The figures are alarming: 1.8 million jobs are unfilled in Germany. Every second company complains of difficulties in finding suitable staff. There is not only a shortage of highly specialised skilled workers, there is also a lack of employees in the unskilled sector. According to the Skilled Labour Report of the German Chamber of Industry and Commerce (DIHK), more than 90 billion euros in added value was lost this year due to unfilled vacancies. Things are also looking bleak on the young talent front. Every second training company is unable to fill all of its advertised apprenticeship position. Some companies do not receive a single application.

"Labour is scarcer today than it has been since the economic miracle," explains labour market expert Enzo Weber from the Institute for Employment Research (IAB). Yet there have never been more people in work in Germany. Employment is at a record high. Two developments show that the situation will continue to worsen. Firstly, the baby boomers will retire in the coming years - and with them, a large number of skilled workers. Secondly, many companies are planning to hire more staff in the first half of 2024 despite the economic downturn, according to a recent survey of HR managers conducted by Randstad and the Ifo Institute. "The shortage on the labour market will therefore remain," summarises Weber.

Two possible solutions to the shortage of skilled labour that politicians are keen to find are, on the one hand, increasing the country's untapped labour potential and, on the other, immigration. This untapped potential includes the many part-time workers. If they were to improve their working hours, many companies would be helped. However, part-time work in Germany has recently tended to increase again. The main problem is the lack of childcare in many places. This is why the expansion of childcare centres is seen by federal policymakers as an essential pillar in securing skilled labour. "We must prevent women's career development from slowing down when they have children," explains Weber.

To attract more skilled workers from abroad who are willing to immigrate, the traffic light coalition launched a reform of the Immigration Act this year. A new feature since November is introducing a so-called opportunity card based on a points system - similar to that in Canada. Skilled workers who want to immigrate to Germany with the help of this law must prove their language skills, professional experience, age and a connection to Germany. However, the immigration potential is also likely to be limited. Even today, one in seven workers is an immigrant. According to IAB statistics, foreign workers comprise around 15% of the socially insured labour force.

Another approach, therefore, appears more promising - albeit more protracted. The federal government must strengthen education and apprenticeships. Dual training is at an all-time low. "It is important to expand career counselling to get more young people into training," demands Weber. "Low-threshold programmes can help to reach those who would not complete a full apprenticeship in one go." Companies are called upon to approach potential apprentices, even if they may not be the first choice.

Another way is to strengthen cooperation between industry, universities and universities of applied sciences. Developments in recent years show that this can work. "The start-up scene in Germany has grown significantly over the past ten years," says Weber. However, a look at the data shows that given the ageing of society, self-employment in Germany, for example, will decline. "It would therefore be desirable to establish entrepreneurial activity more strongly in degree programmes," demands the labour market economist. One person who has set himself precisely this goal is Helmut Schönenberger.

The aerospace engineer is co-founder and CEO of UnternehmerTUM, a platform that offers start-ups "an all-round service from the initial idea to the IPO". The initiative, founded by German entrepreneur Susanne Klatten, is based at the Technical University of Munich (TUM). Schönenberger has also been a member of the board of the German Start-up Association since 2023.

The trained engineer is aware of the challenges posed by the current situation in the labour market: "The shortage of skilled workers is having a toxic effect on Germany's innovative strength," explains Schönenberger. "It is weakening SMEs in particular and inhibiting the growth of young and established companies." One solution for the Professor of Entrepreneurship is immigration. The TU Munich is already doing a good job of attracting foreign talent. "The TU Munich now has 44% international students," says Schönenberger and continues: "Most graduates stay in the country as employees and founders. There is great potential here."

Even though German start-up funding has recently developed positively, "we have a lot of catching up to do in terms of competitiveness in Germany, especially in comparison to the USA and China," says Schönenberger. Germany is lagging behind in growth financing in particular. From the beginning of 2020 to the end of June 2023, 1,157 euros per capita were invested in the USA in financing rounds of at least 100 million euros. This corresponds to almost six times the German figure. In addition, there is a high dependency on American investors: Almost half (46.1%) of the financing rounds come from US backers.

Germany has some catching up to do when it comes to start-up culture. As the German Start-up Monitor shows, significantly fewer investments were made in 2023 than in the previous year. At the same time, however, the number of newly founded start-ups is rising again. Start-ups focus on artificial intelligence and clean tech, i.e., products or processes that reduce costs, resources, energy consumption, waste, and pollution. The nucleus of the German start-up scene can be found at universities. 49% of new entrepreneurs state that they have received support from universities. "German start-up support, especially at universities, has developed very positively in recent years," summarises Schönenberger. RWTH Aachen University and TU Munich are leading the way here.

However, the co-founder of UnternehmerTUM warns: "Compared to the USA, we spend more on research in percentage terms, but do not commercialise the research results even half as well. Our country can no longer afford that." Berlin's politicians have already taken the first steps to improve start-up framework conditions. In the summer of 2022, the traffic light coalition launched a start-up strategy, which, according to Schönenberger, has made initial progress. The "Start-up Factories" competition organised by the Federal Ministry of Economics is also an important step. Five to ten such start-up factories are to be established at German universities.

However, smaller and new companies, particularly, are still finding it difficult to access the capital they urgently need to continue growing. "So far, only the large, established companies have been able to get their hands on this - due to very bureaucratic requirements," criticises Schönenberger. However, start-ups could become real game changers about the shortage of skilled labour. According to Schönenberger, successful start-up stories are likely to attract young workers from abroad - and motivate others to set up businesses. For this to work, however, politicians need to work on the bureaucracy in particular. Better access to growth capital and optimised technology transfer from science to industry must also be promoted more strongly.