The energy and economic situation paints a bleak picture for Germany. A current study now shows how the shortage of skilled workers in Germany is throwing a spanner in the works and that 86 billion euros in economic output are lost every year. The solution lies abroad.

The German economic engine sputters. The pressure is increasing due to high energy prices. But that’s not the only problem. In the long term, the shortage of skilled workers could have even worse effects. According to calculations by the management consultancy BCG, the labor shortage reduces German economic output by 86 billion euros annually. Losses could continue to grow.

According to the authors, the losses in the German economy are the second highest after the USA in a comparison of the economically strongest nations, according to a recently published study by the Boston Consulting Group. The authors Johann Harnoss and Janina Kugel used the figures from the Nuremberg Institute for Labor Market and Occupational Research as the basis for the study for the calculation for Germany. Accordingly, 1.9 million vacancies are reported for the second quarter.

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“That’s about a million above the long-term average,” said Harnoss of the dpa. “Both economists and we see this as a structural deficiency.” Both assume that on average each of these one million missing employees would generate around 86,000 euros in economic output per year – a total of 86 billion euros. “The costs of 86 billion euros will be even greater if we don’t take countermeasures,” said Kugel. “While the US has the most vacancies, it is also best positioned to close the gap.”

At the same time, economists keep predicting a recession in Germany. Typically, such bleak economic prospects result in no more hiring and many being laid off. At least the German job market has been stable for a long time. The number of people in Germany who have a job increased from month to month. The number of unemployed has even halved to around 2.5 million in the past two decades.

In June 2022, 45.6 million people worked in Germany. The year before it was over half a million less. The number of unemployed has increased slightly recently. However, this is due to the large number of refugees from Ukraine who are now entering the German labor market. At times, the gloomy economic situation in Germany hardly cost any jobs.

Recently, however, this robustness has cracked. The labor market barometer of the Institute for Labor Market and Occupational Research (IAB) fell by 0.8 points to 100.4 points in September. This is the lowest level since the Corona slump in 2020. The willingness of companies to hire is also falling in all sectors. According to a survey by the Ifo Institute, the Ifo employment barometer fell to 99.5 points in September, after 100.9 points in August. There are signs of a negative development.

The problems in Germany have been obvious for a long time. Baby boomers are retiring and not enough young people are following. According to many experts, something must be done to counter the demographic change and the impending recession, which could further exacerbate the reluctance of companies to hire new staff. Short-time work can initially absorb greater losses in economic output by securing jobs. Even during the pandemic, short-time work was a means to an end.

Irrespective of a recession, however, Harnoss and Kugel estimate that even assuming immigration of 300,000 to 400,000 people per year, the number of people of working age will fall by three million by 2035 and by nine million by 2050. In the United States, Kugel and Harnoss project a labor force gap of 19 million by 2050, but also expect the same number of immigrants. The conditions for absorbing billions in economic output losses are better than in Germany.

But immigration remains part of the key to making up for some of the losses in this country, too. Harnoss suggests that Germany specifically recruit workers from countries whose populations are still growing. “One possibility would be to train people there in their home countries before they come to Germany. That would have advantages for the immigrants, for the countries of origin and for the destination countries.” He cited India, Nigeria, Indonesia and Egypt as examples.

“We must have non-ideological lines,” Kugel pleaded for a factual discussion of immigration. “If we experience an even greater shortage of skilled workers, we will get political discussions in completely different tones,” she said, referring to the affordability of the pension and health systems.

“Where immigration takes place on a large scale, acceptance is also significantly higher,” Kugel argued, referring to cities like Munich, where a very high proportion of immigrants goes hand in hand with a comparatively low influx of extremists.

Kugel and Harnoss advise German medium-sized companies to increasingly look around on the international job market – and not just to replace local workers who are leaving. “The more diverse companies are, the more innovative they are,” said Kugel, referring to US tech companies that employ a large number of immigrants.