Western superpower faces severe labour shortages

Western superpower faces severe labour shortages

Certain sectors are already at risk, and shortage will worsen as the so-called "baby boomers,"the generation whose members were born between 1945 and 1965, are set to retire soon. This makes the integration of migrants a necessity, experts argue.

ECONOMY NOVEMBER 24. 2022 06:30

Germany’s labour shortage issues are becoming increasingly palpable, and the situation is set to worsen dramatically in the coming years. Seven million workers may be lost by 2035 if no counter-measures are taken, according to a study by the Nurenberg-based Institute for Employment Research (IAB).

„By 2035, Germany will lose seven million workers due to demographic changes, and thus one seventh of the workforce in the labor market,”

Enzo Weber, researcher at IAB and one of the four authors of the study said, pointing out that this trend can be stopped if Germany uses all means at its disposal to retain older people in work, strengthen the professional development of women, attract and integrate immigrants and increase birth rate.

The problem already existed at the outset of the coronavirus pandemic, when many – after having lost their jobs – found new employment and some sectors were unable to lure back workers in the post-pandemic period. The issue is exacerbated by the fact that the so-called „baby boomer” cohort, i.e. those born between 1945 and 1965, will soon retire. In Germany, the so-called „baby boom” followed a specific pattern: the number of births in the immediate post-war period was initially rather low and only reached a level of 1.1 million per year in the first half of the 1950s. Then, however, there was a sharp increase to 1.4 million in 1963 and 1964, the Cologne-based German Economic Institute (IW) recalls.

“If we assumes the standard retirement age prescribed in the statutory pension insurance, then in 2022 only those born in 1956 should to retire. However, a large portion of society’s capable workforce will exit the labour market a few years earlier, so the retirement of „baby boomers” is already much further advanced,” according to IW’s researchers.

The experts add, however, that “we are still at the beginning of a development that will probably not reach its peak until the 2030s. Not only will the differences in size between the birth cohorts leaving and joining the labor market continue to increase until 2030, but the resulting gaps will also continue to accumulate.”

“A second, less serious demographic development that is specific to Germany is also relevant to the current situation on the labor market. In the late 1990s and 2000s there was a significant drop in the number of births to just 670,000 in 2009, and to 660,000 in 2011. … The combined fertility rates had already reached their lowest value of 1.24 in 1994 and have fluctuated at a low level of between 1.3 and 1.4 children per woman since the late 1990s,” the institute writes. It means that companies cannot expect a significant workforce from this generation.

ECONOMY

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baby boomer, germany, labour market