Labor force gap widening: millions of baby boomers will soon retire

12.9 million workers will retire in the next 15 years.

This corresponds to 30 percent of the people available on the labor market in 2021, according to statistics published by the Federal Statistical Office in Wiesbaden on Thursday.

The number of soon-to-be retirees is so high because the largest cohorts, the so-called baby boomers, will reach retirement age in the next few years.

Younger age groups will therefore not replace the baby boomers born between 1957 and 1969 in terms of numbers.

For example, the age group of 40 to 49-year-olds, which had the highest employment rate at 89 percent in 2021, with 8.9 million people in employment does not reach the baby boomers in terms of numbers.

According to statistics, 8.4 million people aged 20 to 24 were available for the labor market last year.

"Companies must limit their business"

For the economy, the labor shortage is likely to worsen again.

A new survey by the Ifo Institute for Economic Research has just shown how great the shortage of personnel is today: According to this, every second company stated in July that its business was affected by a shortage of skilled workers - more than ever since the beginning of this Survey in 2009. The assessments were queried as part of the regular Ifo business survey.

In April, the proportion of companies acutely affected by a shortage of skilled workers had already reached a high of 43.6 percent, and this figure has now been significantly exceeded at 49.7 percent.

"More and more companies are having to scale back their business because they simply can't find enough staff," said Ifo labor market expert Stefan Sauer, summing up the situation.

"In the medium and long term, this problem is likely to become even more serious." Achim Dercks, Deputy General Manager of the Association of German Chambers of Industry and Commerce (DIHK), recently summed up the key data of this development with reference to the demographic development: "There are differences in Germany every year up to 400,000 more people retire due to old age than new ones come from school,” he said.

"This will reduce our workforce potential by four to six million people over the next 15 years."

A few years ago, complaints about a shortage of skilled workers were heard mainly from industry, which feared for young people for technical professions.

Then the shortage of staff in social professions such as geriatric care became the focus of political discussion.

In the meantime, however, the problem can be seen across the entire economy - and in service sectors even more than in industry, as the new Ifo figures show.

On average, 44.5 percent of the industrial companies surveyed complained about an acute shortage of skilled workers, among the service companies it was even 54.2 percent.

Holiday trips, hotel guests and restaurant visitors are currently feeling the effects of this.

Government wants to facilitate the immigration of skilled workers

In order to tackle the problem, the federal government wants, among other things, to facilitate the immigration of skilled workers so that companies can recruit not only academics but also professionally qualified specialists from countries outside the EU to a greater extent than before.

Federal Labor Minister Hubertus Heil and Interior Minister Nancy Faeser (both SPD) have already outlined the first approaches.

In the future, skilled workers should also be allowed to enter the country and work if their professional qualifications are not yet recognized in Germany, but they have professional experience and an employment contract.

They should then obtain recognition with the support of their employer.

The recognition of professional qualifications is considered a major hurdle for the immigration of professionally qualified specialists, as business representatives emphasize again and again.

This is due to the fact that German dual training is internationally unique - it is often almost impossible to present an equivalent qualification.

In another regulation, according to Heil and Faeser's plans, partial recognition of the professional qualification will be sufficient in the future, which would have to be certified by the responsible body - such as the Chamber of Crafts - when entering the country to look for work.

If you want to come, you would have to have professional experience and prove that you can support yourself.

So far, entry to the country to look for work also requires full recognition of the professional qualification, which is probably one of the main reasons why this option has hardly been used to date.

Labor market researchers also advocate creating better framework conditions for a higher labor market participation of women and older people, for example by expanding childcare options.

In fact, the figures from the Federal Statistical Office also show that the labor force participation of women in 2021 was lower than that of men across all age groups.

The employment rate for women between the ages of 30 and 39 was around 11 percentage points below that of men of the same age.

Between the ages of 40 and 65, the average difference was just over 8 percentage points.

According to estimates by the Institute for Labor Market and Occupational Research (IAB), which is part of the Federal Employment Agency, a higher labor force participation rate among women and older people will not be enough to close the skilled worker gap resulting from demographic developments.

The researchers have calculated that the labor force potential in Germany would shrink sharply by 2060 without any migration, even if women and older people worked significantly more.

In order to keep the number constant, a net immigration of around 400,000 people per year is necessary.