FAQ on Shortage of Skilled Workers
According to our modelling, a shortage of skilled workers is indicated if the demand for trained skilled workers discernibly and permanently exceeds the supply of skilled workers once allowance has been made for occupational flexibility. This needs to be delineated from the labour shortage that does not take account of necessary professional and vocational qualifications and does not include persons with non-formal qualifications. Recruitment for tasks that are open to the unskilled and semi-skilled is thus easier than for tasks that require an occupation-specific qualification. In order to evaluate the skilled worker situation within an occupation, the fifth wave of the QuBe Project developed a skilled personnel indicator (Maier, Wolter et al. 2018). In the sixth wave (Maier, Zika et al. 2020), this was replaced by a new indicator in the form of adjusted search durations by occupations. The adjusted search duration states the number of days needed by a company to find a suitable person to fill a job vacancy in a certain occupation. The longer the mean adjusted search duration in an occupation, the more difficult recruitment will prove to be. Lengthier search durations also increase the risk that companies will ultimately be unsuccessful in filling their vacancies (see question “5. How Is the Adjusted Search Duration Modelled and Updated?”).
Although no shortage of skilled workers is presently apparent in broad terms, the degree of detail is crucial. It is already possible that difficulties in filling vacancies are being experienced for special qualifications, requirements and occupations and/or in individual regions (see for example Fachkräfteengpassanalyse der Bundesagentur für Arbeit [Skilled worker shortage analysis carried out by the Federal Employment Agency]).
Contrary to previous forecasts, the sixth wave of the QuBe population projection shows that the population will continue to rise over the coming years. It indicates that a peak figure of 84.1 million will be reached in 2028. This will, however, be followed by a population fall to 83.7 million by 2040. High net gains in population occasioned by migration during recent years are the main reason for this. By way of contrast, the working age population of persons between 15 and 70 will decline constantly and will reach a level of 53.4 million in the year 2040 (cf. Figure 1). Development of the labour supply will follow this trend by also exhibiting a long-term drop. This decrease will, however, be less dramatic since the assumption is that it will be possible to achieve a further rise in economic activity in a number of age groups, amongst both women and men. The results indicate a further slight rise from 2037, leading to a total labour supply 44.6 million in the year 2040. Labour demand will also grow to about 45.5 million by 2023 before falling back to approximately 43.5 million by 2040. Under-employment will therefore significantly decrease as compared to the 2000s and fall to a level of only around one million persons. However, such a reduction in unemployment can only be achieved if the future requirement for workers can be covered both quantitatively and with regard to qualifications. Although the convergence of labour supply and demand increases the overall chances of the unemployed in their search for a job, it also brings the inherent risk of a lack of labour or shortage of skilled workers in the case of certain qualifications, sectors or occupations.
Source: QuBe Project, 6th wave
A simple per capita contrast between labour supply and labour demand is insufficient in terms of obtaining an overview of the possible skilled worker situation with regard to an occupational and time comparison.
One of the reasons for this is the fact that such a summary assessment fails to accord consideration to offered and demanded working hours (see project FAQ How Is the Potential Volume of Work of the Labour Supply Taken Into Account?). If the number of offered working hours far exceeds the number of hours needed, any increases in demand may be covered by existing workers via the process of increasing the number of hours worked. This means the higher the supply of working hours in comparison to demand, the easier the recruitment situation will be to manage.
Secondly, labour supply can only be attributed statistically to the labour supply of one occupation. However, occupational mobilities mean that employment opportunities arise in more than one occupation. The possibility of substitution in an occupation by persons with different qualifications is thus of relevance to the occupational recruitment situation. If the exercising of a task requires a special licence or particular training certificate or if lateral entrants need to undergo long periods of induction, companies can only use such persons to a limited extent. This low level of substitution potential will then make the recruitment correspondingly harder.
