German Labor Shortages Menace Half of Companies Across Economy

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By Jana Randow

2 August 2022

A half of all German companies are struggling to find skilled workers, threatening to undermine production and inflict more permanent damage on Europe’s largest economy. 

The shortage is particularly acute in services, where some 54% of businesses were affected in July, according to a survey by the Munich-based Ifo institute. Some 45% of manufacturers complained about a lack of workers.

Germany Lacks Skilled Workers

“More and more firms have to cut back on business because they simply can’t find enough staff,” said Stefan Sauer, who researches labor markets at Ifo. “In the medium and long term, this problem is likely to become even more serious.”

Germany’s economy stagnated in the second quarter amid record inflation, supply shortages and the threat of energy rationing if a Russian gas shutoff materializes. Economists reckon that a recession is almost inevitable in the second half.

Still, the labor market has been holding up well, with the rise in unemployment in the past two months largely due only to the inclusion of Ukrainian refugees in the data. Officials recorded more than 880,000 vacancies in July and said demand for workers remains very strong.

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