February 2024
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TD Magazine

Germany Is Experiencing a Skills Chokehold

Thursday, February 1, 2024

How can companies combat a simultaneous labor and skills shortage?

A labor shortage occurs when demand for labor exceeds the supply of workers. That should not be confused with a skills shortage, which occurs when there aren't enough qualified workers.


Germany, like many countries, is enduring both a labor and a skills shortage. Growth Through Education: How Further Education Can Alleviate the Skills Shortage, a recent report from Switzerland-based training provider Tectrain, explores the potential consequences for German employers, as well as solutions for boosting its skilled labor market.

According to the report, half of 100 employee respondents of different ages said a skills shortage is the greatest threat to their companies' development, compared to other challenges such as fluctuating raw material prices, cyber protection, and inflation.

Moreover, 62 percent of respondents believe the talent shortage puts an additional burden on the rest of the workforce, and 54 percent are concerned shortages will lead to rising labor costs. One-fifth think a lack of skilled labor will result in a loss of innovation.

The issue is not that skilled workers are absent altogether from the German labor market, but they are siloed in specific industries and professions—creating a "skills bottleneck" rather than a typical skills shortage, explains the report's author, Clara Brinkmann, a business developer at Tectrain Academy.

The report notes that many businesses compensate for the lack of workers with automation to complete or streamline specific processes. The strategy requires initial investment, but it potentially saves on long-term personnel costs.


Another tactic to counter the talent shortage gaining traction among German organizations is securing skilled workers through immigration. Data reveals that one in three companies has hired skilled workers from abroad in recent years; 70 percent of those companies support their new employees by providing language acquisition training.

Nevertheless, reskilling and upskilling the current workforce is the most sustainable measure against a skills shortage. The report recommends investing in internal training programs and devoting resources to other employee development programs, such as expanding internship programs to attract and train younger workers.

The study's findings underscore that educational opportunities are vital to creating a sustainable, skilled workforce. Understanding how and why the labor market is experiencing the skills bottleneck will "aid German employers and politicians in implementing targeted measures to recruit the necessary skilled workers in certain sectors or to train existing workers for new tasks," Brinkmann asserts.

About the Author

Ryann K. Ellis is an editor for the Association of Talent Development (ATD). She has been covering workplace learning and performance for ATD (formerly the American Society for Training & Development) since 1995. She currently sources and authors content for TD Magazine and CTDO, as well as manages ATD's Community of Practice blogs. Contact her at [email protected]

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