Merkel To Tackle Skills Shortage In Einstein’s Home (Germany)

Merkel to Tackle Skills Shortage in Einstein's Home

By Andreas Cremer
Bloomberg News

Aug. 22 (Bloomberg) — German Chancellor Angela Merkel, a physicist by training, convenes a special Cabinet meeting tomorrow to tackle a growing skills shortage in the country that spawned scientists like Albert Einstein and engineers such as Rudolf Diesel.

The issue tops the agenda for the Aug. 23-24 Cabinet conclave in Meseberg, a government retreat northeast of Berlin. With almost 100,000 engineering positions forecast to remain vacant through 2014, economists and industry leaders warn the shortfall may dash the economic upswing, not to mention derail attempts to promote Germany as the “land of ideas.''

“We're struggling with the effects of staff shortages every day,'' said Hans-Georg Haerter, chief executive officer of ZF Friedrichshafen AG, a German maker of gearboxes for the automotive industry. The company plans to hire 250 engineers through the end of next year, though “if we could, we'd rather take them on now,'' Haerter said.

The shortage is particularly hard-felt in Germany, Europe's biggest economy, where demand and supply are mismatched through a combination of growth near a six-year high and a stagnant birth rate. Unlike the U.K., Sweden and Ireland, Germany blocked free movement of workers from the new European Union states that joined from 2004, shutting off a supply of fresh talent. Merkel faces calls to review that position.

“We may have to open our borders if we want our companies to continue operating at full capacity,'' said Martin Wansleben, executive director of Germany's DIHK industry and trade chambers representing about 3 million companies.

Policy Planning

The issue joins climate change and steps to shield German companies from takeovers by sovereign wealth funds on tomorrow's agenda as the 16-member Cabinet draws up its policy plans for the second half of the coalition's four-year term.

Merkel's room for maneuver on skills shortages is limited by Germans' traditional concern for job security and the sensitivities arising from three state elections due in early 2008, said Oliver Koppel, a labor expert at the Cologne-based IW economic institute. Merkel's Christian Democrats and her Social Democrat coalition partners are likely to consider “a mix of steps'' at Meseberg, he said.

They may include greater incentives for skilled foreign workers to migrate to Germany, along with better job training for apprentices and graduates and rewards for companies prepared to locate in areas with higher populations of skilled workers, Koppel said.

Tax Incentives

The DIHK is pressing for tax incentives for companies that hire research and development staff, and for lowering the annual pay threshold of 85,000 euros ($115,000) that a foreign worker must earn to be entitled to stay in Germany.

Otherwise, “the imminent shortage of scientists could become a real problem for growth,'' DIHK chief economist Axel Nitschke said in an interview today.

“We will need foreign experts,'' Merkel said in an interview with ARD television on July 22. “But we must also say we're prepared to take steps at home.''

The coalition faces pressure for action from Germany's biggest companies. Siemens AG, Europe's largest engineering company, awards each employee a 3,000-euro bonus for proposing a new hire at its power-plant engineering unit, where it currently lacks 600 experts. Lufthansa AG, the continent's second-largest airline, is turning away orders at its maintenance division, where aircraft systems are tested and plane body shells overhauled. It wants to hire 400 technical engineers by 2009.

`Rejecting Orders'

“We barely know how to process the workload'' with existing staff, said Bernd Habbel, spokesman for Lufthansa Technik AG. “We're already rejecting orders.''

Each engineering post supports the equivalent of 2.3 jobs in research, development and trade, according to Eike Lehmann, head of Germany's VDI engineers' association — positions that cannot be filled as long as the engineering vacancies persist.

The dearth of skilled staff — most pronounced among engineers, physicists, other scientists and computer specialists — may cost Germany's economy more than 20 billion euros this year, slicing as much as 1 percent off gross domestic product, the IW institute said in a government-commissioned study, part of which was released yesterday.

By contrast, immigration to the U.K. from new EU states such as Poland and the Czech Republic, both of which border Germany, will boost Britain's aggregate GDP by 0.67 percent in the “medium term,'' according to a March report by the National Institute of Economic and Social Research.

Party Differences

The Social Democrats want to tackle Germany's skills shortage by scrapping restrictions keeping eastern European workers out of Germany until at least 2009 in return for the introduction of minimum pay levels — a measure the chancellor's Christian Democrats have rejected as hostile to job creation.

Merkel's party favors targeting highly qualified foreign workers through measures such as lowering the minimum wage threshold for migrant workers, said Maria Boehmer, Merkel's envoy for immigration matters.

“Given global competition for the best minds, Germany must become more attractive for the highly qualified from abroad,'' Boehmer, a Christian Democrat lawmaker, said in an interview.

Yet with almost 3.8 million Germans unemployed, Merkel's coalition “may shun any radical steps'' in favor of incremental changes to immigration rules, said Uwe Andersen, a professor of political science at the University of Bochum in western Germany.

“Ultimately, immigration matters are highly sensitive,'' Andersen said, meaning it's likely the issue is “tackled in small rather than big steps.''

To contact the reporter on this story: Andreas Cremer in Berlin at .
Last Updated: August 22, 2007 07:27 EDT