Council of Europe experts are calling on Germany to take stronger measures against human trafficking, in a report released on Friday.
The German authorities should punish traffickers more effectively and provide victims with more help and higher compensation, the report said.
Prostitution is the area most affected by human trafficking, though the number of people who are exploited in labour relationships has increased, the report said, referring to extensive investigations in the meat industry and beverage logistics.
The Council of Europe saw some positive developments in Germany since the last evaluation, with significantly more people being convicted of human trafficking.
However, there is cause for concern that many sentences are suspended and court proceedings take an excessively long time.
The panel also criticized the low compensation payments to victims.
Germany's Federal Criminal Police Office says it is very difficult to detect human trafficking offences and they assume a high number of unreported cases.
Most of the victims come from Germany, Eastern and South-Eastern Europe and are often promised legal, well-paid work, before being forced into prostitution or exploitative labour conditions, sometimes by force.
Mostly this is due to the victims' lack of prospects and poverty and the demand for prostitution and cheap labour, the report said.
The Council of Europe is independent of the EU. Together with its Court of Justice, is committed to protecting human rights, democracy and the rule of law. Its 46 members include all 27 EU countries plus Britain and Turkey.