany's ambitious plans to boost the roll-out of renewable energy, Economy Minister Robert Habeck said.

"We’ve known for years that we’re going to have a demographic problem but nothing was done about it," he told reporters in Berlin.

Cabinet agreed on a draft proposal that would help would-be immigrants from outside the EU get their skills and qualifications recognized and lower bureaucratic hurdles – such as language requirements – for some sectors such as IT.

Labor Minister Hubertus Heil said that apart from providing more language training abroad, Germany would also have to do more to highlight what it has to offer if it wants to compete with other countries for skilled workers.

"We've got a lot to offer, we've got great jobs and we need to strengthen that (image) abroad," he said, adding that it is in Germany's interest to present itself as a cosmopolitan society that's welcoming to immigrants.

The proposal needs to be debated in parliament before lawmakers pass a bill reforming immigration law.