Germany’s looming skills shortage

Germany’s Looming Skills Shortage | 16/11/12
by Siobhán Dowling

BERLIN, Germany — It’s a problem many other European countries would dearly love to have.

Germany, Europe’s economic powerhouse, is in the throes of a skills shortage. With the lowest unemployment level in two decades, firms are finding it increasingly difficult to find well qualified workers.

That’s right: In a world where millions of talented people are hopelessly idle, a shortage of qualified workers threatens Germany’s economic performance.

In fact, Frank-Jürgen Weise, the head of Germany’s Labor Office, recently warned that the skills squeeze could hinder the German economy more than the debt crisis.

According to the German Chamber of Commerce (DIHK) this is among companies’ biggest concerns at the moment.

“Every third company we surveyed said that they saw the skills shortage as one of the biggest risks to the development of their business over the next 12 months,” Stefan Hardege, head of the DIHK’s labor market unit, told GlobalPost.

Many sectors are hit, he explained, but companies that rely on engineering and other technical skills — the core of Germany’s powerful export economy — are particularly affected.

The problem is already costing a fortune. About 92,000 engineering jobs were not filled last year, leading to an estimated loss of about 8 billion euros, according to a study published in April by the German Engineering Association (VDI) and the Cologne Institute for Economic Research (IW).

The VDI says in March, 2012 there were 110,400 unfilled engineering jobs in Germany, an increase of 26 percent on the same month last year. The states of Bavaria, Baden-Wuerttemberg and North Rhine-Westphalia were particularly badly hit.

Meanwhile, there are currently 38,000 open positions in telecoms and IT, according to industry association BITKOM.

More from GlobalPost: Is Germany catching the euro zone virus?

There are several causes for the shortage, including demographic change; a failure to educate enough young people to meet industry’s needs; barriers to female participation in the workforce; and the difficulties that skilled foreign workers have had in moving to the country.

Executives worry that the problem will only get worse in future decades, as demographic change starts to bite. After all, Germany has one of the lowest birth rates in Europe. Over the next 50 years the population is expected to shrink by 17 million from the current 82 million.

By 2025, Germany will face a shortage of about three million workers, predicts Weise, of the Labor Office.

Industry has complained about the trend for years, and politicians are starting to address it.

In early June, Chancellor Angela Merkel gathered ministers and industry and labor representatives in the Meseberg Castle outside Berlin for a summit to address the shortage. It was the third such meeting she has held in recent years.

After the meeting, she said that one way to address the problem would be to create a proper European labor market. She pointed out that while Germany is searching for workers, many other countries are suffering from high unemployment.

She also said that education should be improved for young people with immigrant backgrounds, and that more needed to be done to make work more flexible for women, so that they can combine families and careers.

On women, Merkel has a good point, and one that has been the topic of vigorous debate. Many German women only work part time because of a lack of adequate childcare facilities. And while the government has pledged to provide state daycare places for 35 percent of 3-year-olds by 2013, implementation is lagging behind. Furthermore, critics warn that a proposed new state payment to stay-at-home parents, known as Betreeungsgeld, will act as a disincentive for women who might otherwise have sought work.

Currently, only 11 percent of engineers are women. And though more young women are now taking technical courses at universities, they still lag behind the boys.

Michael Sommer, head of the German Trade Union Confederation, also urged better training, saying that 1.5 million young people lacked proper qualifications.

“The complaints from employers and the government about the skills shortage is not credible as long as they don’t do more for the employment and further training of young people, women, migrants and old people,” he said.

Two-thirds of companies say that young people are finishing school without basic skills, according to Hardege, of DIHK.

Meanwhile there is also a lack of high tech graduates. VDI estimates that there is an annual need for 80,000 new engineers yet only around 50,000 are currently graduating from universities.

Germany has many programs to encourage people to study math, science and the like at university, but the drop out rate is around 50 percent.

