Author: Tobias Buck
Posted on: Financial Times| November 17th, 2017

 

At the employment agency in Eichstätt, a town in southern Germany, they still remember the dark days of the global financial crisis. The year was 2009, banks were going bust, housing markets were crashing and workers were losing their homes and jobs. In Eichstätt, too, the jobless rate rose sharply.

All the way to 2.2 per cent.

In the years since, the unemployment rate has hovered close to its long-term average, a little above 1 per cent. Right now, it stands at 1.3 per cent, the lowest anywhere in Germany.

“Young people here don’t have to worry about the future,” says Stephan Vielberth, the head of the local employment agency. “They know they will find work.”

This abundance of jobs would be the stuff of dreams in much of southern Europe, where unemployment remains painfully high. But the case of Eichstätt also highlights the challenge posed by a labour market that has been sucked dry by years of economic expansion and soaring demand for workers. It is a challenge that confronts more and more regions in Germany — and that is starting to cause problems for companies across the nation.

In the industry-rich south, local unemployment rates of less than 2 per cent are no longer a rarity, making it increasingly hard for businesses to find and retain staff. According to the federal labour agency, the jobless rate in Germany now stands at 5.4 per cent, the lowest since unification. Employers flagged 780,000 vacancies with the agency in October, 90,000 more than last year.

A pretty Baroque town of 14,000 inhabitants, Eichstätt has enjoyed full employment and broad prosperity for longer than most locals can remember.

Mayor Andreas Steppberger says the town benefits from its location in central Bavaria, close to the vast Audi factory in nearby Ingolstadt, and the cluster of companies that has sprung up around it.

But Eichstätt is also an administrative centre as well as a popular tourist destination. And just about every employer in town is looking for workers.

“Companies are looking desperately. Some are even happy if they don’t get new orders because they just don’t have the staff to meet demand,” says Mr. Steppberger.

Longstanding warnings from business leaders about the Fachkräftemangel — the lack of qualified labour — are sounding more urgent by the day.

complained of being understaffed said they had lost contracts as a result. One in two said the lack of qualified workers had led to lower revenues.

A similar survey conducted earlier this year by the chamber of commerce in Ingolstadt (which also covers Eichstätt) found that local businesses were unable to fill 10,000 vacancies for qualified workers. The report estimated the overall economic loss for the region at €7.6bn.

“If you don’t have enough people you can’t increase production and you cannot grow,” warns Alexander Kessel, a member of the board of Kessel AG, a waste water technology company with 500 workers near Eichstätt. “The result will be that the region will no longer be able to generate economic growth.”

Mr Kessel argues that local employers must make more use of still-untapped potential, most notably women and older workers, and invest more in training younger staff as part of Germany’s much-admired apprenticeship system.

Local solutions aside, Germany needs to do more to train and integrate its refugee population and to attract foreign workers from outside the EU through a modern immigration law, he adds.

In the meantime, employers in the region have started searching for staff across Germany and beyond, and raised salaries accordingly.

“The dominant side now is the worker,” remarks Rudolf Eberl, the head of personnel at Gigatronik, a company that develops information technology for the car industry.

“That means the crucial element in hiring decisions is not the project but the situation in the labour market. You have to hire people when you find them, not when you need them.”

At the employment agency in Eichstätt, a town in southern Germany, they still remember the dark days of the global financial crisis. The year was 2009, banks were going bust, housing markets were crashing and workers were losing their homes and jobs. In Eichstätt, too, the jobless rate rose sharply.

All the way to 2.2 per cent.

In the years since, the unemployment rate has hovered close to its long-term average, a little above 1 per cent. Right now, it stands at 1.3 per cent, the lowest anywhere in Germany.

“Young people here don’t have to worry about the future,” says Stephan Vielberth, the head of the local employment agency. “They know they will find work.”

This abundance of jobs would be the stuff of dreams in much of southern Europe, where unemployment remains painfully high. But the case of Eichstätt also highlights the challenge posed by a labour market that has been sucked dry by years of economic expansion and soaring demand for workers. It is a challenge that confronts more and more regions in Germany — and that is starting to cause problems for companies across the nation.

