Skills Shortage in Germany – Qualified Immigrants Needed in Moderation

In October, the number of people unemployed in Germany dipped below the 3-million mark for the first time in a long while. In the face of a healthy labour market, firms are increasingly calling for more skilled immigrants because they are not enough domestic applicants with sufficient qualifications. Dr. Holger Bonin, head of the Research Department “Labour Markets, Human Resources and Social Policy” at ZEW explains what steps need to be taken to tackle this skills shortage.

Dr. Holger Bonin completed his doctorate in economics at the University of Freiburg in 2000. Following research positions at the Institute of Labor Economics (IZA) and DIW Berlin (the German Institute for Economic Research), Bonin joined ZEW as head of the Research Department “Labour Markets, Human Resources and Social Policy” in 2007. Bonin’s research interests include issues relating to employment and low-skilled workers, wage flexibility, the economic effects of an ageing population and migration as well as risk tolerance among employees.

Do we really need immigration?

Bonin: Definitely. We need immigrants with the right qualifications to fill the current gaps in the labour market as quickly as possible. But this is not as easy as it sounds. Skilled professionals from overseas aren’t exactly queueing up to come to Germany. In addition, we still do not have a set of control instruments to ensure targeted immigration.

But isn’t there a risk that these immigrants we welcome into the country will just add to Germany’s unemployment figures if the economy stalls?

Bonin: This is a common misconception. We should not base today’s immigration debate on what happened with the migrant workers who came to Germany in the 1960s. The Germany of today needs migrants for structural, rather than economic, reasons. We want skilled people to come here who, thanks to their qualifications, are likely to do well on the German labour market whatever the state of the economy.

Is it possible to say how many skilled migrants are needed in each sector?

Bonin: It is difficult to say. Through continual monitoring it is, however, possible to estimate which professions are currently lacking skilled workers. These professions should then be given more weight in a point-based immigration system. If such a system also considers age, education level, professional experience and language skills, then we have a better chance of welcoming migrants who will have no problems integrating into the labour market. That being said, the annual immigration quota should not be set too high.

Why do we need such a restriction?

Bonin: To safeguard the self-healing power of the market. If there is still a surplus demand for labour despite immigration, then wages will rise. This sends a message about the right kind of training workers need. And if companies know that they cannot fill all their empty positions with immigrants then they have an incentive to train domestic workers themselves and offer attractive working conditions.

What can German companies themselves do to tackle the shortage of skilled professionals?

Bonin: In the medium-term at least, it is essential that companies continue looking to older workers and, more importantly, to women to tackle this skills shortage on their own. Firms need to make concerted efforts to attract these workers, for example through creating work environments that are welcoming to older workers and introducing policies that make it easier to balance work and family life. In the case of women, this goes beyond offering a crèche at the office. Particularly in more technical professions, a fundamental change in the company culture is often necessary to ensure that women are able to succeed.

What about qualifications and professional training?

Bonin: This is not really a solution in the short term. The idea that we could train up many of the currently long-term unemployed to the point where they could fill this shortage of skilled workers is, in my opinion, completely unrealistic. However, Germany’s future skilled workers are of course currently still in school or in kindergarten. And, as we know from plenty of studies on education, this is where a lot of human capital potential gets wasted. Our education system only needs to not only teach children basic job-related skills, but also provide them with career and professional development guidance.