Germany is facing a crippling labor shortage as its working-age population continues to dwindle.
By 2030, the workforce is expected to shrink by 6.3 million and by 2060, the country will have no more than 70 million workers from 82 million today.
Already, the looming skills deficit is costing Europe’s biggest economy 22 billion euros (US$27 billion) a year, Reuters reported Tuesday, citing Cologne-based think tank IW institute.
The deficit is especially acute in workers with adequate qualifications in maths, computing, science and technology.
And there is little slack in the form of unemployed people or part-timers willing to work more — unemployment is at a record low 6.6 percent and the underutilized labor rate of 9.3 percent is the lowest in the eurozone, according to Eurostat.
For now, German multinationals can compensate by luring talent from abroad and adjusting working conditions to retain older staff.
But the millions of mid-sized companies that employ six out of 10 German workers and often have their headquarters in rural settings are finding it hard to compete.
“Twenty years ago, an employee had to apply to a company, but today I have to compete for potential staff and show them what I can offer,” said Thomas Egenter, human resources chief at Hansgrohe, a bathroom fixture company.
“You have to turn a lot of screws to be able to deal with this demographic change,” Egenter said. “We’re not waiting until it becomes a problem.”
The population shift will be a major problem by 2060, when there will only be 1.3 workers per retiree, against 2.3 now.
Meanwhile, the country’s birth rate is the lowest in Europe.
“The political response to the demographic challenge will… be decisive in determining whether the German economy can retain its leading position in many areas,” Jens Weidmann, president of the Bundesbank, the German central bank, said recently.
Angela Merkel, Germany’s conservative chancellor since 2005, has offered benefits for parents and stay-at-home mothers, which critics say keeps more women out of the workforce, and increased kindergarten places.
To offset the burden on the pension system of an aging populace, Merkel also introduced a phased increase in the retirement age to 67 in her first term but then brought it back down to 63 for some workers, under pressure from her centre-left coalition partners.
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