Labor shortages keep Germany awake at night. Europe's leading economy has been suffering from a serious lack of personnel for years, which for various reasons is becoming more pressing and which is leading the government of Chancellor Olaf Scholz to once again look abroad in search of a solution.
So far in 2023, this country has registered an average of 773,087 jobs advertised and unfilled, according to official data from the Federal Employment Agency (BA), although it is possible that there are many more, since not all small Employers necessarily notify a vacancy for which they have not found a worker. Meanwhile, the Association of German Chambers of Industry and Commerce (DIHK) notes with concern in a study from the end of 2022 that "the shortage of qualified labor is increasing."
The problem especially affects what is known as the Mittelstand, the network of small and medium-sized companies that drive the country's economic strength. But also the powerful brands of the big industry accuse the shortage of troops when it comes to supplying their templates. A recent report from the Ministry of Economy on the labor market warns that the shortage of qualified workers is "severely affecting" the growth potential of many German companies. "More than 50% of companies see this as the biggest threat to the development of their business," the report says.
Germany needs skilled workers such as millers, turners, masons, mechanics, plumbers, carpenters, electricians and metal workers, but also doctors and health personnel, especially geriatric nursing, for hospitals and nursing homes; nursery and early childhood education teachers; social work professionals; train, truck and bus drivers; heavy machinery and energy technicians; waiters and hospitality and tourism professionals, and engineers and specialists in MINT disciplines (German acronyms for the fields of knowledge of mathematics, computing, natural sciences and technology), among other profiles.
New factors are conspiring so that a situation of already endemic shortages has become very worrying, because, as Stefan Hardege, an expert on the labor market at the DIHK, points out, the problem of the lack of qualified workers is no longer a matter of certain sectors economic. "Now it is a problem that exists in all sectors, it affects very different professions," says Hardege.
The most recent cause of this unmet demand diversification is the coronavirus pandemic. At that time, and despite the protective measures of the government of the then Chancellor Angela Merkel, many companies lost workers, or temporarily laid them off, especially in the service sector. And, when activity picked up, those workers did not return, many times because they took other paths. Example: in 2020, the first year of the pandemic, in the hotel and catering sector almost 390,000 employees – that is, half the total then – left or lost their jobs, and many later migrated to sales, logistics or company administration.
But the underlying reality is that the high number of jobs without candidates had increased steadily before the pandemic for a structural reason, which will continue to shape the situation in the future: demographics.
The very large generation of baby boomers – those born in the 1950s and 1960s, when the post-war baby boom took place in Germany – represents one third of the population of 83.2 million, and also represents one third of the employed population, which is 45.6 million.
Baby boomers are embarking on the progressive path towards retirement, which will culminate for the latter around the year 2035. And there are not enough young people to take over. The Institute for Employment Research at the University of Dortmund (Ifado) calculates that by 2035 Germany will be short of a whopping seven million skilled workers.
“We have to try to make better use of the potential that exists within the country, because both solutions are necessary: more qualified foreign workers and more German employees, although all this will probably not be enough, given the demographic evolution”, continues Stefan Hardege.
Every year some 350,000 people drop out of the workforce, and labor market experts estimate that Germany would need 400,000 foreigners a year over the next decade to close a widening gap. In 2021, foreign workers arriving in Germany exceeded that number (see graph). 1.94 million arrived, of which 1.65 million came from EU countries (including 43,000 Spaniards) and 295,000 from the rest of the world.
But not all of them joined the qualified technical jobs that Germany urgently needs, quite a few have come for a temporary stay and it is not clear who aspires to stay and work in this country in a stable manner. Language difficulties, unrepentant bureaucracy, the importance of family reunification and fitting into German society are all stumbling blocks that foreign workers say have taken the plunge.
The paradox in Germany, a country with a low unemployment rate (5.7% this April), is that its unemployed, which are about 2.5 million, do not have access to vacant jobs. “We often see that the qualifications of the unemployed do not match what companies are looking for,” laments specialist Stefan Hardege.
There is also an internal cause that is difficult to diagnose. The dual vocational training system in Germany, the object of admiration in the world, faces a growing lack of apprentices. In the dual vocational training, the student studies in a vocational training center and learns the trade in situ in a company. The Institute for the German Economy (IW), a private institution in Cologne, stresses that in 2021 only 473,064 apprenticeship contracts were signed in companies and workshops, which represents a drop of 10% compared to 2013.
This has profound implications for the economy, as these apprentices nurture the ranks of skilled workers the industry needs. Experts warn that the dual system, after decades as a fundamental pillar of Germany's economic strategy and a successful way to enter the job market, is losing its appeal to young Germans.
The speech given by Chancellor Scholz on May Day, Labor Day, at a meeting of the German Trade Union Confederation (DGB) in Koblenz, was along these lines. Scholz recalled that "some already speak of the shortage of workers as the great problem of the future" in Germany, and argued that one of the recipes is to guarantee that dual vocational training works well, that "all young people who are looking for a training position find it”, thus calling on companies to increase training places.
Europe's largest economy is weathering the risk of recession much better than expected at the start of the energy crisis due to the cut off of Russian gas due to the war in Ukraine. But at the same time, he laments and suffers for not being able to cover all the job vacancies that arise in his buoyant labor market, a situation that can be seen even in daily life, when the public notices that the neighborhood lacks hairdressers or shoemakers.