Industry representatives want Germany to attract more skilled workers from abroad. Already, steps are being taken to loosen up Germany’s previously outmoded immigration system. Last year it opened up immigration from Eastern Europe, which it had initially hesitated to do, thus losing out to countries like the UK and Ireland who availed of workers from

Poland and other countries

Furthermore, the government is making it easier for highly qualified workers from non-EU countries to work in Germany, by reducing the minimum salaries that such immigrants have to earn once they arrive. Instead of the previous minimum salary of 67,200 euros, now very highly skilled professions such as doctors and engineers, can earn just 34,944 euros a year, while other skilled migrants will need to earn 44,800 euros.

The Education Ministry has also made the recognition of foreign qualifications easier. That is not only of benefit to those abroad but also to the thousands of foreigners living in Germany for years who have not been able practice the professions for which they trained back home.

Meanwhile the government is launching an information campaign aimed at attracting talent both at home and abroad. While the www.fachkräfte-offensive.de provides information to companies and workers in Germany, www.make-it-in-Germany.com is aimed at well qualified foreigners, and includes both job offers and information about working in the country.

At a recent launch of the campaign, Labor Minister Ursula von der Leyen warned of the problems that industries face.

“There is work there that is not being done, and there are orders there that are not being filled,” she said.

Economics minister Philipp Roesler, whose department is also involved in the campaign, warned that the looming skills shortage could be a “growth brake” for Germany. He said he wanted to see more skilled workers coming to Germany, adding:

“We will start further advertising campaigns in those European neighboring states like Spain, Italy and Portugal, where there is high unemployment.”

Indeed migration from those countries has already started to increase, due to the lure of Germany’s strong economy.

Yet Hardege of the DIHK says more need to be done.

“It is not that well known that Germany is looking for skilled workers or which workers are being sought, or what kind of possibilities for migration exist, and that it is being made easier and less bureaucratic than before,” he said. “So it is important that this is actively communicated.”

Many industry representatives would also like to see a points system like that in operation in Australia and Canada, whereby immigrants are selected on the basis of how their skills match the gaps in the labor market.

“A points system would certainly be the easiest and most efficient way because it is more flexible and less bureaucratic,” Hardege argues. “And it allows workers abroad gain an overview: can I come, can I not, what qualifications have what points? Furthermore, domestically we would be in a position to steer immigration based on the needs of the labor market.”

Yet German politicians seem to balk at the idea. After her summit Merkel said that there was no need for such a system when there was already a pool of labor available in the EU.

“We have freedom of movement in 27 countries. Everyone who has found or is looking for work can come to us.”

Read the original article here: This article first appeared on GlobalPost, June 25, 2012 and has been reblogged with the kind permission of the authour, Siobhan Dowling.

@SiobhanDowling

Berlin · http://siobhandowling.wordpress.com/

Dublin-born editor and journalist, reporting from Berlin, mainly for GlobalPost and the Guardian.

Tags: Economics, Germany, Jobs. Tags: , , , , , , , , , , , ,

What is up with Africa?

by John Brian Shannon

Yesterday, the UNDP opined on Twitter that “Africa is on the move.”

Today, on Project Syndicate David Fine wrote “Inside Africa’s Consumer Revolution” where he pointed out some interesting facts about that continent.

“Nowadays, Africa’s economic potential – and the business opportunities that go with it – is widely acknowledged. Poverty and unemployment are still more widespread than in other emerging markets, but accelerating growth since 2000 has made Africa the world’s second-fastest-growing region (after emerging Asia and equal to the Middle East).”

CAR101212B-1 Steady pace of African growth 2012 and 2013

The above chart is from the IMF which is noted for it’s careful and qualified assessments of developing nations and regions. Here is a small excerpt from their authoritative October report:

Regional Economic Outlook: Sub-Saharan Africa Maintaining Growth in an Uncertain World

”Economic conditions in sub-Saharan Africa have remained generally robust despite a sluggish global economy. The near-term outlook for the region remains broadly positive, and growth is projected at 5¼ percent a year in 2012–13. Most low-income countries are projected to continue to grow strongly, supported by domestic demand, including from investment. The outlook is less favorable for many of the middle-income countries, especially South Africa, that are more closely linked to European markets and thus experience a more noticeable drag from the external environment. The main risks to the outlook are an intensification of financial stresses in the euro zone and a sharp fiscal adjustment in the US–the so called fiscal cliff.”