Finally, account also needs to be taken of the fact that a per capita comparison of labour supply and demand merely enables information to be obtained about shortages of workers and not about skilled worker bottlenecks. For this reason, a new indicator to evaluate the skilled worker situation by occupations was developed for the sixth wave of the QuBe Project. This indicator is the adjusted search duration (see question “5. How Is the Adjusted Search Duration Modelled and Updated?”). The adjusted search duration supplements the way in which labour supply and labour demand is assessed over the course of time and provides a more detailed interpretation than a summary assessment by dint of the fact that it is measured in days. The longer the mean adjusted search duration in an occupation, the more difficult recruitment will prove to be for firms. Lengthier search durations also increase the risk that companies will ultimately be unsuccessful in filling their vacancies (Maier, Steeg et al. 2020).
In order to judge the possible future skilled worker situation in an occupation, it is therefore necessary to take account of the labour market situation in the initial year and also to give consideration to the change in adjusted search duration. The ratio of working hours on offer to working hours in demand and opportunities for occupational mobility also both play a part.
A company survey conducted by the IAB, the IAB Job Vacancy Survey, serves as the main database in this regard. The IAB Job Vacancy Survey is a representative and repeated cross-sectional survey which contains detailed responses from the respondent companies on aspects such as last case of new recruitment and most recent failed recruitment attempt during the past twelve months. This includes information on characteristics relating to the position filled, the person appointed, the search and recruitment pathways and periods of time needed for these processes, difficulties experienced in filling the post and any recruitment compromises made (Bossler, Gartner et al. 2020).
The modelling of adjusted search durations is based on about 30,000 successful recruitments (not including positions involving unskilled/semi-skilled tasks) taken from the IAB Job Vacancy Surveys conducted between 2012 and 2017. A two-stage procedure was adopted. Initially, a piecewise-constant hazard-rate model was used to estimate the mean search duration by company size, sector, turnover rate, person recruited, requirements level of the position and difficulties in the recruitment process. Consideration was also given as to whether the occupation advertised was a shortage occupation in accordance with the definition of the Federal Employment Agency (see Fachkräfteengpassanalyse der Bundesagentur für Arbeit [Skilled worker shortage analysis carried out by the Federal Employment Agency]). The mean search duration predicted by the event data model was subsequently collated by occupational groups, occupational main groups and requirements level. Care was taken to ensure that each value estimated for an occupation was based on at least 30 real observations. The mean search duration estimated via the event data model is designated as an adjusted search duration because it is exclusively stipulated via the covariates determined in the estimation. This means that it was adjusted with regard to the explanatory variables used (i.a. search strategy of the companies). The second stage involved a panel estimate by occupational groups and requirements levels for the years from 2012 to 2017, which identified a significant correlation between the adjusted search durations and the following two indicators:
Volume of work ratio
The volume of work ratio states the ratio between the maximum number of working hours offered by the persons making up the labour supply (see project FAQ How Is the Potential Volume of Work of the Labour Supply Taken Into Account?) and the hours of work performed by the employed persons within an occupation. Companies will find it easier to fill their vacancies as the number of working hours on offer rises vis-à-vis the working hours in demand within an occupation. The coefficients of the volume of work ratios differ by occupational main groups.
The substitution indicator shows the extent to which persons who have completed training in a different field or are not in possession of a relevant professional or vocational qualification may be suitable for the exercising of a certain occupation. Certain tasks, e.g. in the healthcare sector, require a licence and can thus only be exercised by persons who are possession of an appropriate qualification. The substitution indicator maps this aspect by showing the amount of the labour supply which has completed training in an occupation within the (superordinate) occupational main group as a proportion of total labour supply in the occupational group (exercising or aspiring to exercise the occupation). The higher this proportion, the lower substitutability will be. A higher proportion will further mean that the average time needed to complete successful recruitment will be longer.
Projection of the volume of work ratio and the substitution indicator also allows a change in the adjusted search duration to be forecast. A detailed description of the approach and results is contained in Maier, Steeg et al. (2020) and in Maier, Zika et al. (2020).
