Struggling to Fill Vacancies: 84% of German Businesses Face Skills Gap
Majority of Establishments Experience Talent Deficiencies, According to Study - Enterprise Majority Struggle With Talent Shortage, According to New Research
Dealing with a talent shortage remains one of the primary hurdles for companies in Germany, according to a study by the Institute for Employment Research (IAB). A whopping 84% of businesses across various industries are currently grappling with this issue, making it the most frequently cited problem. "The skills gap continues to be the top issue businesses are grappling with," said IAB researcher Michael Oberfichtner.
Other challenges include high labor costs and frequent absenteeism, as outlined in the IAB Business Survey. Two-thirds of businesses are skeptical about finding suitably qualified applicants in the coming years, particularly those in the construction industry where the issue is particularly acute.
Some solutions companies consider to combat this skills gap include investing in ongoing training programs, staff development, and fostering better work-life balance. Around half of businesses endorse these measures as viable solutions.
However, five percent of the 15,000 surveyed businesses anticipate they'll have too many employees on payroll, especially in the manufacturing sector, as pointed out by IAB researcher Ute Leber.
Last year, 55% of businesses bemoaned being weighed down by exorbitant labor costs, a jump of 12 percentage points compared to 2022. Businesses in manufacturing, wholesale, and retail complain about the financial burden more often than the average.
While the labor shortage isn't as glaring in simple roles like helper jobs, it's still evident: one in three businesses expects to face difficulties hiring in this segment, particularly in the hospitality industry, other service providers, agriculture, and mining.
Emerging Challenges in Addressing the Skills Gap
The IAB identifies several factors making it difficult for German businesses to address their skills gap:
- Mismatch in Skills: Despite a high number of unemployed individuals, the qualifications of many job applicants do not align with the requirements of the vacancies, leading to nine unemployed people for every job opening in 2023 but just two applicants for skilled positions.
- Declining Job Vacancies: Economic uncertainties have resulted in a decrease in job vacancies, negatively impacting industries like manufacturing, construction, and business-related services.
- Demand for AI Skills: The rising need for artificial intelligence skills may lead to a shift in demand for other skills, which could affect the employability of low, medium, and highly skilled workers.
Potential Solutions
- Skill-focused Recruitment Agencies: To bridge the skills gap, recruitment agencies may focus more on training and skill development, helping adapt the existing workforce to the evolving demands of the job market.
- Immigrant Hiring Strategies: To enrich the labor pool, Germany could consider hiring 7 million skilled workers from countries like India and other regions by 2035.
- Long-Term Personnel Development: Companies could commit to investing in employees through long-term personnel development, including work-life balance enhancement and further education.
- Innovative Recruitment Strategies: To attract skilled workers, businesses might opt for more innovative approaches such as promoting the company as an attractive employer, offering in-house vocational training, and improving wages to compete for top talent.
- The community policy should emphasize the importance of vocational training to combat the skills gap and meet the employment needs of German businesses, given that 84% of businesses currently face this issue.
- The lack of suitably qualified applicants is a significant concern for two-thirds of businesses, especially those in the construction industry, where the skills gap is particularly pronounced.
- Michael Oberfichtner, an IAB researcher, highlights that the top issue businesses are grappling with is the skills gap, and investing in ongoing training programs, staff development, and fostering work-life balance are strategies being considered to address this issue.
- Ute Leber, another IAB researcher, points out that five percent of businesses anticipate they'll have too many employees on payroll, mainly in the manufacturing sector, despite the average business lamenting exorbitant labor costs last year.
