Germany’s Institute for Economic Research calculates that over 500,000 skilled labor positions remain unfilled, costing the German economy almost 50 billion euro per year.
A study released by the Institute for Economic Research (IW) in Cologne on May 12 examines Germany’s continued lack of skilled workers. The authors maintain that this lack costs Germany’s economy 49 billion euros per year. Moreover, the magnitude of this issue is expected to escalate in coming years.
IW estimates that there are approximately 570,000 job positions that remain unfilled in Germany due to the lack of qualified people. If these jobs were filled, it could boost production by 1.1% within the year. IW stresses that this is only the direct cost to the German economy, and does not take into account consequential costs such as stress due to overtime or lost innovations. Looking ahead to 2027, not filling these gaps could cost the German economy up to 74 billion euros per year.
Obvious solutions
The solutions offered are predictable. One difference is that efforts made thus far help to prove that the challenges are not insurmountable. The authors point to changes made in the Skilled Immigration Act that are opening opportunities in that regard. As Euronewsreported in October 2023, the changes made to the act could enable another 60,000 skilled workers into the country. This effect is not yet in the data from that the authors used, as the changes will come into effect in stages over November 2023, March 2024 and June 2024.
Tackling employment barriers faced by older workers should also make a positive impact. Germany has a higher workforce participation level than the European average already, and lags only its Scandinavian neighbors. Also, the retirement age is rising to 67 years of age by 2031. More could be done, though.
One of the study’s authors, Alexander Burstedde, commented. "It would also be particularly effective if older employees worked longer. Companies could keep their experienced employees in the company longer with suitable offers." Burstedde did not elaborate on what those suitable offers would be.
Also on the table is getting more women into work by increasing childcare options and tweaking tax rules for married couples which might help too. At the same time, addressing gender bias against women in terms of pay is something that needs to be addressed.
