The German economy is already lacking an estimated 700,000 skilled workers, and that gap is expected to widen to millions by 2035, based on the number of older workers who are set to retire by then.
There aren’t enough young people in Germany to offset the rate at which baby boomers are retiring. Compounding the issue, young people in Germany are increasingly under-qualified for positions that need to be filled, as the share of students opting out of higher education or professional training programs has increased.
Meanwhile, Germany’s production – and the health of its economy – hangs in the balance. On Wednesday the German government slashed its growth forecast for 2024, cutting the previous growth estimate down to a mere 0.2 percent.Â
"We lack hands and minds," Habeck told Reuters while presenting the government's 2024 economic report. He added that it’s no longer only skilled workers that are lacking in Germany, but now workers in virtually every sector.
According to the Ifo institute, 43.1 percent of 9,000 German firms that it surveyed reported suffering from a shortage of qualified workers as of July 2023.
Put simply, employers across Germany will face increasing challenges in finding qualified workers in coming years unless the country can find a way to effectively mitigate its worker shortage.
READ ALSO: Why few companies in Europe are hiring foreign workers despite shortages
How can Germany address its lack of young workers?
Experts have argued that Germany can take three major steps to beef up its workforce: compel more women to work full-time, keep older workers on the job longer, and attract more immigrants.
One significant factor for encouraging the first step is better access to childcare to allow more women to work full time. In a report, German media outlet Focus Online points out that the head of the German Institute for Economic Research (DIW Berlin), Marcel Fratzscher, has claimed for years that women have enormous potential to fill Germany’s labour gap.
But getting more women into full-time jobs will require two crucial steps, both of which are entirely out of most women's control.
Two factors may be reducing Germany’s share of women working full-time
First, many women require better access to full-time childcare. Fratzscher sees a lack of childcare as a serious barrier for women who may otherwise join the workforce, or work full-time.Â
Technically in Germany parents are legally entitled to Kita (daycare or childcare) for kids over the age of one. But many parents still can’t find the all-day childcare they would need to work full-time due to nationwide shortages in childcare workers and facilities.
On the other hand, companies that want to attract more workers might need to consider offering flexible working hours that would allow mothers (or fathers) to balance their duties at home with their work time.
READ ALSO: Why are Berlin Kitas in a state of crisis?
Secondly, companies could do more to ensure that they are taking female applicants seriously for all roles.Â
Focus online discussed how Economist Dorothea KĂĽbler from the Social Science Research Center (WZB) in Berlin ran an experiment in which HR professionals were tasked with scoring a series of applicants. She found that female applicants were scored lower than their male counterparts with the same credentials, especially in male-dominated industries.
Does Germany need to hold onto its older workers?Â
Some economists seem to suggest that the economy could be run more effectively if only people wouldn’t give up on working when they’ve reached their retirement age.
This argument likely sounds pretty bleak to anyone who is currently working hard with the hope that they can save up enough to enjoy ten or so quiet and relaxed years later in life.
Especially considering that a growing number of elderly Germans are already choosing to work later in life, for many, simply because their pension payouts aren’t enough to live on.
Per the government’s 2024 economic report, offering financial incentives for people who would like to work longer and more flexibly in old age was one solution proposed.
Experts agree that keeping Germany's economy running will require a lot of immigrants
No matter which way you slice it, Germany will probably need several big waves of immigrant workers if it hopes to replace the number of workers set to retire in the coming decade.
As author and career coach Chris Pyak recently told The Local, Germany fundamentally needs way more immigration just to keep the economy running.
READ ALSO: Q&A - How foreign jobseekers in Germany can maximize their chances in 2024
For his part Habeck appears to agree. He told Reuters that Germany won't be able to bridge the workforce gap without migration.Â
The number of immigrant workers needed each year to fill open positions is typically cited at about 400,000 – well above the net annual immigration of 250,000 people that the Germany’s Statistical Office expects in the coming years.
Furthermore, many immigrants in Germany arrive as refugees, meaning they are legally prohibited from working until they can clear the rigorous bureaucratic process of obtaining residency.
On Wednesday Habeck suggested Germany needs to become immigration friendly with quick visa procedures, more language courses, and digital access to German companies from abroad.
He highlighted several new laws that the government has put forward in hopes of making Germany more attractive for foreign workers. These included the citizenship law update, speeding up the issuance of visas, and recognising foreign qualifications in the job market.
READ ALSO: Who can get permanent residency fastest under Germany's skilled worker law?
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