Thank Merkel - 1.2 Million Migrants Let in Germany: Only 34,000 are Working
The government's Institute for Labour Research (IAB) also said that of the employed, nearly a quarter are on temporary contracts.
The numbers apply to refugees mostly from Syria, Iraq, Afghanistan and Eritrea.
"If we manage to get 50 percent of them into work which pays for their lives in five years, that'd certainly be a success," said Joachim Möller, director of the IAB.
"But it would be an illusion to believe that we will manage to find jobs for a decent proportion of refugees in well-paid industry jobs like car manufacturing."
This means the burden of feeding, housing and caring for them will continue to soar into the billions and fall upon the German taxpayer.
One bright side is that the crisis has created an estimated 60,000 jobs for Germans in social work, teaching and in security for the numerous asylum centres around the country.
Mr Möller believes that the full impact of the refugee influx will only be properly gauged in five or six years time.
"It probably won't lead to us making money, but diversity can have positive effects," he added.
The Kiel Institute for the World Economy published last week, suggested that by the end of 2018, more refugees will be employed than out of work.