By most accounts, the German economy is on a roll. GDP is expected to grow 2.5 percent this year, the DAX listing of 30 companies is reaching near-record highs, and order books are bulging. Could there possibly be a downside?
There aren't enough highly-skilled workers to keep up. Germany has 1.1 million job vacancies, and it takes 103 days to fill a post, up from 63 days one year ago.
“We have a huge problem with the shortage of skilled workers and the trend is increasing,” said Oliver Zander, managing director of Gesamtmetall, the employers' association for the electrical and metal industries. More than 20 percent of firms in his industry have reported production delays because of unfilled jobs, he said.
In a recent poll by the German Chamber of Commerce and Industry (DIHK), 56 percent of companies cited the shortage of skilled workers as the biggest risk facing their business, triple the amount in 2011. “This is an extremely high number,” said the chamber’s president, Eric Schweitzer. From blue-chips including Siemens, BMW and BASF to family-owned builder Wolff & Müller, companies are looking for engineers, software developers, electricians, metal workers and construction site managers.
Because of a decline in immigration, there will be slightly less growth momentum this year than in the past. Christoph Schmidt, Chairman of the German Council of Economic Experts
These staff shortages mean many firms cannot produce what they are capable of when fully staffed, said Christoph Schmidt, chairman of the German Council of Economic Experts, which advises the government. He added that until now, immigration from other EU countries had filled many jobs, but net immigration to Germany is now relatively low. “That means there will be slightly less growth momentum this year than in the past," Mr. Schmidt said.
The shortage of professionals is expected to damage Germany as a business location. “In a break with the past, companies will in future build up more core operations like research and development, sales and management, outside Germany,” said Mathieu Meyer, a partner at consultancy EY Germany.
While Germany took in nearly 1 million refugees two years ago, most are unable to speak German and many lack rudimentary skills. Only one in seven asylum seekers registered with the labor office has a qualification as a specialist in a particular job category. Although Germany has introduced more visa options to attract academics and vocational-trained staff, it lacks a tradition as an immigration country like the US. Germany’s 2.37 million unemployed workers either don't have the necessary skills for the jobs available or don't live close to the open posts.
Germany’s vaunted dual-education system, which combines school and apprenticeship, is also facing problems to attract people. Companies are so desperate for workers that one firm held a “speed dating” event with potential employees at a fair ground, with recruiters holding impromptu interviews with candidates in the gently rocking gondolas of a Ferris wheel.
Ingo Kramer, president of the Confederation of German Employers’ Associations, called for the adoption of a skilled-worker strategy, including more skilled immigration, better childcare to help women re-enter the labor force, and more help for the long-term unemployed.
The Federal Employment Agency has developed a 10-point action plan to help address the shortage of skilled workers. Among its recommendations, reducing the number of high school dropouts, targeting immigration of skilled labor, and increasing working hours so that people with part-time jobs can move up to full time. Other suggestions include bringing more women into the workforce and increasing the participation of workers aged 55-64 in the economy.
Ulf Sommer writes about finance for Handelsblatt, Frank Specht writes about the German labor market from Berlin and Charles Wallace is an editor for Handelsblatt Global in New York. To contact the authors: [email protected], [email protected] and [email protected]