In brief, the following developments may be identified according to the basic projection of the sixth wave of the QuBe Project:
Projection of the adjusted search durations takes place in a way that is specific to occupations and requirements levels. Changes are materially affected by opportunities to access the occupation (occupational mobility) and by the volume of work ratio. For 2019, an average of 64 days is projected for the adjusted search duration to successfully fill a vacancy. The longest adjusted search durations for 2019 are approximately 100 days in “occupations in mechatronics, energy electronics and electrical engineering” and 98 days in “occupations in computer science, information and communication technology”. Over the long term, the highest increases in adjusted search durations compared to 2019 are shown to be in the occupational main group of “occupations in computer science, information and communication technology”, which is already characterised by skilled worker shortages, (10 days) and in the “medical and health care occupations” (7 days). In these occupational main groups, companies will need to devote more resources to recruitment in future.
The adjusted search durations vary by requirements level of the task. The level of requirements relates to the degree of complexity of a task and is sub-divided into four levels in accordance with the Germany Classification of Occupations 2010 (KldB 2010). These four categories are “unskilled/semi-skilled tasks”, “skilled tasks”, “complex tasks” and “highly complex tasks”. The higher the level of requirements of an occupational task, the greater will be the amount of resources that a company needs to deploy in order to find staff (cf. Maier, Steeg et al. 2020). Differences are accordingly produced in the development of search duration by level of requirements or by professional specialisation in the occupational group (three-digit code KldB 2010).
Undertaking a consideration at the level of skilled tasks, shows that “occupations in mechatronics, energy electronics and electrical engineering” have an adjusted search duration of around 100 days, the longest in 2019. The highest increases in the adjusted search duration are revealed in the “medical and health care occupations” (6 days) and within the occupational main groups of “occupations in non-medical healthcare, body care, wellness and medical technicians” and “occupations in safety and health protection, security and surveillance” (5 days in each case). The first two of these represented around ten percent and four percent respectively of labour demand for skilled tasks in the year 2019. The ageing of society is in particular bringing about a rise in demand in the occupational groups (three-digit code) of “occupations in nursing, emergency medical services and obstetrics” and “occupations in geriatric care”, although “doctors’ receptionists and assistants” and “occupations in body care” are also similarly affected. The expansion of employment in these areas means that many new jobs can be expected, and the longer recruitment search durations involved will lead to higher costs.
The increasing adjusted search duration in the occupational main group of “occupations in computer science, information and communication technology” is primarily a reflection of rising recruitment difficulties in the case of complex tasks (8 days) and highly complex tasks (14 days). A particular impact is being exerted on the occupational groups of “IT-system-analysis, IT-application-consulting and IT-sales” and “software development and programming”. This development correlates with the trend towards digitalisation and the networking of production and service processes. Detailed annual results for both the occupational and occupational main groups may be viewed in the QuBe Data Portal.
The results of the sixth wave of the QuBe Project indicate that the expansion in education that has become apparent over recent years will continue to increase. About 20.6 million persons will leave working life between 2020 and 2040, whilst a new labour supply of around 19 million will join the labour market for the first time. During this period, net migration to foreign labour markets will be approximately 350,000 persons. Around 4.1 million (21.6%) of new arrivals on the labour market from the education and training system until 2040 will be in possession of a more advanced higher education qualification (not including bachelor's degrees and degrees from a university of applied sciences). Approximately 4.4 million (23.1%) will have completed upgrading training (master craftsman, technician, certified senior clerk), a bachelor's degree or a degree from a university of applied sciences. The majority of newly qualified persons (8.7 million persons or 45.7%) will continue to have acquired a fully qualifying vocational certificate. Up until 2040, however, only 2.6 million persons (12.7%) with a higher education qualification (not including bachelor's degrees and degrees from a university of applied sciences) and 5.3 million persons (28.5%) with upgrading training or a bachelor's or a degree from a university of applied sciences will enter retirement. By way of contrast, the corresponding figure for those in possession of a vocational qualification is around 10.2 million (49.5%). This means that the proportion of this qualification group will decline from just under 41.4 percent in 2020 to around 37.7 percent in the year 2040.
