Germany lacks skilled labour
Comment of the Day

August 31 2010

Commentary by David Fuller

Germany lacks skilled labour

This is an interesting article from The Wall Street Journal regarding Europe's industrial powerhouse. Here is the opening
BERLIN-The surprising strength of Germany's economic rebound is exacerbating an already worrying problem for legions of its companies: a dearth of skilled workers.

Industrialists and economists long have warned of a looming shortage of skilled German labor, a consequence of the country's declining birth rate and an exodus in recent year of engineers and other highly trained workers, to around the European Union, the U.S. and elsewhere. But the rapid recovery of Germany's export-fueled economy in recent months has suddenly brought the problem home for many domestic companies, which fret that the shortage could restrain their ability to respond to the nascent rebound.

Though German unemployment still hovers around 7.6%, about 70% of German companies report they are having trouble finding enough master craftsmen, technicians and other skilled labor, according to a survey released this week by the DIHK Association of German Chambers of Industry and Commerce. Companies haven't been able to fill some 36,000 engineering jobs open across the country, the Association of German engineers reports.

Bitkom, Germany's largest information-technology industry association, says the same goes for 43,000 IT posts.

"And this is happening just barely out of the severe recession of 2009," said Hans Heinrich Driftmann, DIHK's president. "As the economy improves and companies need to hire more people, it's only going to get more severe."

For now, Germany's marquee corporations, such as Siemens AG and BMW AG, have enough skilled job applicants, thanks to aggressive recruiting and generous training programs. But many of the country's Mittelstand, the thousands of small to mid-size companies that are the backbone of its export-led economy and provider of 70% of German jobs, are struggling to find needed employees as demand picks up.

David Fuller's view I do not find Germany's economic rebound surprising because it has long been an industrial success story and is therefore in a strong position to benefit from the developing (progressing) world's strong economic growth. Germany's exporters also have the profitable tailwind of a soft euro. I am more surprised by the shortage of qualified workers, although apparently this has been expected in Germany, according to the second paragraph above.

A low birth rate is a factor but not the main problem, I suspect. People are free to develop other interests and career fashions change. I do not know the comparable statistics but would guess that Germany still produces far more engineering graduates than the UK and USA, per capita, where too many business school graduates still aspire to careers in the City or on Wall Street. We know that China and India produce far more engineers than western countries. One influential factor, presumably, is because the financial incentives are at least as attractive as careers in finance.

I question the wisdom of government influence on career choice, at least without broad consensus that this was in the national interests. However closer ties between business and educational institutions would appear to be a virtuous circle.

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