Coping with the effects of demographic change and the associated shortage of specialist staff suffered by the German economy not only requires action from politicians. Businesses are also increasingly developing formulas and instruments in order to deal with the situation.
If North Rhine-Westphalia (NRW) was an independent state, its economy would be ranked 18th in the world. As the largest exporting German federal state, NRW had a share of 16.4 per cent of German exports in 2013, amounting to around 180 billion euros. The “European Cities and Regions of the Future 2014/15” ranking prepared by fDi Magazine, a publication by the British financial newspaper Financial Times, concluded that NRW was the most attractive location for business and investment when compared with 468 other locations in Europe: it ranked first in the category “European Region Overall”, ahead of other regions such as Scotland, Copenhagen as well as the Île-de-France. An annual sum of approximately 200 billion euros of direct foreign investments underline NRW’s appeal for international investors.
NRW’s medium-sized companies are shouldering a large majority of the dual training schemes. Although 19 of the 50 largest German companies are headquartered in NRW, its economy is still heavily influenced by medium-sized companies. Many small and medium-sized companies are the backbone of its economy: they make up 99.6 per cent of companies, are employers to approx. 60 per cent of employees subject to social insurance contributions as well as nearly 82 per cent of trainees (Institut für Mittelstandsforschung, Bonn, 2012). Around 191,000 trainees alone are currently being trained in professions that are supervised by the chambers of industry and commerce.
These small and medium-sized companies are not only involved in the lion’s share of training schemes, but they are also in an excellent position when it comes to innovation and strategy: at least 150 are considered to be “hidden champions”, meaning they are the market leaders in their sector around the world or within Europe. In no other European region are there so many scientific institutions packed into such a small area as in NRW: economy is reaping considerable benefits from the expertise of 67 universities, 26 institutes belonging to the Fraunhofer Gesellschaft and Max Planck Society and approximately 100 research institutions, as well as the currently 490,000 students.
Demographic change – A challenge for NRW’s economy. NRW’s economy can only compete in the single market and in global markets if it succeeds in continuously driving technical developments. To do this, it needs staff, i.e. skilled specialists who can develop, but also produce new products. Recruiting skilled specialists in light of a declining and ageing population will prove even more challenging in the future. The skilled labour force will decline by almost eleven per cent, when compared to today, in NRW alone by 2030. In 2050, the working population aged between 19 and 65 is expected to decline by 22 per cent. These aspects were highlighted in the 2014 NRW report on skilled labour force, which was formulated by the NRW’s chamber of industry and commerce (IHK NRW), and were based on 4,000 answers obtained from companies. From a present perspective, the Fachkräftemonitor NRW (www.fachkraeftemonitor-nrw.de) predicts a shortage of 379,000 skilled specialists by 2020, and even 827,000 by 2030. This is particularly true of the segment of vocationally qualified specialists, as they make up by far the largest proportion of the shortage of skilled specialists, losing approx. 350,000 in 2020 and approx. 791,000 in 2030. This affects regions within NRW in different ways. While some regions will continue to to grow over the coming decades, others are already being confronted with a shrinking population.
This development is certainly alarming, but is not a cause for pessimism: many regions and companies in NRW have identified this development and are already looking into new ways of preparing themselves for any harsh market conditions.
Is the shortage of skilled specialists an economic risk? There is no way the domestic economy can ignore securing skilled specialists. Companies are having an increasingly difficult time in finding any trainees at all: in addition to demographic development, there is also the fact that more and more students are striving towards, and are successful in, obtaining a university degree (2030: 78 per cent). Academics will then only make up around five per cent of the skilled labour shortage, however a figure of more than 90 per cent represents the shortage of vocationally qualified specialists! Therefore IHK NRW is demanding that industrial training is made more appealing to ensure that young people, including graduates, consider an apprenticeship to be an attractive equivalent to a university degree programme.
IHK surveys reveal how important this is. Today, 31 per cent of companies, particularly small companies, believe the skilled labour shortage constitutes a risk for the economy: almost two-thirds of the companies indicate that the number of applicants for training positions is declining. Over 23 per cent of companies surveyed are unable to fill all of their training positions with suitable applicants.
In this, the sectors and regions are affected in different ways: some can slow down the demographic development by means of an influx of foreign workers, while others are already facing bottlenecks. This has affected the entire state of NRW and companies in certain sectors are already battling the shortage of skilled labour. For instance, the construction industry (45 per cent), healthcare sector (47 per cent) and industrial companies have been hit by the shortage in various ways.
Companies are active: instruments for countermeasures. Before companies can introduce any countermeasures, it is important to begin by analysing the situation. The IHK NRW has developed the “IHK Demografierechner” (demographic computer) for analysis purposes. By using this web application (http://www.demografierechner-nrw.de), it is possible to demonstrate for each company in a simple and adaptable way, when and in which departments or professional groups the age structure can result in problems.
Many companies in NRW have long identified the problem. They are responding in the diverse ways in order to secure their specialist workforce; by means of apprenticeships and in-service training (53 per cent or 51 per cent) for example, flexible work time models (37 per cent), by recruiting older employees (26 per cent) or foreign employees (16 per cent) or by improving the work life balance (24 per cent).
From further training to employer branding. The NRW economy is well prepared: companies are already investing heavily every year, in order to educate the next generation and to ensure that their own employees obtain the necessary qualifications. In the 2013/2014 training year, more than 3,000 companies participated in approximately 80 recruitment events for trainees, which were partly or wholly organised by the IHKs.
In order to keep up with the rapid pace of technological development and prepare employees for new fields of work, professional apprenticeships and further training schemes are gaining increasing significance and employees are also being urged to adopt a readiness and capacity to learn.
With increasing competition for high-calibre employees, more and more companies (37 per cent) are placing emphasis on the unique selling points as attractive employers, commonly termed “employer branding”. For instance, these days it is not enough to create an appealing job advertisement, or offer a decent salary. Skilled specialists increasingly expect their employees to offer concepts that are in line with considerations for economics, mankind and nature.
Additionally, an increasing number of companies recognise and value the experience of their older workforce (26 per cent) and look for ways to retain them beyond retirement age. By establishing teams of mixed ages, in which a high level of experience and up-to-date specialist knowledge complement each other well, it is not only possible to enhance the workflow efficiency, but also tp preserve corporate knowledge. 44 per cent of companies regard the safeguarding of expertise a priority.
A sufficient number of skilled specialists ensure successful business activities in NRW. Highly qualified employees are a fundamental prerequisite for growth and prosperity in North Rhine-Westphalia. Additionally, the government can indeed support companies when it comes to meeting the demand for skilled labour. A flexible child care offering from day care centres to afternoon child care schemes in schools can significantly increase professional life in families. Employment opportunities can also be improved considerably for older people, migrants or those with learning disabilities.
In working together, NRW will successfully address the challenges relating to demographic change.
Dr. Ralf Mittelstädt
The author, born in Brakel, district of Höxter in 1960, obtained a degree in Geoscience in Göttingen. Upon completion of his doctorate, he held various professional positions, most recently as a managing director of the Bremen Chamber of Commerce. He has been Chief Executive of the Chambers of Industry and Commerce in NRW since 2009.