Mind you, not everything is trending upwards — some things are going downhill there too. Way down. Here is a nice chart to underscore that trend.

image

Figure 1: African Debt and Debt Service Source: International Monetary Fund, World Economic Outlook Database, October 2009.

The World Bank agrees with the optimistic view of things and has noted this progress in their twice-yearly report on Africa — Africa’s Pulse. Here is a short excerpt from that report:

In its wide-ranging analysis of new developments in Africa, the new report notes that after ten years of high growth, an increasing number of countries are moving into ‘middle- income’ status, defined by the World Bank as those countries achieving more than $1,000 per capita income.

Of Africa’s 48 countries, 22 states with a combined population of 400 million people have officially achieved middle-income status; while another 10 countries representing another 200 million people today would reach middle-income status by 2025 if current growth trends continue or with some modest growth and stabilization.

On October 15, 2012 Jean-Michel Severino and Emilie Debled wrote about Africa’s huge growth opportunity in their great Project Syndicate piece, “Africa’s Big Boom

“Africa is undergoing a period of unprecedented economic growth. According to The Economist, six of the ten fastest-growing countries in 2011 were in Africa. Average external debt on the continent has fallen from 63% of GDP in 2000 to 22.2% this year, while average inflation now stands at 8%, down from 15% in 2000. This positive trend is likely to persist, given that it is based on structural geographic and demographic factors, such as rising exports, improved trade conditions, and steadily increasing domestic consumption.”

The continent we call Africa, once an economic backwater is rapidly-transforming into an important partner of the world’s major economies, by providing much-needed raw resources and increasingly, agriculture is playing an important role there.

A major UN paper dated June 2011 remarked on the recent optimism felt by many world leaders, “The African Moment: On the Brink of a Development Breakthrough

In the words of UN Secretary General Ban ki-Moon (2011:1) at the Summit of the African Union in January 2011: ‘Africa is on the move. The new narrative for Africa is a story of growth.’ And as Donald Kaberuka (2010:4), President of the African Development Bank, noted at the opening of the 2010 African Economic Conference, there is now ‘broad agreement that an unusually strong momentum has built up in the African economies over the last decade’. This change in perception does not mean that the immense challenges faced by the continent  are being glossed over, but the Afro-pessimism of the 1990’s has clearly been replaced by a much more realistic and confident outlook. African people seem to share this view.

The answer to the question What’s up with Africa? Everything you want in a growing continent.

Please take the time to read the seminal articles that I have cited in this post. They will enrich your understanding of this coming-of-age continent.

JOHN BRIAN SHANNON

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Excerpt of Prime Minister Stephen Harper’s WEF speech this morning in New Delhi

by John Brian Shannon
Here is a short excerpt of the speech the Prime Minister of Canada, the Right Honourable Stephen Harper delivered at the World Economic Forum, November 7, 2012 in New Delhi, India:

[“It is also a pleasure to be back at the World Economic Forum, a place where a great many people who want to make a difference regularly come to meet.

“And I am delighted to see that you have also chosen to be in India, a place where globally important decisions are increasingly being made.

“Almost a year ago, during your last Davos gathering, I highlighted some of Canada’s economic strengths and challenges.

“On the former, on the strongest, Canadian banks remain the soundest in the world.

“The World Economic Forum is one of several organizations that says so.

“Canada’s net debt-to-GDP ratio remains the lowest in the G-7, and the lowest by far.

“Thus Canada’s top credit rating has been reaffirmed by all of the major rating agencies.

“Among G-7 countries, Canada now has the lowest overall tax rate on new business investment.

“Canada also possesses a diverse yet harmonious society, with public institutions and a public service noted for professionalism and integrity.

“All of these assets, as Borge mentioned, and others have helped Canada better weather and better recover from the global recession.

“Indeed, despite the uncertainty of the times, the Canadian economy has now added more than eight hundred thousand net new jobs since July 2009.

