How German companies court employees?

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February 3, 2022

HOYERSWERDA, BAUTZEN, Kamenz and Radeberg are cities in the eastern German state of Saxony that lost tens of thousands of inhabitants, especially the young and the educated, after the collapse of communism. Once a coal-mining hub, Hoyerswerda has seen its population shrink from 70,000 inhabitants in 1985 to 32,000; the average burgher is 53 years old. In all four cities baby boomers are retiring or preparing to. Worried about staff shortages, in 2019 the quartet’s city halls and two dozen local employers launched the “late shift” programme. It involves busing local teenagers around factories, workshops and offices in the afternoons to encourage them to sign up for an apprenticeship.

Worker shortages are a huge problem in Germany. The country’s workforce may peak soon in absolute terms and could shrink by up to 5m by 2030. Covid-19 has made the problem worse. Early in the pandemic, lockdowns and a recession meant that lots of German companies had too many workers, plenty of whom ended up in state-supported furlough schemes. As the economy has reopened, they find themselves with too few.

And co-opting new staff is only getting harder. Employees, especially young ones, increasingly seek greater security. Having watched some lines of business such as hotels or airlines shut down almost entirely, they would prefer a safe job in public administration over the private sector, says Zuzanna Blazek at the German Economic Institute, a think-tank.

Last October 43% of firms said their business was suffering because of the lack of skilled labour, up from 23% a year earlier and the most since German reunification in 1990, according to a survey of 9,000 companies by KfW, the state development bank, and Ifo, a think-tank. Services were hardest hit, followed by manufacturing. The shortage of skilled workers is now so serious that it is “dramatically slowing down our economy”, warned Christian Dürr, a leader of the pro-market Free Democrat Party, last month. He thinks Germany needs to attract about 400,000 immigrant workers per year to soften the economic impact of an ageing society.

Even though many Germans share Mr Dürr’s pro-immigration stance, his goal cannot be met overnight. Because German companies need employees now, they are pulling out all the stops to come across as an attractive place to work. Some of their efforts look similar to what is happening in places like America. Many are extensions of existing schemes designed to stave off the spectre of a shrinking workforce.

The obvious—and universal—way to secure enough employees is to pay them more. Since German workers are already among the best-paid in the world, companies have little room for manoeuvre. Still, rises are coming. The new government is increasing the statutory minimum wage in several steps from €9.60 ($10.10) in 2021 to €12 by the end of the year. Higher earners can count on a modest increase, too. In a poll published last month, Ifo found that 78% of companies expect wages to go up this year, by an average of 4.7%—in line with union demands of around 5% and above the 3.3% inflation forecast the federal government has for 2022.

Social engineering

Another popular pandemic strategy around the world is for employers to offer more flexible work arrangements. Allianz, a big insurer, has launched a new “ways of working” programme that includes options such as working remotely at least 40% of the time, up to 25 days a year abroad and travelling significantly less for business. Some German firms are taking this to the extreme. Bosch, an engineering conglomerate, lets workers pick one of 100 models of working hours. It has extended job-sharing, where two people divvy up responsibilities so that each can work part-time, to senior management positions.

Like their counterparts in other rich countries, employers are also advertising their concern for employees’ well-being. They have long offered help with child care. Bosch and Siemens, another industrial giant, both run day-care centres for employees’ offspring. Now they are expanding the range of assistance. Bosch has spent €75m on a health centre at its headquarters in Abstatt where employees have access to counselling, physiotherapy, a gym and a climbing wall. Delivery Hero, an online food-delivery firm based in Berlin, offers workers virtual yoga classes, gym memberships, accounts at Headspace, a meditation firm, and subsidised bike rentals. Allianz lets staff take “focus time” where no meetings are scheduled, and its “global meeting etiquette” limits meetings to 25 or 50 minutes and allows for a break between calls. In addition, it provides mental-health support, including to employees who prefer to remain anonymous.

Deutschland AG is also leaning ever more heavily on its world-renowned training and apprenticeship schemes. Bosch works closely with prestigious institutions such as the Technical University of Munich and the Institute for Technology in Karlsruhe, where its representatives hold lectures and other events for students, as well as offering them internships and training. Allianz encourages employees to devote an hour of work time a week to take one of more than 10,000 courses, from graphic design to big data. Siemens spends €175m a year on training and retraining its workers in Germany (plus nearly as much doing so in its overseas operations). On top of that, it currently offers 3,700 domestic apprenticeships, considerably more than a few years ago. Smaller firms have fewer resources but no less get-up-and-go. Despite operating in Germany’s most depopulated region, Saxony’s late-shifters, all of which are medium-sized, have so far managed to fill their vacancies.

This article appeared in the Business section of the print edition under the headline “Depopulation pressure”

How German companies court employees?

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