The labour supply projections thus reveal an increasing academisation. Despite a continuing structural change, which brings a higher demand for service occupations in its wake, demand for occupations in which high level qualifications are required is not rising to the same extent as supply. At the same time, we know that there is a strong correlation between rates of unemployment and a formal vocational qualification (Hausner, Söhnlein et al. 2015).
The extent to which a shortage or oversupply for certain qualifications will emerge in future will depend heavily on how companies draw on the individual qualification levels in accordance with the given requirements level. Because a more highly qualified labour supply will be available to the labour market in future, it would also be plausible to assume that companies will fall back to a greater extent upon persons with higher qualifications, thus meaning that those in possession of academic qualifications will continue to exhibit a lower risk of unemployment. In future, jobs involving complex and highly complex tasks will therefore increasingly be held by persons with appropriate formal qualifications.
The sixth wave of the QuBe project differentiates the results according to the federal states at the level of 37 occupational main groups. This reveals that the population development in the federal states and the industry structure that evolved in the past both determine how the local labour markets develop.
All federal states apart from Hamburg, Baden-Württemberg, Bavaria and Bremen will experience lower rates of unemployment by 2040 in comparison to the year 2020. This will largely be caused by a stronger reduction in labour supply as opposed to labour demand. A sharp decline in both labour supply and labour demand is particularly indicated in the federal states of eastern Germany, and this development will be most pronounced in Saxony-Anhalt. Demographic development is a particular driving factor in this regard. A trend towards further academisation can be identified in all federal states, both in respect of labour supply and labour demand. Jobs involving unskilled and skilled tasks are in decline. At the same time, there is increased deployment of demand for employees who are able to perform complex and highly complex tasks. Because the adjusted search duration tends to be longer if the level of requirements is higher, companies will have to devote greater resources in future to finding suitable persons to fill their vacancies. By 2040, the adjusted search duration in national average terms will rise by five days to 74 days as compared to the year 2020.
In 2040, the adjusted search duration in the federal states of eastern Germany will generally be longer that in the western German states. The skilled worker situation in Saxony will, for example, be tighter than the national picture across all occupational main groups. In the “occupations in mechatronics, energy electronics and electrical engineering”, a tight skilled worker shortage situation is particularly indicated in Bavaria as well as in the federal states of eastern Germany. Shortages in “occupations in computer science, information and communication technology” will primarily occur in Berlin, Hamburg and Saxony. Bottlenecks in the “medical and health care occupations” will take place in the large non-city states of eastern Germany and increasingly also in Bavaria, in North Rhine-Westphalia and in Rhineland Palatinate, where the healthcare sector will undergo strong growth.
The data and methods used are based on the concepts deployed in the fifth wave of the projection. These are set out in detail in the IAB Research Report 01|2020. The results of the sixth wave of the QuBe baseline projection are also presented in detail for the federal states in the IAB Research Report 01|2021. The IAB Brief Report 01|2021 provides a comparative overview of the region-specific results
The results of the sixth wave of the QuBe Project show the development the German labour market will take if currently observable trends persist. The factors which exert the greatest influence in determining the pathway highlighted here on the labour supply side are demographic development (in particular immigration) and the labour supply potential this provides, career choice, participation in education and training and employment (including in hours) and occupational flexibility. The main determining factors on the demand side are demographic development including immigration in particular, economic structural change, development of demand for requirements levels and wage and working time development within the occupational groups. The question of whether it will be possible in future to find an appropriate skilled worker for certain tasks thus always depends on several interlinking factors.