“Still, we remain acutely aware of the difficult global trends, especially for many developed countries.

“As I said to the World Economic Forum in January, many countries with which Canada is traditionally aligned continue to be weighed down by debts they cannot seem to control, by entitlements they can no longer afford and by growth which threatens to remain sluggish for the foreseeable future.

“As I said in January, it is high time we realize that:

“The wealth of western economies is no more inevitable than the poverty of emerging ones.”

“As these last four years have revealed, the wealth we enjoy today in the West is not inevitable.

“Our standard of living will be based on – and will be based only on – strong, growth-orientated policies and on getting the hard choices right.

“That is why, over the past year, the Government of Canada has committed itself to a series of determined actions, we want to help ensure that growth, job creation and economic prosperity will be there for Canadians over the long term.]

End excerpt.

This information was provided by the Prime Minister’s office (Official News Feed, November 7, 2012)

JOHN BRIAN SHANNON

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Last Chance for the U.S. Economy!

by John Brian Shannon

This blog examines Canada‘s debt and deficit-cutting success of the 1990’s and early 2000’s which improved Canada’s credit rating, lowered borrowing costs for the government and when combined with a new 7% nation-wide Goods and Services tax (1990) allowed many job-creation projects to be funded which lessened the blow of the government’s (then) austerity program.

Read “How Canada Cut Its Deficits and Debt” — by former Prime Minister of Canada Paul Martin (prior to that he was Finance Minister) who famously took Canada from second-worst among the G-7 countries to the most stable economic performer in only a few short years. The above link takes you to a downloadable PDF document. It is a must-read for students of macroeconomics.

Paul Martin, 21st Prime Minister of Canada
Paul Martin, 21st Prime Minister of Canada (Photo credit: Wikipedia)

The Fiscal Turnaround

“When the Liberal Party took office, Canada’s deficit and debt were by far the worst among the G-7 but for one, and our level of foreign debt was the highest of the industrial world. Indeed, the Wall Street Journal had publicly dubbed Canada all but bankrupt. Four years later, our debt-to-GDP ratio was dropping like a stone. Our financial record was second to none and Canada’s deficit was no more.” — Paul Martin quote in The Magazine of International Economic Policy — The International Economy.

Many American friends of mine, are asking how the U.S. can solve its massive U.S. deficit and debt problems — problems which seem almost as insurmountable as going to the Moon was viewed in the early 1960’s.

The fact is, these problems have been solved in Canada and they can be solved in the United States. What has been lacking up until now, has been the will to act. Once elected, leaders who are empowered by their electorate to slay the twin dragons of debt and deficit could do so relatively quickly.

Some final advice from the Right Honourable Paul Martin former Prime Minister of Canada, the man most directly responsible for solving Canada’s historic debt and toxic deficit problem.

“The final lesson I would draw is that if deficit reduction is to be a priority, then it has to be a “national” priority.

When Canada’s debt ratio hit 70 percent, it was assumed by most economists that we had crossed the tipping point. The United States is there now, and the IMF projects that within eight years it will hit 115 percent. [!]

These are serious numbers, and yet the so-called deficit debate in the United States is not about the deficit at all. It’s about winners and losers.

One thing to remember from the Canadian experience it is that for deficit cleansing to succeed, there can be no winners while most people are losing. If deficit reduction is to gain public support, it requires a united effort—in other words, it must be a truly national exercise.” — Paul Martin quote in The Magazine of International Economic Policy — The International Economy.

Related articles

JOHN BRIAN SHANNON

To follow John Brian Shannon on social media – place a check-mark beside your choice of Facebook, Twitter or LinkedIn: FullyFollowMe/johnbrianshannon

Clean Energy: How To Get There From Here!

by John Brian Shannon

Everyone knows more electricity is needed in developed nations and electrical needs in developing nations are skyrocketing. No problem there — everyone deserves to live a good lifestyle and enjoy our modern technology to the fullest.

The problem occurs in the means used to generate that electricity. Some kinds of electrical power generation cause huge billowing clouds of pollution 24-hours per day, every day of the year.

