Germany’s economy is suffering from an acute shortage of workers. Whether in nursing, in gastronomy, in the trades or in the IT sectors, employers are complaining about a shortage of staff almost everywhere.
In the 1990s and early 2000s, faced with mass unemployment, those looking for work had to take almost any job, but today Generation Z – those born after 1995 – can hardly save themselves from offers.
According to the Federal Employment Agency, Germany will be dependent on 400,000 qualified immigrants per year for some time if the current number of employed persons is to remain stable. This is the result of the retirement of the baby boomers, i.e. the baby boomers born between the mid-1950s and the late 1960s, from working life.
Without immigration, the number of 20 to 65-year-olds would already be around eleven percent lower in 2030 than in 2020. The Kreditanstalt für Wiederaufbau (KfW) even sees an annual need for immigration of one million people of working age if the relation between gainfully employed and pension recipients should remain constant.
In any case, a falling labor supply would reduce the growth potential of the German economy and erode the revenue base of wage-based social insurance.
>> Read here: China is aging rapidly – and could therefore miss its own targets
Labor shortages are not a new phenomenon in Germany. Already at the end of the 19th century, the high demand for workers, especially in the Ruhr area, made Germany the second largest immigration country in the world.
Prof. Bert Rürup is President of the Handelsblatt Research Institute (HRI) and Chief Economist of the Handelsblatt. For many years he was a member and chairman of the German Council of Economic Experts and an adviser to several federal and foreign governments. More about his work and his team at research.handelsblatt.com.
And in December 1955, the Federal Republic concluded the first recruitment agreement with Italy. Agreements with Greece and Spain, Turkey, Morocco, Portugal, Tunisia, Yugoslavia and South Korea followed.
Nevertheless, there are doubts that – as in the 1950s and 1960s – the German economy can be kept on the usual growth path solely through labor migration.
From the mid-1950s onwards, employers urged the government to conclude recruitment contracts in order to cover the growing need for workers in the course of the “economic miracle”, especially after the influx from the GDR was stopped in August 1961 with the building of the Wall.
Guest workers formed a new lower class
Above all, companies in which heavy physical work was done – i.e. in the iron and steel sector or in the processing of asbestos – were dependent on willing and inexpensive workers.
At the same time, companies in the textile and clothing industry, which, due to the fierce international competition, were unable or unwilling to pay higher wages or improve working conditions, tried to withstand the globalization pressure that already existed at the time by employing “guest workers” – in vain, as we know today.
The number of foreign employees in the Federal Republic rose from around 100,000 in 1957 to around 2.6 million by the time recruitment was stopped in 1973. That was 12 percent of the workforce at the time.
>> Read here why there will be no wage-price spiral
Due to the rotation principle, the fluctuation of the foreign workers was extremely high – because they were usually only supposed to work in Germany for one year. Of the 14 million guest workers who came to the Federal Republic by 1973, more than eleven million returned to their home countries. However, this rotation principle was increasingly perforated because the companies wanted to keep their trained staff.
Reducing part-time work offers potential
Since the unskilled foreign workers consistently occupied the lowest ranks in the employment hierarchy, the “guest workers” formed a new underclass in the Federal Republic. It was thanks to the journalist Günter Wallraff that he put this precariat in the public eye in his bestseller “All the way down”.
Today, German politicians must ask themselves how such undesirable developments can be avoided when at least 400,000 people from distant cultures are expected to come every year – along with their families.
When trying to answer these uncomfortable questions, it quickly becomes clear that immigration alone cannot solve the problem of the declining domestic labor force potential, but can only be part of a bundle of measures.
The first thing to do is to make better use of the existing workforce – not least by reducing part-time work. While only 14 percent of employees worked part-time in 1991, by 2021 it was almost 30 percent. Almost every second employed woman works part-time today, although the education of women is now higher than that of men.
Digital systems can relieve employees
This is important but will not be enough. It is therefore imperative to use technical progress, specifically digitization, more than before. The potential is huge; because robots can now – at least partially – replace more and more human activities in interaction with computer programs.
According to the latest available data (as of 2019), according to the Institute for Labor Market and Occupational Research, more than a third of employees subject to social security contributions – at least 11.3 million – work in occupations in which 70 to 100 percent of activities can be carried out by computers or computer-controlled machines – almost three times as many as in 2013.
But computer algorithms and robots cannot only replace human work. Above all, they can relieve, support and contribute to mobilizing a previously untapped workforce potential, for example people with a physical disability.
Replaceable
11.3
millions
Employees in Germany work in jobs in which 70 to 100 percent of activities can be completed by computers or computer-controlled machines.
If it succeeds in raising the productivity potential associated with digitization, Germany could remain on its current path of trend growth of almost 1.5 percent per year even with fewer workers.
Push for modernization could unleash forces
In addition, an undesirable development of the economic boom years could be avoided. Until immigration was stopped in 1973, the immigration of cheap foreign workers hindered and delayed structural change. In retrospect, the guest workers seemed like a subsidy for the “old” industries.
Structural change will presumably accelerate. Politicians will have to support the associated exit of companies with socio-political measures. Under no circumstances should attempts be made to stop these processes.
Because a strong modernization drive in administration and business could be an important contribution to counteract the demographically caused labor shortage. The pronounced hostility to technology, which is widespread in quite a few social circles, should not be given any space in a future-oriented policy for our aging society.
More: Xi, Putin usher in ‘new era’ of bilateral ties – Western politicians disappointed