The Glaring Shortage of Skilled Labor in Former East Germany
The gaping shortage of skilled labor across East Germany is becoming increasingly evident, particularly in the former East German states. Despite federal labor statistics that no longer differentiate between East and West Germany, the Chairwoman of the Federal Labor Agency, Andrea Nahles, has raised the alarm about the disparities in the labor markets between the old and new federal states. She explained:
"The demographic shift in the eastern states is advancing at a much faster and more significant pace compared to western Germany," Nahles stated on her return from visits to the new states. The primary cause is the exodus of young people from the eastern states post-reunification, making the elder population in Former East Germany outpace the national average, leading to a rising number of retirees and a dearth of skilled workers. While employment growth continues in West Germany, it's already on a decline in the East. "East Germany is essentially a demographic forecast for the entire nation in a few years," Nahles commented.
Interestingly, the data shows that the economy in the state of Thuringia is remarkably benefitting from the influx of foreign laborers, as Nahles noted. Since 2017, the employment growth there can solely be attributed to non-German citizens. Nationwide, this trend was observed by 2023. "It's crucial to maintain the appeal of these regions for immigrants, fostering an inclusive, diverse, and welcoming culture," said Nahles, given the upcoming local elections in Thuringia and Saxony on Sunday, with AfD, a party advocating for immigration restrictions, receiving strong support in surveys.
Paradoxically, despite the growing scarcity of skilled workers, the unemployment rate has persistently risen. "There's no indication that this continual increase will slow down or even reverse," said Nahles. This observation has held for several months. Economist Fritzi Köhler-Geib also pointed out, "The economic stagnation is now evident on the labor market."
According to the Federal Labor Agency, the unemployment rate in Germany increased by 63,000 compared to July, seasonally adjusted, to 2,872,000, marking a 176,000 rise compared to August last year, as well as an increase of 0.1 percentage points to 6.1 percent compared to July. The number of job vacancies also decreased by 72,000 to 699,000 compared to the previous year. The Federal Labor Agency based its statistics on data up to August 14.
On a more encouraging note, the situation appears more promising on the training market. Between October 2023 and August 2024, 418,000 young individuals applied for a training position, representing a 10,000 increase compared to the previous year. As of August, 82,000 remained without either a training position or an alternative. Simultaneously, out of a total of 502,000 training places, 158,000 remained vacant. With the market remaining dynamic, the number of unplaced applicants and open training positions is expected to decrease significantly by the end of September.
Employer President Rainer Dulger pointed out the importance of addressing the skills shortage at its source. Germany urgently needs improvements in education quality and strengthening the job-oriented vocational orientation. Over a third of training positions remained vacant last year, with small businesses seeing almost two-thirds go unfilled. "This gap is a potential threat to our future prospects if we don't act," Dulger stated.
In conclusion, the shortage of skilled labor in Recent East Germany is a pressing issue. Andrea Nahles highlighted the faster demographic shift in the eastern states, including Former East Germany, featuring more retirees and fewer skilled workers compared to West Germany. The economy in the state of Thuringia is remarkably benefiting from the influx of foreign laborers, contributing to employment growth since 2017. It is crucial to address the skills shortage at its source through strengthening the education system and fostering a job-oriented vocational orientation.
Additional Insights
- Germany's labor market has demonstrated resilience and adaptability, with an employment rate of 75.5% in the service sector in 2024, followed by industry and agriculture. The median age of the labor force is 45.7 years, posing challenges related to underemployment and job-skills mismatch. (Reference: )
- Since reunification in 1990, East Germany has been integrating its economy with that of West Germany. While the standard of living and annual income remain significantly higher in Western German states compared to Eastern states, the modernization and integration of the Eastern German economy continue to be ongoing challenges. (Reference: )
- Addressing the labor shortage requires a combination of practices, including government initiatives like visa reforms, EU Blue Card updates and industry-specific trends such as cybersecurity which is experiencing rapid growth, with more than 106,000 professionals expected to be needed by 2026. (Reference: )
