Demographic Future Is Now Eastern Germany Confronts Skilled Labor Shortage

For years, demographers have been warning that Germany could face a labor shortage as its population ages. In eastern Germany, such scarcities have already become reality. Competition for talent is fierce -- and businesses are becoming more generous.


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Olaf Kühn is happiest about his job when he is driving along the pearl necklace in the morning. That's what locals call the A73 autobahn, which fills with cars in the morning and the evening, with their glittering headlights strung tightly along the highway like pearls on a necklace.

Thousands of commuters use the route, which stretches from Arnstadt in the eastern German state of Thuringia to Coburg in Bavaria and on to Nuremberg. "The traffic jams can go on for kilometers, but I just drive past," Kühn says with a smile. His commute, after all, takes him from west to east, the opposite of the prevailing trend. Every morning at about six a.m., Kühn drives to work from Bavaria to Thuringia.

Kühn works as a CNC programmer at Analytik Jena, a company that emerged from optical instrument maker Carl Zeiss, in Eisfeld just southwest of Leipzig. The 48-year-old lives near Coburg in Upper Franconia, where he also worked until 2008. But then Reinhard Jacob, the Analytik Jena plant manager, recruited him. "I spent a year trying to convince him to work for us," says Jacob. "We just didn't have enough good people here."

Kühn earns just as much as he did in Bavaria, even though salaries in eastern Germany generally remain significantly lower than in the West. With the emergence of a new economic boom in Germany, specialists like Kühn are more in demand than ever, and they are being courted and recruited accordingly. To attract employees like Kühn, companies have to come up with attractive incentives.

Stopgap Solution

Businesses in the states of the former East Germany have to be especially creative. The eastern states are ahead of the rest of the country in at least one respect: From Rügen in the north to Plauen in the south, the lack of skilled workers that western states will not fully experience until about 10 years from now has already become reality.

In the third quarter of 2010, the number of open positions throughout Germany grew to 986,000, a 19 percent increase over the same period last year, and the trend will only intensify in 2011. Although some three million people are also registered as unemployed, this doesn't solve the problem.

Labor market experts use the term "mismatch" to describe a situation in which an unemployed person is not offered any of the unfilled positions on the market. Either the job seeker has the wrong qualifications or none at all, is too old, is insufficiently mobile or is unsuitable for other reasons. Additional job training and costly qualification measures are a stopgap solution at best.

So far, there has been little agreement among experts on the question of the lack of skilled workers. In a new study, the German Institute for Economic Research (DIW) even characterizes the issue as a "Fata Morgana." According to the DIW, there is "no evidence" pointing to a general lack of available workers. For example, say DIW experts, salaries for skilled workers have hardly increased, and the number of qualified unemployed people exceeds the number of available jobs.

The DIW also points out that in light of the growing numbers of students pursuing degrees in science and technology, a shortfall is not to be expected. However, the DIW study also acknowledges that bottlenecks could develop in high-growth regions, as well as in large parts of eastern Germany.

Especially Glaring

On the other hand, an internal survey conducted by the Federal Employment Agency among its 176 local employment agencies shows that the lack of skilled workers is already a reality today. Two-thirds of the participating agencies reported significant bottlenecks in many areas. In July, there was an average of 7.5 unemployed workers for every open position. The study lists 16 professions, from plumbers to engineers to doctors, in which the problems are especially glaring.

The microcosm of southern Thuringia offers a telling example of what has become symptomatic for parts of the east, particularly along the former border between East and West Germany and the booming regions surrounding the cities of Dresden, Jena and Potsdam. In the district around Eisfeld, not far from the border of Bavaria, for example, the number of open positions was 48.8 percent higher in October 2010 than it was in October of 2009. Unemployment there is 6.7 percent, which is about the same as the average in the West. There are already about 16,000 commuters who drive to work every day from the West to the East.

For a number of reasons, demographic changes affected the East earlier and more strongly than the West. Not long after German reunification, the birth rate plummeted in the East -- meaning that since 2006, significantly fewer young people have been entering the work force.

In addition, many eastern Germans, especially young people, are moving to the West -- a trend that has continued unchecked for years. The eastern states have lost about 1.5 million workers since 1990. If the trend continues, the population between the ages of 15 and 64 in the East will be cut in half, to 4.5 million, by 2050. At the same time, large groups of older people are entering retirement.

From West to East

A historic shift occurred in southern Thuringia this year. For decades, the number of high-school graduates in the state had exceeded the number of training positions. That relationship has now been reversed for the first time.

While the number of new apprenticeship agreements in trade professions in the West was still 4.4 percent higher than in the previous year, that number has already declined by 1.7 percent in the East. There are simply not enough young people anymore. As a result, companies in the eastern states are now recruiting both skilled workers and trainees in the West.

"I didn't have a problem going to the East," says Linda Duwe. "I wanted to move out of my parents' house, anyway, so I didn't care where I went." The 20-year-old from Einbeck near Göttingen in central Germany was determined to become a printer, specializing in digital printing. After sending out about 30 applications, she ended up choosing the best offer, which came from a company in Ilmenau, Thuringia.

For the past three months, Duwe has been in a training program, learning her profession of choice, at EDU-Con, a small publisher specializing in advanced training. "We're glad that Linda came to us," says Managing Director Kristin Schlötel. "Otherwise we would have found it difficult to fill this training position." This year, EDU-Con received about half as many applications as it did three years ago, when the last training program began.

These developments show that the lack of skilled workers is no longer an economic problem but a structural one. Well-trained individuals are becoming the most important and scarce commodity in a modern industrial and service society. This doesn't just apply to Germany, but in hardly any other country is the outlook quite as dramatic.


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