Employers beware: Eurozone labor shortage continues to grow
During a conversation at the Fall WBN (Worldwide Brokers Network) meeting in Santiago, Chile last month, one of my German colleagues spoke about the challenges some of his clients experienced as they expanded their business into the country. Facing severe labor shortages and the challenge to retain older workers, Germany ranks among the top countries struggling against a tightening labor market.
According to data from the German Chamber of Commerce, 1 in 4 German companies have a lack of skilled personnel, particularly engineers, IT, telecom specialists and software developers. As an increasing number of baby boomers depart the workforce, many national economies are dealing with worker shortages in a myriad of industries and markets. The demographic in Germany however, has been especially aggravated due to the implementation of recent retirement laws. Last May, German lawmakers passed major pension reforms, allowing employees who have contributed to the state pension system for 45 years to retire early at 63 without deductions. Critics say the overhaul made little economic sense in the countries’ rapidly aging population, and leaves companies struggling with the premature exit of skilled, experienced workers.
With estimates showing that the country could face a shortage of 2.4 million workers by 2020, German employers must find ways to recruit young talent while also keeping older employees on the job. While some have focused on improving their attractiveness as an employer by offering additional benefits like flexible work hours and extended vacation time, others have invested in better trainee and professional development programs for prospective job candidates and young workers. Some German employers have been able to entice retired workers back on the job by offering them part-time or freelance work to lead the training programs. Doing so allows the companies to benefit from their experience a bit longer while also keeping these older workers active and engaged with their respective industries a bit longer.
Based on current labor trend predictions, it’s clear that all employers, not just German companies, should pay close attention to this issue. Companies with German and other Eurozone offices or clients need to monitor and stay aware of Eurozone market conditions in order to be able to ensure continuity of business operations. Employers contemplating entering new markets will need to review their current insurance policies to make sure their programs are compliant and competitive in the existing market and should work with professional counsel with expertise in the particular area. Working with our WBN partners, WGA assists clients from around the world to reduce their P&C and Benefits cost of risk by keeping abreast of international issues like the current labor shortages in Germany and leveraging that knowledge to make sure organizations are prepared to face these market trends.
About the Author
James Kinney JD, LLM is a Senior Vice President at WGA, and leads the WGA Global Practice for Employee Benefits, overseeing the leadership of the firm’s international benefits strategy, including the placement of expatriate and local national programs.