Alternative development pathways need to be taken into account because, alongside political influences, employment is mainly driven by economic momentum. Growing exports would, for example, significantly increase the demand for skilled workers (Maier, Helmrich et al. 2012; Mönnig, Zika et al. 2013). Massive investments in the digitalisation of the economy would change both the extent of labour demand and the demand for occupations (Wolter, Mönnig et al. 2015; Wolter, Mönnig et al. 2016).
Investigations have shown that increasing the rate of female employment and extending working life only exert a temporary effect (Bonin, Schneider et al. 2007). Rates of employment amongst women are high, particularly at the higher qualification level as compared with the other levels. In the study cited, only immigration emerged as a significant medium and long-term item to counter the impending shortage of skilled workers.
Since the fourth wave, forecasts have been based on a specially designed QuBe population projection (Fuchs, Söhnlein et al. 2016; Gorodetski, Mönnig et al. 2016; Maier, Wolter et al. 2016; Maier, Zika et al. 2016; Zika, Maier et al. 2017) that distinguishes between Germans and non-Germans (see project FAQ How Is the Population Development Projected?). The results of the sixth wave of the QuBe Project indicate that the proportion of the foreign population will increase from 10.5 percent in 2015 to 15.5 percent in 2020.
This means that the foreign population will exercise a greater significance on the labour market in future because it will develop in the same way as the overall population and provide a growing share of the labour supply potential. Effective integration in the education and training system and on the labour market could enable young refugees in particular, who predominantly arrive in Germany without a fully qualifying vocational certificate, to enter appropriate training and help counter the shortages of skilled workers, which are becoming apparent (see question “6. Which Professions Will Be Affected by a Shortage of Skilled Workers?”). In addition to this, the targeted recruitment of foreign skilled workers within the scope of a controlled migration system represents an opportunity to close the skills gap, which is impending in individual occupations.
A welcoming culture for migrants needs to be in place, and both companies and policy makers need to play their part. This includes, for example, measures to offer training to refugees and to keep foreign students in the country, and the creation of general conditions that facilitate access to the labour market for skilled workers from abroad. Factors such as recognition and certification of skills acquired abroad also have a part to play in this process. The Professional and Vocational Qualifications Assessment Act (BQFG), which entered into force on 1 April 2012 within the scope of the Recognition Act, allows for the equivalence assessment of foreign qualifications in professions and occupations in which practice in Germany is governed by legal or administrative provisions. Establishment of equivalence of skills may also be helpful in non-regulated occupations since this offers points of guidance to human resources managers at companies in evaluating applicants and thus facilitates market access for the latter. Persons who are unable to use certificates as a vehicle for demonstrating their skills are afforded the opportunity of identification of occupational competencies via a so-called skills analysis. This means that immigrants must show that they are qualified to perform a job by producing work samples or by taking part in specialist interviews.
Occupations in science, technology, engineering and mathematics (STEM) are mostly highly specialised individual professions. This means that bottlenecks may always occur, even if a consideration of these occupational groups does not indicate any shortage. The principal reason for this is that the highly complex tasks that are usually exercised in such occupations require a longer period of training and thus can only be performed by qualified staff. In this case, substitution opportunities for companies via the use of persons with different qualifications are not very extensive. Although there is currently no evidence of an overall shortage of STEM specialists (Statistics of the Federal Employment Agency 2019), there is already a squeeze in individual occupations within this sector. This is leading to the perception that Germany is heading towards a shortage of skilled workers in the highly qualified STEM field because it is common knowledge that demographic development may exacerbate this problem in future.
In fact, however, the process of demographic change in Germany is also being accompanied by a trend towards higher levels of education and training. In the field of the academic professions, this is helping to counter the demographic shift because the new labour supply is more highly qualified than the persons who are leaving working life (see question “7. Will the Shortage of Skilled Workers Only Be Manifested for Certain Qualification Levels in Future?”). In addition, young people’s growing interest in STEM subjects is reflected in higher numbers of STEM undergraduates as a proportion of all students. In the period from 2005 to 2016, the number of students in the subject groups of “Engineering” and “Mathematics and Science” as a ratio of all students increased from 34.4% to 38.4%. The number of students in “Engineering” disciplines more than doubled during this time (Federal Statistical Office 2017).
