IAB: Staffing Woes Loom Large for German Businesses
Majority of German businesses (84%) forecast staffing challenges - Majority of German Businesses Anticipate Employee Issues (IAB)
In the fast-changing world of work, personnel issues are a common concern for over 80% of German companies, according to a study from the IAB.
Michael Oberfichtner, a researcher at the IAB, elucidated that skill shortages dominate the issues cited across various industries. Almost two-thirds (64%) of firms doubt their ability to find adequately competent job candidates in the future. Particularly in the construction industry, this concern is pronounced, with only a quarter (25%) expecting no staffing issues.
Moreover, 55% of all companies are grappling with high labor costs, an increase of 12 percentage points compared to 2022. Sectors like manufacturing and retail trade are particularly affected by this predicament. The research also points out challenges caused by an aging workforce, increased need for continuous education, and significant organizational effort due to divergent schedules.
The survey was based on data from the IAB Establishment Panel, a representative study of approximately 15,000 companies.
Navigating the Modern German Labor Market
The German labor market witnessed a substantial drop in job vacancies by 4% in late 2024, standing at 26% less than the previous year. Significantly impacted sectors include other services, transport, manufacturing, construction, and business services, all due to economic uncertainties such as high costs and weak foreign demand [3].
The labor market in Germany is undergoing a "greening" process, as characterized by the IAB. This transformation is driven by both evolving job tasks (more green jobs, fewer brown jobs) and shifts in job allocation. The increasing need for eco-friendly tasks and skills is reshaping the labor market, posing challenges and opportunities [4].
Closing the Skills-Gap and Countering Labor Costs
A persistent issue in Germany's labor market is the mismatch between available skills and job requirements. Despite having a relatively high unemployment rate, qualified skilled workers continue to be in short supply. In fact, there were only about two adequately qualified applicants for every skilled worker vacancy in 2023 [3].
To combat these staffing challenges, young companies are adopting strategies like offering attractive work conditions, long-term career development, improved work-life balance, additional education, and higher wages to retain skilled employees. However, they tend to bypass educational institutions or job centers, instead addressing their personnel concerns independently [2].
In response to skills shortages, there is an emphasis on further training programs. Recruitment agencies are expected to focus more on such programs to realign the skills of the workforce with the evolving needs of the labor market [3].
Overcoming Bureaucratic Hurdles and Wage Pressures
High administrative burdens, particularly for young companies, present a significant obstacle. This excessive bureaucracy may hamper these firms' ability to compete for talent and maintain optimal staffing costs [2].
Additionally, around 40–45% of start-ups consider higher wages a vital strategy for retaining employees, reflecting ongoing pressure to offer competitive pay in the battle for limited skilled labor [2].
Inclusive Transition and Reducing Displacement Risks
The green revolution and automation heighten the risk of displacement for low-skilled and migrant workers. To ensure an inclusive transition and mitigate widening labor market inequalities, the IAB urges targeted support and expanded vocational training [4].
In essence, the German labor market confronts declining vacancies, a persistent skills gap, and escalating administrative and labor costs. As the labor market evolves to meet the shifting demands of a greener economy, this transition poses challenges and opportunities while increasing risks for vulnerable worker groups. To effectively address these issues, targeted support, enhanced vocational training, and administrative reforms are essential [3][4][2].
- The German labor market is experiencing a decline in job vacancies, a persistent skills gap, and increasing labor costs, according to a study by the IAB.
- The construction industry, in particular, expresses concern over staffing issues, while sectors like manufacturing and retail trade are affected by high labor costs.
- Michael Oberfichtner, a researcher at the IAB, stated that skill shortages are a common concern across various industries, with 64% of firms doubting their ability to find adequately competent job candidates in the future.
- To address these staffing challenges, young companies offer attractive work conditions, long-term career development, improved work-life balance, additional education, and higher wages to retain skilled employees, but often bypass educational institutions or job centers.
){kind=link}