Labour crunch likely to follow recession

German companies' order books are thin and people are working shorter hours, but some firms warn that qualified staff are hard to find as they recruit ahead of an anticipated rebound.

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At Trumpf, a family-owned company near Stuttgart in southwestern Germany, 80 percent of its 4,500 workers have been working reduced hours since July because demand for its industrial stamping and metal cutting machines has slumped. Trumpf's orders fell by 35 percent in the fiscal year that ended on June 30.

Thanks to measures introduced by the German government to keep a lid on unemployment during its worst recession since World War II, Trumpf is paying its workers less for fewer hours, and the taxpayer is making up the rest so that employees still go home with a full pay packet.

But that should not keep the company from hiring 25 engineers fresh out of college during this business year and having them work the same short hours as other workers, spokesman Ingo Schnaitmann said.

"We absolutely want to avoid the same thing that happened in the 1990s," he said, "No one hired because of a crisis so fewer and fewer young people studied engineering, and when the economy rebounded we were stuck."

German bosses say that a lack of skilled labour could threaten the country's position as the leading European exporter and number two worldwide, behind China.

What Trumpf and others are doing now would have been forbidden before, but the national employment agency understands the problem and has eased rules so companies can begin to recruit even as they receive state subsidies.

The worst of the economic crisis came just a few months ago, and even though unemployment is still forecast to increase in early 2010, "there are still more job offers for engineers than candidates," according to Michael Stahl, who is in charge of training for the German metal and electronics federation Gesamtmetall.

The employers federation BDA also recently spoke of a lack of 60,000 qualified workers, almost all in technical professions.

Gesamtmetall and others are therefore doing all they can to make sure companies have skilled staff and young engineers as soon as business picks up. That is expected to happen fairly soon, according to leading economic indicators which suggest Germany is finally pulling out of recession.

In the southern state of Bavaria, Gesamtmetall has created a kind of temporary work agency, which hires young graduates and "lends" them to companies while keeping them on the body's payroll.

"That way they do not become a charge on the companies," Stahl said. For some firms, hiring new workers is delicate because they are needed but banks look closely at payroll numbers when they decide whether or not to extend credit.

Tighter credit conditions associated with the slowdown have hit the German manufacturing sector more than construction and services, a study released last month by the Ifo economic think-tank found.

But once the crisis has passed, it is hoped companies will hire the temporary workers full time. The main objective is that "young graduates do not lose their training, and that they don't go looking in other sectors" for work, said Holger Wuchold from the machine tools federation VDMA.

Federation members, a strong force in the German industrial landscape, were among those who suffered the most in recent years from a lack of skilled staff. The lack is a result of several factors, including an ageing society and a trend by young workers away from scientific and technical professions.

In the former communist east Germany, where the birth rate plunged in the 1990s and emigration towards western parts of the country has been strong, the labour pool will be drained of two million workers by 2025, a study by the IAB Institute for Employment Research showed.