The projection for labour supply in mathematics, information technology and the natural sciences, professions which are dominated by academic qualifications, therefore indicates that the number of persons who have trained in an occupation in the occupational main group “occupations in mathematics, biology, chemistry and physics” will rise by 2040. Around 439,000 of the labour supply of 931,000 persons who had qualified in a profession in this occupational main group in 2020 will have left working life by 2040. However, approximately 625,000 persons will complete training in mathematics, information technology and the natural sciences during the same period. This means that the total labour supply with a qualification in these fields will be around 1.1 million persons in 2040. The mean adjusted search duration for this occupational main group will decrease by one day by 2040 from a base of 70 day in 2019. This indicates that the skilled worker situation in these occupations will ease slightly in future.
A different picture is, however, revealed in the technical sector, where relevant qualifications are particularly acquired via initial and advanced training. In the occupational main group “technical occupations in the machine-building and automotive industry”, for example, the qualified labour supply will fall from 2.56 million persons to 1.98 million between 2020 and 2040. By 2040, the mean adjusted search duration will rise by one further day from its current high level of 78 days in 2019. The labour supply who have completed training in the occupational main group “occupations in mechatronics, energy electronics and electrical engineering” will reduce by 328,000 persons between 2020 and 2040. In 2019, this occupational main group already exhibits the highest mean adjusted search duration of 100 days. Nevertheless, this will remain virtually unchanged in the basic projection of the sixth wave up until the year 2040.
In general, companies will need to establish more of a positive image in future when seeking to recruit skilled workers. This will give an edge over the competition and make them more attractive to the skilled workers themselves. In this regard, there is a particular focus on competition from abroad. Achieving an improvement vis-à-vis domestic rivals may increase chances of prevailing against competitors, but it does not mitigate the shortage of skilled workers in macro-economic terms. Practical aspects include, for example, concepts aimed at providing a work-life balance, flexible working models, home office and leisure provision (e.g. sports groups and general non-occupation-related continuing training programmes). Increasing emphasis is being placed on work-life balance measures.
Given the development in the ageing structure, companies have no option other than to place greater faith in older workers. Continuing training is an important instrument for the training of such persons. The development of the employment rates of older workers may be an initial sign in this regard. The raising of the pension age is also showing an effect.
The companies need to engage in a fundamental rethink of their recruitment behaviour and make timely and sustainable efforts to support their young skilled workers from Germany and abroad (including greater participation in the provision of training). Policy makers can create the necessary general conditions via vehicles such as appropriate training measures for young refugees to enable them to learn the German language and attain proper apprenticeship entry maturity. Recognition and certification of skills acquired abroad represents another possible route. The Professional and Vocational Qualifications Assessment Act (BQFG), which entered into force in April 2012 and was developed under the lead management of the Federal Ministry of Education and Research (BMBF), has initiated a Federal Government law which aims to assist with the assessment and recognition of qualifications obtained abroad and thus contribute towards securing a supply of skilled workers. Since the beginning of 2013, BIBB has been monitoring the execution of the BQFG on behalf of the BMBF. The results of the Recognition Monitoring Project (BMBF 2017) show that the new mechanisms introduced by the Recognition Act are helping with qualified migration and are having an impact on the long-term establishment of availability of skilled workers in Germany. Studies conducted by BIBB demonstrate that this legal reform has brought about a significant improvement in both the extent and the quality of labour market integration by persons with foreign qualifications and has even encouraged companies to take the initiative and avail themselves of the opportunities offered by the Recognition Act to fulfil their own skilled worker requirements.
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