Skills shortage - Economic downturn can hardly alleviate the problem of skilled workers
The persistent weakness of the German economy cannot alleviate the problem of the skills shortage any further. According to the new "Skills Barometer" created by the state development bank KfW and the Ifo Institute, more than every third company sees its business activity hindered by the lack of suitable personnel. In summer 2024, the percentage was only one percentage point lower than in January of the same year. However, it was still 15 percentage points higher than it had been two years ago.
The problem is significantly larger in the service sector - with 42%, the survey found that the affected percentage is above average there. Particularly in law firms of lawyers, tax consultants, and auditors, there is an acute shortage - 71% reported being negatively affected.
Survey of 9,000 Companies
For the "Skills Barometer," 9,000 companies in Germany are surveyed once per quarter. Among them are around 7,500 medium-sized businesses.
In industry, only 25% of the companies feel affected. This is much less than in the service sector, but still three times as much as the long-term average. In retail, the percentage is 28% in summer, and on construction sites, it is 27%. Smaller companies are, on average, less affected than larger ones, and the West is less affected than the East.
"With the expected recovery of the economy, the skills shortage is also expected to worsen," says KfW Chief Economist Fritzi Köhler-Geib. "The extent of this depends on how successful countermeasures are, such as incentives for higher labor participation of women and the elderly, the recruitment and integration of qualified migrants, needs-based training and reskilling of employees, and measures to increase individual and overall economic productivity, such as stronger digitalization."
- The ongoing economic downturn in Germany is exacerbating the issue in the labor market, particularly in Frankfurt, as the KfW Banking Group's latest "Skills Barometer" reveals.
- Despite an economic situation showing slight improvement in summer 2024, the skills shortage in Germany remained a significant challenge, affecting more than one-third of surveyed companies, according to KfW Banking Group and Ifo Institute's research.
- The economic recovery anticipated in Frankfurt and Germany is likely to further aggravate the skills shortage, warns KfW Chief Economist Fritzi Köhler-Geib, but effective countermeasures such as targeted labor participation programs and digitalization could potentially mitigate the impact.
