Shortage of skilled workers in Germany: What does this mean for companies?

The shortage of skilled workers is noticeable for all of us on a daily basis: weeks of waiting for appointments with medical specialists, staff shortages in child day-care centres, cancelled classes in schools, longer delivery times due to the lack of drivers, etc.  

But companies are struggling with the shortage of skilled workers, too. Find out in this article how the shortage of skilled workers is affecting companies and the economy.

The shortage of skilled workers is currently the subject of many a discussion – in politics, in business and, for some, also in the workplace. But what are the reasons for the shortage of skilled workers? Actually, there are several.

One of them is demographic change in Germany: the population is ageing. The baby boomers, who saw a very high birth rate, are hitting retirement age or are very close to it. This means that a large number of people are about to leave the labour market. Since the generations after the Baby Boomers had lower birth rates, they are not able to fill the gap, thus leading to a shortfall in workers.  

But the ageing of society also means that ever more people will need nursing and medical care in the future, which in turn will exacerbate the shortage of skilled nursing professionals. This phenomenon is referred to as the nursing crisis: the demand for nursing staff will only continue to grow in the future and we are already experiencing a shortfall.

Another reason is because the professions in which there is a shortage tend to be less valued. This discourages many young people from undertaking an apprenticeship in these areas, for example as drivers, tradespeople, etc. Moreover, the conditions in some professions, such as nursing, are less than appealing: shift work, overtime, stress or heavy physical work. This does not add up to being an attractive working environment.

So, which professions are affected by the shortage of skilled workers? Generally speaking, just about every industry is struggling to fill vacancies to a certain extent. However, the greatest shortage is in the social, technical and skilled trade sectors.  

According to the Federal Employment Agency, the following professions are most affected by the shortage of skilled workers:

• Nursing and healthcare professions
• Construction and skilled trade professions
• Professional drivers
• Educators

The shortage of skilled workers has an impact on all companies in the above-mentioned sectors, but also on the economy as a whole. Companies are unable to fill vacant positions, for instance, and that has consequences.

If positions cannot be filled, employees have to work overtime. If colleagues are absent, they have to work even more overtime. This in turn leads to even more stress and possibly to more absences due to ill health – a vicious circle.

However, overtime and an excessive work burden also lead to employee dissatisfaction. Staff can end up struggling with a lack of motivation, and employees who are not particularly motivated are often less productive, which in turn has a negative impact on the productivity of the company.  

Under certain circumstances, a lack of motivation may also lead to a decline in the quality of the work, which will also have an impact on productivity.

A lack of productivity means less growth in the long run. Companies affected by the shortage of skilled workers are so consumed with trying to fill vacant positions, compensating for illnesses and dealing with day-to-day business that there is little time left over to drive growth and innovation. Employees who are constantly busy keeping day-to-day business running have less energy to deal with new topics and develop innovative ideas – let alone drive them forward.

Companies can find themselves having to shell out higher salaries just to be able to fill vacancies. Moreover, application processes are drawn out longer, since the search for suitable candidates is difficult. If the company employs a recruiting agency for this purpose, it will incur further costs. Then, having finally filled the position, if it turns out the candidate was not the right fit after all, the company faces more costs, and the recruiting process starts all over again.

The consequences of the shortage of skilled workers for the entire economy are enormous: according to the German Economic Institute, the economy lost around 49 billion euros in 2023 due to the shortage of skilled workers.

When the economy weakens, companies hire fewer people. Initially, this means a decline in the number of vacancies and is exactly what we can see at the moment. The shortage of skilled workers seems less dramatic as a result. The reality, however, is very different: the shortage of skilled workers is and remains a major challenge for our society.