Shortage of skilled workers in STEM areas reaches new all-time high – acute shortage in eastern Germany

The German Economic Institute (IW) is warning of an acute shortage of skilled workers in digitalisation occupations in eastern Germany. "The federal states in eastern Germany are at risk of being left behind in the digitalisation process due to a lack of human capital," explains a study carried out by the Institute on behalf of the Federal Ministry for Economic Affairs and Climate Action. IW analyst Alexander Burstedde analysed Federal Employment Agency data to support the study. The regional distribution of the shortages in Germany is very uneven. In the east, however, the labour supply of digital experts is "much too low", the study explains.

In terms of numbers only, in eastern German states (not including the city state of Berlin), the proportion of vacancies in the digitalisation occupations which could not be filled – referred to as the "Stellenüberhangsquote" (vacancy backlog rate) – was 55 percent in 2021. This meant there were no suitably qualified unemployed persons for one in every two vacancies. The figure for 2020 was 49 percent. By way of comparison, in the city states where recruitment to the digitalisation occupations is much easier the figure was only 28 percent in 2021.

Across Germany, the German Economic Institute estimated a shortfall in the number of skilled workers in digitalisation occupations of around 77,000 in September 2021. At that time, therefore, there were no suitably qualified unemployed persons for roughly one in every two vacancies. "Companies need significantly more digitalisation skills than the German labour market is currently providing," summarises the Institute.

The problems in the IT sector are part of the general shortage of workers in the STEM area (Science, Technology, Engineering, Mathematics). According to the latest STEM Spring Report from the German Economic Institute, the shortfall in skilled workers in April 2022 was 320,600, about twice as high as a year ago. 

Across Germany, there are now around 180,054 job seekers in a STEM occupation to cover nearly half a million vacancies. And by no means are these just academic occupations – almost half relate to training occupations. "Without the initial successes with immigration, the shortfall would be over 600,000," write the team of researchers led by IW education expert Axel Plünnecke. Besides IT, the biggest shortages are in the energy and electrical occupations. 

As a consequence, Germany’s research performance – measured in terms of patents – has, in recent years "only risen because patent applications from inventors with foreign roots have increased," said Plünnecke. There has actually been a particularly sharp rise in the proportion of patent applications in digitalisation technologies, from eight percent in 2010 to 14 percent in 2018, he added. "In the group of occupations in the telecommunication and IT sector, the proportion comprising immigrants is as much as 22.5 percent."

There has been a small amount of progress in efforts made to attract women into STEM occupations. These are generally well paid but often dominated by men. The proportion of women still rose between 2012 and 2021 from 13.8 to 15.6 percent. In absolute terms, 1,105,600 women are now working in STEM occupations. In this regard, eastern Germany leads the way. Here the proportion of women is 16.6 percent, while in the western Germany the figure is only 15.2 percent. 

As a consequence of the findings, advice from the IW is to generate interest and enthusiasm among young people on a more regular basis for occupations with a shortage of skilled workers – and to do so by providing gender-neutral information, by offering more placements and by shifting over public funding for training and study places to shortage occupations. According to the study, "the digital transition requires further development of vocational education and training".

Unemployed persons should also become more "regionally and professionally" mobile . In terms of immigrants, the IW recommend simplifying professional recognition and removing language barriers. "Steps should be taken to attract international skilled workers more actively and with a greater focus on service."

Berlin has the best recruitment prospects

Berlin is one of the regions where the shortage of skilled workers is not so pronounced. According to the study, in the capital the vacancy backlog rate is 25.7 percent, although in Berlin there has been a huge increase in employment in the digitalisation occupations. The investigation states that, "there it is still relatively easy for employers to find new workers".

Both Hamburg (23.2 percent) and Bremen (28.3 percent) are also "islands of good recruitment prospects" compared to surrounding areas. However, cities also exist where digitalisation skills are few and far between. In this regard the study refers in particular to Leipzig (60.1 percent) and Frankfurt (69.6 percent).

In the federal states, the vacancy backlog rate is lowest in North Rhine-Westphalia (33.2 percent) and Baden-Württemberg (39.8 percent), which comes just ahead of Schleswig-Holstein (39.9 percent). Recruitment of personnel with digitalisation skills is most challenging in Mecklenburg-Western Pomerania (53.8 percent) and Thuringia (54.8 percent).

Digitalisation occupations include mechatronics fitters, who construct robots for industrial production, and IT system electronics technicians, who plan and install information and telecommunications technology. According to the study by the German Economic Institute, these are the occupations with by far the greatest shortage of skilled workers. In September 2021, there were no appropriately qualified unemployed persons for 70 percent of vacancies.

From 2013 to 2020, by far the largest increase in employment was in the IT occupations (by 41 percent). According to the German Economic Institute, this is due in particular to growth in the number of experts with masters, diplomas and similar qualifications (an increase of 84.2 percent).

However, demand for IT specialists with vocational education and training was also very high – their employment increased by 48 percent. "This must be seen as a success story for the training occupation of information technology specialist. This now has four specialisms and appears to meet demand from companies effectively," explains the German Economic Institute in a summary of its investigation.

Digitalisation occupations offer great earning potential

The largest growth in employment, according to the study, was seen in specialists in technical information technology (up 232.9 percent), experts in IT applications consulting (up 159.6 percent) and experts in software development (up 99.1 percent).

According to the study, scope for increasing employment in the digital electrical occupations has been "severely restricted" by the ongoing shortage of skilled workers. This applies for example to so-called construction electricians even though not all vacancies have a digitalisation focus. The main work of construction electricians is likely to involve traditional construction work such as routing power lines and installing fuse boxes.

However, they are also responsible for routing data lines and installing smart home systems. Apart from digitalisation, they also have a key role to play in climate protection, for example when installing wallboxes and photovoltaic systems.

The training occupation of “electronics technician for industrial engineering” is seen as particularly relevant to digitalisation. Experts in this area set up controls for systems which will be automated, and program programmable logic controllers (PLCs) for controlling machines. "This work is essential for the digitalisation of industry," underlines the study by the German Economic Institute. Experts specialising in information technology are also relevant. According to the German Economic Institute, they represent "a pool of potential talent for new IT occupations such as data scientist or machine learning engineer".

According to the study, many digitalisation occupations offer great earnings potential. Young workers under 40 earn the most as software development managers, achieving an average salary in 2020 of €6,131 (gross, full-time). Next come experts specialising in aerospace and automotive engineering with salaries of €5,924 and €5,889. At the "specialist" qualification level, information technology is the most lucrative with a salary of €4,968.