GERMANY (OBSERVATORY) – German companies are struggling to find skilled workers to increase production, and the labor shortage costs the economy up to 0.9 percentage points of production per year, the German economic institute IW said on Monday.
The labor market in Germany is on the rise, and employment is reaching record heights. But an unusually long cycle of economic growth, which has been celebrated for nine years, combined with a shortage of people of working age, means that the firms are running out of suitable personnel.
Even if the German leaders hired all qualified unemployed, there were still about 400 thousand open vacancies, according to the estimates of the IW Institute.
This means that the total output in Europe’s largest economy will be 0.6 percentage points higher if companies can hire all the workers they need, the IW study said.
Since companies that expand their labor force also tend to increase investment in equipment, the total production in the medium term will be 0.9 percentage points higher, the report said.
Last month DIHK’s Chamber of Commerce and Industry announced that a shortage of labor threatens to undermine Germany’s economic recovery. Last year the economy grew by 2.2%, which became the strongest indicator in six years.
DIHK survey of about 24 thousand companies showed that almost every second failed to find suitable candidates for vacant seats for a longer period, and 6 out of 10 managers noted the lack of qualified personnel as a threat to their business.
Among the sectors most affected by the problem are industry, construction, security services, education, childcare and care for the elderly.