Germany’s Skills Shortage

Business, China, Company Strategy, Economics, Europe

Ageingpopulation.jpgBy John Richardson

GERMANY’S engineering and chemicals companies are the envy of the world as a result of their ability to find perfect niches in the global value chain. The sophisticated machinery and chemicals needed by China to fulfil its role as the cheap workshop of the world are often provided by Germany, for example.

But there is a huge challenge to the Germany success story: An ageing population.

Demographics in general will shape the global economy over the coming decades, and is a subject that policymakers seem to largely ignore as they stumble around for a solution to the lingering economic crisis.

“The Association of German Engineers, or VDI, is desperate. It needs 70,000 engineers, and quickly. It takes an average of 114 days to fill an engineering post, according to the VDI,” writes Judy Dempsey, editor in chief of Strategic Europe at Carnegie Europe, in this New York Times article.

“According to the Cologne Institute for Economic Research, there is already a shortage of 210,000 MINT graduates (the German acronym for mathematics, engineers, scientists and IT specialists).”

The reason is Germany is that by 2060, the number of people between 20 and 65 will fall to 33 million from 50 million today, according to the German Federal Statistics Office.

And the above chart, from the Wall Street Journal, illustrates the scale of the problem, particularly in what was East Germany. For example, the population in the state of Thuringia in the east is forecast to plunge more than 40% to 1.3 million residents by 2060.

Dempsey adds that during the 1990s, when millions of Russians and ethnic Germans moved from Russia, the German government missed the opportunity of recognising their university degrees.

And successive German governments have also failed to provide the three million residents of Turkish descent the education that they need, she claims.

Thus, a major overhaul of immigration policies and a long-term integration strategy for the immigrants already living in Germany is required.

The blog is in Berlin for the 2nd ICIS World Polyolefins Conference and so we shall look at other challenges facing Germany, and the rest of Europe, later this week.

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