Skills shortage: economic slowdown instead of improvement in supply

The KfW-ifo Skilled Labor Barometer June 2023 shows German companies are struggling with a shortage of skilled workers, which is affecting service providers in particular. A decline can only be explained by the current economic downturn.

According to the KfW-ifo Skilled Labor Barometer in April 2023, 42.2% of German companies were affected by a shortage of skilled workers. This figure was 47.4% in the service sector in particular, while it was slightly lower in manufacturing at 35.1%. Although the shortage of skilled workers has decreased significantly due to the economic slowdown, it still remains very high in historical terms. Since 2021, the shortage has increased significantly despite the coronavirus crisis and the economic impact of the Russian attack on Ukraine.

Large companies were affected more frequently (44.0%) than small and medium-sized companies (41.3%). There are significant regional differences, with companies in eastern Germany suffering the most from a shortage of skilled workers at 47.8%, while companies in Hesse, Rhineland-Palatinate and Saarland are less affected at 35.4%. This reflects the fact that the eastern federal states are particularly affected by demographic shrinkage and an ageing population.

Skills shortage affects companies' business activities

In most sectors of the economy, a significant proportion of companies continue to report adverse effects due to the shortage of skilled workers. Particularly hard hit are legal and tax consultants, auditors, architectural and engineering firms, transport and storage companies, travel agencies and tour operators, landlords of movable property and companies in the building and garden maintenance sector as well as the manufacture of data processing equipment, electronic and optical products.

Although the shortage of skilled workers has been reduced by the economic slowdown, it remains a challenge for many companies. Large companies are somewhat more affected than small and medium-sized enterprises, and in the eastern federal states, the skilled labor situation is particularly precarious due to demographic factors. In view of the expected economic recovery later this year, it can be assumed that the shortage of skilled workers will increase again due to both economic and demographic conditions.

The further development of the Skilled Immigration Act is a real game changer for our economy! With the newly introduced points system based on the Canadian model, we are enabling people to find jobs in Germany.

Melis Sekmen, Chairwoman of the Economic Affairs Committee, MDB

Bundestag passes Skilled Immigration Act

Last Friday, the Bundestag passed the law to further develop the Skilled Immigration Act in order to combat the acute shortage of skilled workers and labor. The alarming shortage of skilled workers, with more than 1.9 million vacancies, requires action. In addition to improving domestic education and training, the focus is on modernizing immigration law in order to counteract the shortage.

The KfW-ifo Skilled Labor Barometer June 2023 can be downloaded from the Kfw website. The debate, the vote and all speeches on the draft bill on skilled labor immigration can be found on the website of the German Bundestag.