All of this adds up to astronomically high costs for electrical power producers and users, which can be measured in several different ways.

For instance, new conventional nuclear  power plants can cost up to $20 billion dollars each. Added to that cost, is the cost incurred to store thousands of tons of (so-called) spent nuclear fuel. Some spent fuels must be stored in air-conditioned bunkers for up to 20,000 years, with never more than 36 hours of A/C interruption. The costs of that are so high, they can’t even be calculated.

New coal plants cost about $250 million dollars/per hundred megawatts. A hundred megawatts isn’t much, by the way – enough to power 16,000 power-hungry A/C homes in the U.S. or about 29,000 homes in China. Some coal-fired power plants cost upwards of $1 billion dollars. The cost of the coal must be added to the equation from day one – the price of which rises and falls typically between $80.00 and $160.00 per ton, plus the significant transportation costs. It may interest you to know that China burned 3 billion tons of coal last year, emitting 7.2 billion tons of CO2 and other toxic gasses. Approximately 410,000 Chinese people die every year as a result of pollution-related deaths.

Natural gas power plants are clean, they cost a little more than comparable coal plants and the only real drawback is they emit huge volumes of CO2. Unlike coal, they emit little in the way of other toxic gasses or soot. Again, a costly and continuous and supply of natural gas must be available every day of the year.

No matter which choice is made, the construction of electrical generation power plants incurs high costs to nations — and the cheapest options come with the highest fuel and health-care costs.

In the United States, nuclear power receives significant subsidies on the order of $3.50 billion per year on average and oil and gas receive $4.86 billion subsidy dollars per year on average.

fossil-fuel-subsidies-490x407

We can see from the chart above that in the United States most forms of electrical power generation are heavily subsidized. Who could afford electricity otherwise?

If solar, wind and geothermal energy were subsidized at the same per kilowatt rate as Oil & Gas, Coal, or Nuclear — total U.S. emission levels would drop dramatically and Americans would be breathing much cleaner air.

National health-care costs would drop, acid rain damage would decrease to near zero, crop damage from power plants would become a thing of the past and meeting international agreements such as the Kyoto Protocol would become boringly simple.

To have the enjoyment of breathing clean air and the other benefits listed above, all governments should calculate the highest subsidy they pay per kilowatt hour and then begin paying ALL electricity providers that same per kilowatt hour subsidy.

Solar power, wind power and geothermal would then become ultra-competitive with coal, N-power and Oil & Gas. Every large rooftop area, such as big box retail outlets like IKEA stores for one good example, could assist national power production and air-quality goals by lowering demand on the grid and potentially adding power to it, while helping to enhance the health of citizens.

One nation has already begun such a program and is right on schedule. Denmark has decided that all energy, including transportation energy(!) will come from renewable sources by 2050 and they have made substantial progress in only a few short years.

Even with the patchwork and grossly unlevel subsidy regimes in place in the United States, this transition is already occurring. Organizations from the U.S. Navy, to IKEA and WalMart, some cities and towns, the Big Three auto manufacturers and many more businesses and organizations, are converting their unused rooftop spaces and vacant land into clean power stations — thereby tapering the need for behemoth, pollution-spewing power plants.

If governments standardized the subsidies they already pay for Oil & Gas, Coal and Nuclear power (instead of paying billions of dollars to some power providers — whilst paying pennies to others) we would all breathe a lot easier.

We need oil & gas, coal, natural gas and conventional nuclear power to feed our grids, what I’m  advocating for is directly comparable subsidies for all electricity providers, including green energy — and there are no real reasons why such subsidy levelization couldn’t soon happen in every country.

ABOUT JOHN BRIAN SHANNON

I write about green energy, sustainable development and economics. My blogs appear in the Arabian Gazette, EcoPoint, EnergyBoom, Huffington Post, United Nations Development Programme, WACSI — and other quality publications.

“It is important to assist all levels of government and the business community to find sustainable ways forward for industry and consumers.”

Green Energy blog: http://johnbrianshannon.com
Economics blog: https://jbsnews.wordpress.com
Twitter: @JBSCanada