When Peter Enevoldsen won a lucrative order for the precision tractor parts that his company, Sjorring Maskinfabrik, makes in northern Denmark, his eyes lit up. The contract was worth more than half a million euros — a boon for his profits.
There was just one hitch: He did not have enough employees for the job.
Delivery was delayed, by one month, then two, then three, as he searched for skilled welders to speed the work at the sprawling factory. But in Denmark's fast-recovering economy, they were hard to come by.
As Europe rebounds from its economic malaise, Denmark is one of a few countries that can boast of nearing a golden era of full employment, meaning almost everyone who is able and willing to work has a job. But instead of being cheered, it is posing new challenges to the country's recovery.
More than a third of companies in this industrial and technically advanced nation can no longer recruit enough skilled workers to fill posts. Vacancies abound for I.T. specialists, computer scientists, engineers and mechanics, as well as for electricians and carpenters. The wages needed to lure them are creeping up. Affected firms are scaling back production, turning down contracts and postponing expansion plans.
"We need more skilled workers, but we can't get them," said Mr. Enevoldsen, who recently joined other companies in a nationwide advertising campaign to lure talent. "If the labor shortage continues, it could sharply impact our growth, and growth in general."
Europe's recovery is gaining traction fastest in the north, where Britain, Germany and Denmark's Nordic neighbors also pushing toward full employment. The unemployment rate has fallen in the United States as well, and some economists have expressed optimism the country may be headed in that direction.
But the experience in Denmark shows what can happen with too much of a good thing.
This country of just under six million people produces a diverse range of goods, from drugs to industrial machinery. To bolster its tech sector, the government recently named a "technology ambassador" to conduct relations with Google and other digital giants.
After a painful recession, unemployment is now at 4.3 percent, which is about as low as it can go without provoking inflation. During an economic boom a decade ago, joblessness fell as low as 2.4 percent, igniting an unsustainable spiral of higher wages and prices that the government desperately wants to avoid today.
Growth is still relatively modest — the economy expanded an annualized 1.2 percent last year despite the hiring frenzy. But in many sectors, the demand for workers has risen so fast that economists are warning that the recovery may hit a wall.
"It's hard to see higher growth because we don't have the labor needed for that," said Steen Nielsen, the director of labor market policy at the Confederation of Danish Industry, the country's main business lobby group. "We may have to be happy with low growth rates in the future unless we can stimulate labor supply."
The government has helped ease the strain by linking the retirement age to life expectancy, allowing seniors to work longer, and encouraging more employment of European Union nationals, who do not need employment visas to work in Denmark.
Some employers have also looked to refugees to fill jobs, but few of the newcomers are readily employable in high-skilled work, and the government tightened policies recently to discourage more asylum seekers from coming in.
Germany, which faces a shortage of engineers, nurses and other skilled workers, has taken the opposite tack, setting up training programs for refugees in an attempt to bridge the gap.
In Denmark, some companies have resorted to creating jobs abroad.
Clio Online, a technology-based education company in downtown Copenhagen that digitizes learning materials for national education systems, opened a satellite office in Ukraine, hiring around 20 programmers.
"We wanted to hire in our own country but it was impossible," said Janus Benn Sorensen, one of the company's three founders. "We still have vacant positions here, and we can't find anyone to take them."
At Sjorring, Mr. Enevoldsen tried for more than a year to add skilled welders and industrial designers to the 275-person work force. The company, which has won business from Volvo and Caterpillar, has a 20-acre factory in Denmark's forested north that runs a partly automated assembly line.
He offered a salary bump of more than 2 percent, but raising wages further would crimp his margins. Though he managed to recruit some Eastern European workers, he still lacks manpower.
Last year's delayed order for the European client, worth 600,000 euros, or $637,000, was eventually completed. But he worried that the labor shortage could keep Sjorring from reaching the next level.
"We could have grown even more if we had the right people, that's indisputable," said Mr. Enevoldsen, the company's chief financial officer, who has turned to a headhunter to find eight welders and machine programmers.