As Germany Booms, It Faces a Shortage of Workers

Dana Russow longs for the day when she will not have to worry about staffing problems.

Reichstag Parliment building, Berlin, Germany
Martin Child | Photodisc | Getty Images
Reichstag Parliment building, Berlin, Germany

“It’s not easy finding qualified staff to take care of the elderly,” said Ms. Russow, 41, director of Residenz Zehlendorf, a privately owned nursing home in southwest Berlin. “This profession has such a low status in Germany.”

The low pay does not help, either: Staff members earn the minimum wage of 8.50 euros, or $11.60, an hour.

Employers in many sectors of the German economy are facing labor shortages, under the dual pressures of an aging population and inflation-fighting measures that have kept wages low in comparison with its neighbors.

The problem was thrown into sharp relief on Tuesday with the release of official figures showing that Germany’s unemployment rate was the lowest in 18 years. While a jobless rate in single digits would be cause for celebration in many countries, in Germany it is the sign of a critical lack of workers.

For German employers like Ms. Russow, help should be on the way. As of May 1, the restrictions that Germany and Austria imposed in 2004 on East Europeans wanting to work in the two countries will be lifted. In theory, a flood of workers should be able and willing to pour into Germany, to take advantage of its booming economy and generous social benefits.

In practice, however, economists say that many workers who wanted to emigrate from the eight East European countries that joined the European Union in 2005 have already done so — to countries like Britain, Ireland and Sweden that kept their borders open.

And even though the economy is faltering in some of those countries, like Britain and Ireland, employers are concerned that workers who have made a new home outside their native countries are unlikely to want to move again.

It all adds up to a murky picture for German companies, whose need for workers is evident now and likely to grow more acute.

McKinsey, the consulting firm, published a report last year that concluded that by 2020 Germany would have a shortfall of two million qualified people to fill open jobs. The engineering sector, crucial to Germany’s export boom, says it is short thousands of engineers.

The high-tech industry, telecommunications, manufacturing and services already need people. The Federal Association for Information Technology, Telecommunications and New Media, Germany’s leading high-tech industry organization, says its members are short 28,000 qualified workers.

Health care is another sector in trouble. “By 2030, we will need one million more people to look after the elderly,” said Bernd Tews, director of the Federal Association of Private Care.

The number of people 65 and older will increase by about half until the end of the 2030s, to around 24 million from nearly 16 million now, according to the Federal Statistics Office. The population older than 80 will grow to 10 million in 2050, from nearly 4.5 million today.

And with an average of 1.38 children being born to each woman, demographers say the birth rate is not high enough to keep the population stable. Over the next 50 years, Germany’s population is expected to fall by 17 million from the current 82 million. Policy makers say it will become increasingly difficult to raise tax revenue to support retirees and maintain economic growth.

In retrospect, the immigrant worker restrictions must have looked like a good idea at the time. Fearing a huge influx of workers that would destabilize their labor markets by pushing down wages or taking jobs away from locals, Berlin and Vienna set strict conditions for any East Europeans wanting to work in their countries.

As a result, though, hundreds of thousands of young people from Poland and the Baltic States, the Czech Republic and Slovakia packed their bags and found jobs elsewhere.

Mr. Tews says Germany lost out by keeping the restrictions in place. “The opening of the borders comes a little late for us,” he said.

Alex Lehmann, chief regional economist for the European Bank for Reconstruction and Development, echoed that sentiment. “Those who wanted to work abroad, do,” he said.

And once these workers emigrated, they adapted to their new homes. “Many have settled in other countries and learned the language,” said Joachim Möller, director of the Labor Market Institute at the Federal Labor office. “Even though the German economy is now strong again and in need of workers, I can’t see people just moving around like that.”

Nevertheless, Mr. Möller figures that 100,000 East Europeans will come to Germany after next May, drawn by perceptions that Germany is a well-run, wealthy and well-paying country with a very good social welfare system.

Those qualities still attract a flexible, well-educated and skilled work force. But jobs in the services sector are not particularly attractive anymore because wages are low in comparison to other countries in the European Union.

According to Peter Verhoeven, chief operating officer of Accor Germany, which is part of one of the world’s biggest hotel groups, incentives are not sufficient to persuade young people to move lock, stock and barrel to another country.

“Wages and salaries are not high enough in the hospitality sector to be the only reason for leaving the home country, especially if you also put the higher cost of living in Germany into the equation,” Mr. Verhoeven said.

And with the economy expanding, he added, it is more difficult to recruit “because of competitive job alternatives in other sectors.”

It has left German industry, the services sector and the government scrambling for solutions out of concern that whatever new arrivals come after May 1 will not be enough to plug the labor gap.

Mr. Verhoeven said Accor was focusing on recruiting from inside Germany. “We recruit in the schools, technical colleges and universities,” he said. “We are looking for all kinds of qualifications required in the hotel business.”

Some German health care companies have set up training courses in Eastern Europe, but expectations are not high. “We are doing some training in Poland and have looked at the Czech Republic,” Mr. Tews said. “We are talking about small numbers. Most of those workers have left.”

The government, for its part, is trying a variety of approaches, including raising the retirement age to 67 and encouraging women to have more children.

It has also considered making it easier for qualified immigrants to find work in Germany. Even then, according to Mr. Lehmann from the European development bank, “Germany nevertheless retains a lot of restrictions in recognizing professional qualifications.”

In southwest Berlin, Ms. Russow, director of the senior home, ponders how Germany can cope with the labor shortage.

“It needs a sea change in social attitudes, which will take a long time,” she said. “That means more value, more respect in terms of the status of certain jobs as well as more rewards for that work for people who train long and work hard.”