In the industry-rich south, local unemployment rates of less than 2 per cent are no longer a rarity, making it increasingly hard for businesses to find and retain staff. According to the federal labour agency, the jobless rate in Germany now stands at 5.4 per cent, the lowest since unification. Employers flagged 780,000 vacancies with the agency in October, 90,000 more than last year.

Mayor Andreas Steppberger says companies are looking desperately for workers
A pretty Baroque town of 14,000 inhabitants, Eichstätt has enjoyed full employment and broad prosperity for longer than most locals can remember.

Mayor Andreas Steppberger says the town benefits from its location in central Bavaria, close to the vast Audi factory in nearby Ingolstadt, and the cluster of companies that has sprung up around it.

But Eichstätt is also an administrative centre as well as a popular tourist destination. And just about every employer in town is looking for workers.

“Companies are looking desperately. Some are even happy if they don’t get new orders because they just don’t have the staff to meet demand,” says MrSteppberger.

Longstanding warnings from business leaders about the Fachkräftemangel — the lack of qualified labour — are sounding more urgent by the day.

A survey released by Germany’s DZ Bank this month found that 61 per cent of German companies needed more workers than they had. A third of the companies that complained of being understaffed said they had lost contracts as a result. One in two said the lack of qualified workers had led to lower revenues.

A similar survey conducted earlier this year by the chamber of commerce in Ingolstadt (which also covers Eichstätt) found that local businesses were unable to fill 10,000 vacancies for qualified workers. The report estimated the overall economic loss for the region at €7.6bn.

“If you don’t have enough people you can’t increase production and you cannot grow,” warns Alexander Kessel, a member of the board of Kessel AG, a waste water technology company with 500 workers near Eichstätt. “The result will be that the region will no longer be able to generate economic growth.”

Mr Kessel argues that local employers must make more use of still-untapped potential, most notably women and older workers, and invest more in training younger staff as part of Germany’s much-admired apprenticeship system.

Local solutions aside, Germany needs to do more to train and integrate its refugee population and to attract foreign workers from outside the EU through a modern immigration law, he adds.

In the meantime, employers in the region have started searching for staff across Germany and beyond, and raised salaries accordingly.

“The dominant side now is the worker,” remarks Rudolf Eberl, the head of personnel at Gigatronik, a company that develops information technology for the car industry.

“That means the crucial element in hiring decisions is not the project but the situation in the labour market. You have to hire people when you find them, not when you need them.”

Michael Schneider says some craftsmen have started offering incentives to entice young jobseekers
The employment gap is especially acute in traditional crafts and trades, which typically struggle to match the pay and conditions offered by larger companies.

Michael Schneider, who helps to run a family-owned chain of butcheries in Eichstätt, says he would hire three butchers and six sales assistants on the spot.

“I am not worried about myself but things are becoming increasingly difficult,” he says. Some craftsmen, he adds, have started offering free mobile phones and incentives such as weekend sports car rentals to entice young jobseekers.

“We thought about these things too but I am sceptical. You shouldn’t spoil an apprentice. And you shouldn’t live like a lord while being an apprentice.”

Locals are quick to point out that Eichstätt is no millionaire’s paradise: there is work and a decent salary for all, but no overt display of wealth.

The general sense of comfort and confidence, however, is hard to miss — especially at the Bürgerversammlung, the annual public meeting between voters and the mayor that was held earlier this week in the inn opposite Eichstätt’s splendid cathedral. The biggest controversy of the night centred on the local playground, and whether or not the sand in the sandbox needs to be changed. Others insisted that the already spotless streets of the historic old town require deeper cleaning still.

Such is life in a town where everyone has work and no one except employers have to worry about the future. “We don’t have real problems here,” says MrSteppberger. “People complain about things that wouldn’t even raise an eyebrow elsewhere.”

 

Read at: https://www.ft.com/content/d9a84826-c9ed-11e7-ab18-7a9fb7d6163e

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