Thursday, November 18, 2010

The Spiegel on East German workforce shortages

I thought our readers might be interested in the Spiegel International article "Eastern Germany Confronts Skilled Labor Shortage". Finally, the low fertility rates and mass emigration are starting to bite.

The eastern states are ahead of the rest of the country in at least one respect: From Rügen in the north to Plauen in the south, the lack of skilled workers that western states will not fully experience until about 10 years from now has already become reality.

In the third quarter of 2010, the number of open positions throughout Germany grew to 986,000, a 19 percent increase over the same period last year, and the trend will only intensify in 2011. Although some three million people are also registered as unemployed, this doesn't solve the problem.

Labor market experts use the term "mismatch" to describe a situation in which an unemployed person is not offered any of the unfilled positions on the market. Either the job seeker has the wrong qualifications or none at all, is too old, is insufficiently mobile or is unsuitable for other reasons. Additional job training and costly qualification measures are a stopgap solution at best.

[. . .]

The microcosm of southern Thuringia offers a telling example of what has become symptomatic for parts of the east, particularly along the former border between East and West Germany and the booming regions surrounding the cities of Dresden, Jena and Potsdam. In the district around Eisfeld, not far from the border of Bavaria, for example, the number of open positions was 48.8 percent higher in October 2010 than it was in October of 2009. Unemployment there is 6.7 percent, which is about the same as the average in the West. There are already about 16,000 commuters who drive to work every day from the West to the East.

[. . .]

For employees, the initial consequences are not unpleasant. On the whole, wages will increase and the income gap between the East and the West will narrow. This is what the Dresden branch of the Ifo Institute for Economic Research expects, and so do others. "Wages will explode, especially for new hires," says industrial sociologist Burkart Lutz, adding that there will be a "substantial increase in average wages." At the same time, however, the lack of skilled workers creates "a substantial potential for crisis," especially for companies in eastern Germany, says Lutz. In the worst case, the region could be in for "another wave of deindustrialization."

Go, read.


Cicerone said...

Me having moved from the west to Jena not long ago, I notice that there is some sort of new spirit in the East. The article is right with the unemployment coming down really quickly, in southern Thuringia a county even reached the 5% mark.

Before WWII saxony was one of the richest regions in Germany, and it seems that the distribution of wealth in the country corrects itself to the status where it has to be. Closing the income gap is a very important goal, because this will ensure that emigration rates will come down.

Although the fertility of the East is higher than in the west for 3 years now, demography of course is still the biggest problem. This can be solved by giving a future, by lowering unemployment. The east was lucky to inherit the good childcare facilities, and they kept them. This can ensure that the fertility gap will widen. i can see an East with a fertility of well over 1.5, maybe even 1.8 children/woman. Why? Therew are several reasons. Dresden is already the most fertile city of over 500,000 and is working to leave the low-fertility-trap (1.48 in 2008). Jena is the most fertile university-city. Although a quarter of the population are studens, it has a fertility of 1.4. A similar city in the west would be more like 1.1. so if you count the students out, you would more like get a 1.65. Thids could be true, as I never saw so many pregnant women in another city in Germany.

Randy said...

That's really interesting. So maybe we might see a brief convergence between West and East in terms of age distribution, with the East stabilizing (or at least shrinking more slowly) while the West shrinks more rapidly, the East doing with less foreign immigration than the rest?

Scott said...

An interesting article, but the questions are whether the "shortage" exists and if the "shortage" exists only at the lower wages. The meat of the article tells us that there isn't agreement that a shortage exists at all. At the same time it doesn't really address the question of whether if skilled wages were higher now would workers be still heading to the west.