• Business

Workers’ Shortage in Germany – A Looming Threat to Growth

One of Germany’s most persistent challenges is the hindrance to growth caused by the shortage of skilled workers. The Government expects the economy to grow by 0.2% this year, far less than the previously forecasted 1.3%. The main reasons include weak global demand, geopolitical instability, and high inflation rates.

While addressing the media, one of the prominent ministers mentioned that close to 700K vacancies remain unfilled. Germany’s economic growth potential has dipped to 0.7% from 2% in 1980. The fall is expected to plunge further to 0.5% if Germany fails to overcome the worker shortage problem. While presenting the Government’s Annual Economic Report, the Minister said the unfilled vacancies will rise further because of the ageing population.

Despite the challenging situation, promising solutions are on the horizon. The Government’s Annual Economic Report suggests offering monetary incentives to encourage people to work longer and more flexibly in old age. This could potentially alleviate the shortage of seven million skilled workers by 2035, paving the way for a more robust and sustainable economy. Another proposed solution is to reconsider the unemployment welfare benefits for some recipients. This move could potentially inspire more people to enter the workforce, boosting productivity and economic growth.

As per a September survey, over 50% of Germans believe that work will continue to be unworthwhile after the Government’s planned rise in welfare payments and child benefits. Nearly 2.6 million people in Germany in the age bracket of 20-30 currently have no professional qualification. Welfare and aggressive labour market reforms were introduced a couple of decades back. They had to be credited with elevating Germany to an internationally resented competitiveness level following the recessions of 2003 and 2004.

However, Germany won’t be able to fill the workforce gap without migration, making it crucial for the country to become more immigration-friendly. This can be achieved through faster visa procedures, more language courses, and digital access to German companies from other parts, all of which are essential to ensure a steady supply of skilled workers.

Berlin has developed several new laws to make the country more exciting and attractive for migrant workers. These include reducing foreigners’ path to citizenship, expediting visa issuance, and recognising foreign qualifications in the job market.

It is also important to understand that not everyone in Germany is pleased with the thought of more immigration. However, the support for the nationalist Alternative for Germany (AfD) party has peaked and is now the second-most popular party in the country.