All hands on deck as Germany nears full employment

Handwerk in MV findet mehr Lehrlinge
Pick a job, any job. Source: DPA

More than half of all German workers are employed in one of the country’s 2.8 million family businesses. And, especially in rural areas, small- and medium-sized family firms have a crucial role in providing work for the local population. The country’s increasing shortage of qualified workers is hitting these companies hardest.

In smaller communities and often with limited resources, family firms are frequently last in line when it comes to in-demand skills. In 2014, a survey by the German industry association BDI revealed that five out of six companies had problems filling vacancies. Since then, the problem has only gotten worse.

A new study by the Cologne Institute for Economic Research, or IW, seen by Handelsblatt, shows that the shortage has prompted many German firms to cast the net wider in search of staff. Family firms, it turns out, train a higher proportion of apprentices than large firms. And they are more prepared to take on unqualified candidates too.

“Family businesses give people a chance when no one else will,” said Reinhold von Eben-Worlée, president of Germany’s largest association of family firms. What this means in practice is that family-owned companies take on a higher proportion of candidates without qualifications, giving them a second chance to get on a career ladder.

19 p12 How German Companies Deal with Lack of Expertise-01

In the past five years, 54 percent of family firms took on unqualified staff, compared with 39 percent of other companies. Often these people go on to gain qualifications on-the-job – this happened in 38 percent of family firms, compared with 24 percent of other companies. Family-run companies are also more willing to consider immigrant job candidates: 57 percent have taken on migrants, compared with 49 percent of other companies. Similar figures apply to older workers, the long-term unemployed and to people with disabilities.

Larger family firms – with more than 250 staff – are the most likely to take on employees without formal qualifications: 80 percent said they had done so in the past five years. 87 percent had taken on workers from ethnic minorities, and three-quarters had employed workers over 55. The reason for the companies’ flexibility is clear: many family firms lack the financial leeway to attract staff with generous financial packages. Rural locations frequently make their situation worse. They take what they can get, and train people on-the-job.

German unemployment currently stands at 3.9 percent, not far from full employment. But the headline figure conceals substantial variations – there are serious skill shortages in many areas, while unemployment figures among minorities and those without qualifications can be stubbornly high. Regional differences are also marked: southern Germany has an effective unemployment rate near 2.5 percent, whereas rates are worse in the states of former East Germany. Unqualified workers have it worst, regardless of where they live. In the wealthy southwest, 17.9 percent of unqualified people have no job while the corresponding figure in former East Germany runs at 31 percent.

Family firms may have less cash to solve their staffing problems, but they frequently have lower requirements. According to the IW survey, only a quarter of family businesses have programs to recruit candidates from higher education, while 40 percent of other firms do.

“We need immigration reform to make this country a more attractive destination for skilled foreign workers.”

Reinhold von Eben-Worlée, president, Association of Family-owned Businesses

The survey found a range of incentives on offer to attract and maintain staff. 76 percent offered extra benefits, while 71 percent offered some measure of flexible working time, and 69 percent made training opportunities available. In recent years, companies also seem to be holding on to staff even when business slows – only 15 percent of companies responding said they had laid off staff in response to slowing demand.

Family-owned businesses may be coping as best they can with a tight labor market, but in an election year, they are also appealing for political support. “We demand that the new government look to improve the education system. Germany has 50,000 high school dropouts, and that is 50,000 too many,” said Mr. Eben-Worlée.

All parties in the election have spoken of the possibility of greater employment for women and the old. But the low German pension age – currently 63 – stands in the way of mobilizing older workers. Greater women’s workplace participation will not come overnight – for this, kindergarten and after-school care infrastructure needs to be improved. Mr. Eben-Worlée also called for immigration reform, to “make the country a more attractive destination for foreign workers.”


Peter Thelen writes about social security systems, the job market and labor topics. To contact the author:

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