Struggling with a Skills Shortage: 84% of German Businesses Feeling the Pinch
Nearly 84% of Businesses Impacted by Skilled Workforce Deficiency (According to Study) - Nearly 84% of businesses face a deficit in qualified personnel, according to research findings.
Get ready to hear some hard truths: The employee drought continues to be a major roadblock for businesses in Germany. Per a recent study by the Institute for Employment Research (IAB), a whopping 84% of German businesses are currently wrestling with a skills gap. According to the research, this gap continues to be the most prevalent issue across industries. "We're facing a skills drought like never before," said IAB researcher Michael Oberfichtner. To add insult to injury, other issues like high labor costs and high absenteeism also pose serious challenges, as indicated by the IAB Business Panel.
Two out of every three businesses are doubtful about their ability to snag enough quality candidates in the future. And if that isn't worrying enough, the construction industry is particularly crestfallen: Only a quarter doesn't expect to face problems.
But fear not! Some measures are showing promise. Half of the businesses surveyed believe continuous training, personnel development, and improving work-life balance can help alleviate the skills gap. However, 5% of the 15,000 polled businesses believe they have too many employees on their payroll—primarily in the industrial sector. "The downturn in international trade and the energy transition are putting a damper on the manufacturing sector," said IAB researcher Ute Leber.
In 2022, 55% of businesses complained about sky-high labor costs, a 12-percentage-point jump from the previous year. Companies in manufacturing and retail grumble the loudest about shoulder-break inflation.
While labor scarcity isn't as dire in simple tasks—for example, helper jobs—it's still evident: One in every three businesses anticipates problems in recruiting. The hospitality industry, other service providers—such as temporary work and security services—agriculture, and mining are the hardest hit.
Dive Deeper:
- Enhanced Apprenticeship Remuneration: A rise in apprenticeship pay is on the table, with a 20% uptick since 2020 and a 6.3% increase in collectively agreed pay set for 2024[3][5]. Pay in historically low-paid sectors could see an increase of up to 15%, making these opportunities more enticing[5].
- Skilled Immigration Act: Workers with two years of experience and a recognized degree no longer need German validation, making hiring more streamlined[1]. An "Opportunity Card" permits skilled workers to stay for one to two years, encouraging foreign talent[1]. The EU Blue Card guidelines have been revised, making it easier to draw in international talent, particularly in the tech sector[1].
- Transnational Strategy: A coalition of actors is taking a transnational approach to sourcing skills worldwide[2].
- Promotion of Dual Education Model: The dual vocational training system—which combines classroom learning with real-world work—is being championed[4]. This approach is attracting international students and talents due to the lack of significant student loan debt[5].
These strategies are intended to attract and retain talent—be it domestic or international—to help meet the skills gap and maintain a competitive workforce in Germany.
To combat the ongoing skills shortage in Germany, a focus on vocational training could be key. This could involve enhancing apprenticeship remuneration, raising pay in traditionally low-paid sectors and potentially seeing a 15% increase by 2024 [3][5]. Additionally, the Skilled Immigration Act simplifies the hiring process for foreign workers, particularly in the tech sector, and provides an "Opportunity Card" for skilled workers to stay for up to two years [1]. These measures aim to attract and retain both domestic and international talent to maintain a competitive workforce in Germany, boosted further by the promotion of the dual education model which offers real-world work experience [4]. To further address the shortage, strategic partnerships for global sourcing of skills have been formed [2]. The financial aspect is also significant, as many businesses grapple with high labor costs and seek ways to cut down employees, particularly in the industrial sector [6]. Assessing financial implications will be essential in devising effective solutions for the future of German businesses.
