In 2022 over 630 thousand skilled jobs remained unfilled due to the lack of properly skilled workers. Some say the solution is raising wages, while the federal government believes that accelerating immigration could be the answer. Experts warn that both paths may have serious consequences.

A study by the Cologne-based Institute for Economic Research (IW) sheds light on the fact that the shortage of skilled labour force worsened further in 2022 in Germany, breaking the previous record. More than 630 thousand skilled jobs remained unfilled in the country due to the lack of job seekers with proper qualifications.

The phenomenon is most striking in the health and social services, education and training, the construction, architecture, surveying and engineering sectors, where six out of ten vacancies could not be filled. Skilled labour shortages were also above average in the fields of science, geography and information technology.

Last year, skilled labour shortage more than tripled in the commercial services, goods transport, sales, and in the hotel and tourism sectors. In the labour market, the thumb rule is that the higher the qualification required, the harder to fill a vacancy, the report suggests.

There’s been a heated debate in past few months as to what’s causing these drastic shortages. Some say that employers should only reach deeper into their pockets and raise wages to fill the vacancies, but IW’s researchers say this is not so simple. Higher wages alone would not narrow this gap, they point out. Better pay cannot ensure the necessary qualifications in the short term and cannot change working conditions and framework conditions in the labour market in the medium term in a way that would lead to creating adequate mobility.

Instead, higher wages in sectors with a particularly severe shortage of skilled labour would result in price hikes to services and goods leading to drastic consequences in the short run. Moreover, this would induce a price spiral, driving inflation further up in Germany,

the researchers say, stressing that occupations suffering from labour shortages should be made more attractive.

However, the federals government is striving for a different solution. The coalition government composed of the Social Democrats, the Greens and the liberals – just like its predecessor – believes that skilled workforce shortages can be eliminated by accelerating migration. However, This has been rebuffed by an earlier study, whose findings showed that,

for example, almost 700,000 of the migrants who arrived in 2015 were unemployed last year, and only 460,000 of them were active job seekers. 88 per cent of the refugees had no qualifications at all, and the overwhelming majority had no intention to change this situation.

These migrants regularly receive unemployment benefits, with the amount depending on their country of origin, among other things. By today, the situation has deteriorated to a point where an unemployed migrant on benefits receives almost as much money – or even more in some cases – as an average working German, the opposition Alternative for Germany (AfD) party said earlier, highlighting the phenomenon.