Talent Shortage

Despite Record Immigration, German Companies Face Skills Crunch

Fachkraeftemangel. Source DPA
German companies are recruiting skilled workers from Spain, Poland, Mexico and elsewhere.
  • Why it matters

    Why it matters

    German immigration policy is not meeting industry’s requirements. The language barrier complicates matters.

  • Facts


    • Immigration to Germany increased by 72 percent between 2007 and 2012.
    • In 2013, small- and mid-sized firms lost an estimated €31 billion in business amid job shortages.
    • A new project to recruit skilled vocational workers only attracted 170 applicants in its first year.
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When Carlos Rosales arrived in Heidelberg eight years ago, he fulfilled a dream.

The 32-year-old software developer from La Paz, Mexico, had first come to Germany as an exchange student when he was 18, and made up his mind to return. “I like the way they live here. I like the security,” he told Handelsblatt Global Edition.

After finishing his studies, he got a job as a software developer at an international company that got him a visa and found him an apartment in Germany. Mr. Rosales now has a German girlfriend and intends to stay for good. “I have my life here now,” he said.

Mr. Rosales’ story is one of thousands powering the German economy. Yet despite an upswing in immigration, German businesses still face a shortage of skilled workers. The situation is so serious that it has begun to affect some corporate bottom lines.

Most recent immigrants to Germany come from other countries in the 28-nation European Union, which guarantees its citizens freedom with the bloc. They each bring a variety of skills to Europe’s largest economy, but often not the ones Germany needs.

After all, a graphic designer from Barcelona who has come to Berlin for a few years is of little use to an auto parts supplier in Bavaria.

Certainly, Germany has made great strides in recent years opening its labor market to foreign workers as policy makers have taken steps to counter the country’s low birth rate and aging population.

In 2013, Germany added 437,000 net immigrants, many of them coming from economically weaker parts of the European Union.

With a major immigration reform in 2005, the opening of the labor market to eastern European E.U. residents in 2011, and strong economic growth, the influx of arrivals has peaked in Germany in recent years.

Germany experienced net migration of 437,000 workers in 2013, according to government figures, an increase of 11 percent from 2012. Most migrants came from Europe, with Poland the top source of migration, and Italy and Spain also seeing increases.

The Organization for Economic Co-Operation and Development in 2012 said Germany was the world’s second-most popular destination for immigrants among industrialized nations  after the United States. Between 2007 and 2012, migration to Germany rose 72 percent.

Even so, German businesses continue to struggle to recruit staff. While more people are coming than ever, many lack the skills Gemany’s highly developed economy needs.

While Germany has always needed engineers and physicians, the E.U. Blue Card, which makes it easier for non-E.U. residents to work in the bloc, has been used by 17,000 people since it was launched in 2012 to find work in Germany.

But the skills crunch is most keenly felt for workers with vocational qualifications.

Industrial mechanics, technicians, plumbers, electricians and heating technicians are in short supply, according to the Confederation of German Employers’ Associations, or BDA. The shortages are acute in southern Germany where much industry is based. There is also a dire shortage of nursing staff throughout Germany, particularly in geriatrics.

A new program designed to recruit vocational workers from outside the European Union only attracted 170 applicants in the year through July. Industry experts are worried Germany is not adquately getting the message out that there are plenty of jobs available for those with the right skills.

deutsch als fremdsprache. Source DPA
For immigrants coming to work in Germany learning German is a key factor. Source: DPA


A study on global talent shortages published in May by ManpowerGroup, an international recruitment firm, found that 40 percent of businesses in Germany had some problems filling vacancies.

And the squeeze is being felt hardest by the small- and medium-sized businesses, the so-called Mittelstand, which forms the backbone of the German economy.

“Many big companies can do a lot to recruit staff,” said Alexander Wilhelm, a labor market expert at the BDA. “But small- and medium-sized businesses, particularly ones that are not well-known outside their region, find it difficult to attract applicants in an ever tighter market.”

A report by Ernst & Young this year that surveyed 3,000 small- and medium-sized companies found that 71 percent had difficulty finding suitable workers. Six in 10 said they had open positions they couldn’t fill.

The companies said the labor shortages resulted in orders not being filled or led to production slowdowns. One in nine said that they had seen sales drop by more than 5 percent due to this skills shortage in 2013. Ernst & Young said the result is costing Germay €31 billion ($40 billion) annually.

Analysts warn that relying on European migration alone is a mistake given the continent’s aging population. As European economies improve, it is likely that many migrants to Germany will eventually return home.

“It is really clear that the long-term immigration prospects for Germany do not lie in southern Europe,” said Wido Geis, a labor migration expert with the Cologne Institute for Economic Research (IW). “Germany has to boost its efforts to attract people from outside Europe and to make itself more attractive there.”

“We have to improve how we provide information about what sort of opportunities there are to immigrate to Germany,” said Mr. Wilhelm of the BDA. He said more effort is needed to promote the German language from a career perspective.

“Few companies are undertaking strategies to deal with it or are willing to make compromises”

Sonja Christ, ManpowerGroup Germany

Germany’s complex, and bureaucraticd immigration system is also a barrier. There is no points system like in Canada, which helps prospective migrants work out in advance if they have a good chance of being allowed to enter the country.

“The German system is really far too complicated,” said Mr. Geiss. “It’s less an issue of liberalization, but that things must be made simpler.”

Getting  foreign academic and professional qualifications recognized in Germany is also a problem. According to ManpowerGroup, which is recruiting technology workers and computer engineers from India to Germany, the process can take up to nearly a year.

However, industry itself may also need to up its game to attract more workers.

Employers, particularly smaller companies, are often not actively recruiting abroad, or when they do, they impose unrealistic, rigid demands on qualifications and German-language fluency, experts warn.

“It is only seldom that companies are prepared to hire candidates with poor German skills, even if they can speak English with their colleagues,” Sonja Christ, a spokeswoman for ManpowerGroup Germany told Handelsblatt Global Edition.

In general Ms. Christ said that there seemed to be a lack of vision among many employers when it comes to filling these jobs.

“Many companies are experiencing a skills shortage,” Ms. Christ said. “Yet few are undertaking strategies to deal with it or are willing to make compromises.”

“In our globalized world, talent is the key factor when it comes to success,” she added

Mr. Rosales in Heidelberg agrees that it should be easier for people from beyond Europe to work and live in Germany.

“Just because you are born in another country, doesn’t mean you shouldn’t have the same opportunities,” he said.

The author is an editor at Handelsblatt Global Edition in Berlin. Contact the author: s.dowling@vhb.de 

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