Skills Shortage Has a Major Impact on Companies’ HR Strategies (4th Quarter 2023)

Shortage of Applicants Greatest in Business and Administration as Well as Engineering and Technology

In addition to the question of whether companies generally receive few applications, it is also of particular interest in which occupational fields a lack of applicants stands out. To this end, the companies concerned were given the opportunity to provide open answers for occupational fields or occupational groups. To be able to map the responses, they were grouped into occupational fields..

The most frequently mentioned occupations were those that can be classified as business and administration (29%), closely followed by occupations in engineering and technology (24%). Computer and IT (12%) and logistics and transport (11%) were also mentioned very frequently. It is also interesting to note that 5% of respondents used the free text field to indicate that the problem exists in all occupational fields, which highlights the explosive nature of the topic. In addition, 14% mentioned unspecified skilled workers and 3% trainees in general. The fact that some occupational fields are less strongly represented is certainly also due to the fact that the survey is limited to companies from the three economic sectors of manufacturing, trade, and the service sector.

Skills Shortage: Biggest Challenge for Companies

Of the various current challenges, the shortage of skilled workers was rated as the most relevant by companies. For the vast majority of companies surveyed (87%), the shortage of skilled workers is of urgent relevance. In addition to this prevailing problem for HR departments, companies are confronted with other challenges. Bureaucratic and legal hurdles, rising energy and location costs, and a weak economy also represent a current challenge for around three-quarters of the companies surveyed. Digitalization and technological changes as well as increasing sustainability requirements are currently causing difficulties for around six out of ten companies. One-third of the HR managers surveyed described equality and equal opportunities requirements as a currently relevant issue.

According to the HR managers surveyed, the corresponding influence on the HR strategy of the companies follows the respective challenges in the same order. In 59% of the companies surveyed, the shortage of skilled workers is also attributed a high priority in the company’s HR strategy. Bureaucracy also influences the HR strategy of 56% of the companies surveyed. Rising energy and location costs as well as the weak economic environment have a high impact on HR strategy in four out of ten companies surveyed, or a moderate impact in the case of the weakening economy. When it comes to topics such as digitalization and technological changes, sustainability requirements, as well as gender equality and equal opportunities requirements, HR managers predominantly describe the influence on HR strategy as moderate. Equality requirements in particular have the least influence on the respective HR strategy among the topics mentioned.

Simplification and Debureaucratization of Approval Procedures: The Most Important Support for Companies

In addition to identifying the most important challenges, the main focus is also on what support from politicians would be helpful in order to meet these challenges appropriately and remain competitive. After determining which challenges the companies are currently facing, they were given the opportunity to rank the political measures they would like to see in the further course of the questionnaire. To do this, they were asked to rank the following five measures in order of 1, 2, and 3, with 1 being the best measure, 2 the second-best, and 3 the third-best. The individually obtained rankings were then averaged across all participants. Lower values indicate a higher value and are in the highest desired position in the ranking. The companies see an urgent need for action to simplify and reduce bureaucracy in business processes and approval procedures (1.71). This measure most frequently received the highest prioritization. In second place comes help to meet the demand for skilled workers (1.83), for example by promoting (further) training initiatives or facilitating the recognition of foreign professional qualifications. State funding programs and financing as well as tax incentives and concessions for innovation and investment share third place among the desired measures (1.95 and 1.98 respectively). The least frequently prioritized measure was promoted and improved digital infrastructure (2.16).

Average Wage Increase of 4.7% Expected for 2024

In the group of employees covered by the survey, wages will predominantly increase in 2024: 82% of respondents expect wages in their company to increase by an average of 4.7%; 17% expect wages to remain the same; hardly any declining wages were reported. The service sector is expected to see the highest wage increase, with an average of 5.2%. Retail companies are also expecting wage increases of 4.9% on average. In manufacturing, the expected wage increases are likely to be somewhat lower (4.0%) than in the other two economic sectors. While around 72% of companies with fewer than 50 employees expect wages to rise in their company, this figure is eight out of ten for medium-sized companies with up to 249 employees, nine out of ten for companies with 250 or more employees, and almost all the companies surveyed with 500 or more employees. At around 5%, the average expected wage increases are slightly higher for smaller companies than for larger and large companies (4.2% and 4.3% respectively).

Against the backdrop of the prevailing shortage of skilled and unskilled workers and the pronounced shortage of applicants that companies are currently experiencing, the scope for wage increases for new hires is of particular interest. It shows how flexible companies are in terms of monetary competition when recruiting new staff. The companies surveyed were asked to estimate how much leeway they would have in setting the salary of newly hired employees in the coming year compared to the salary of existing employees. Of the HR managers surveyed, 12% are not planning any new hires next year. Smaller companies in particular (19%) stated that they were not planning any new hires, while this was the case in only around 5% of large companies with 500 or more employees. Of the remaining 88% of companies, the vast majority (70%) report that there is no room for maneuver, while 30% report an average of 8% room for maneuver when setting wages. In trade, more companies reported having leeway than in the other two economic sectors (37% vs. around 28% in manufacturing and the service sector). However, at 7.7%, this is the average for all economic sectors. At 6.9%, manufacturing companies report the lowest level of flexibility, while service providers have the highest level of flexibility at 8.9%. Smaller companies reported having more leeway than larger companies. However, there are hardly any differences in the average amount of scope for wage setting across the size classes. Only in companies with over 500 employees is this slightly lower than in the comparison groups, at 7.2%.

Majority of Companies Surveyed Pay Inflation Compensation Bonus

Since October 26, 2022, the so-called inflation compensation bonus has allowed employers to grant their employees an amount of up to EUR 3,000 free of tax and duties. Of the companies surveyed, 72% have already paid out an inflation compensation bonus; a further 16% are planning to pay it out; 12% do not intend to make a bonus payment. While the proportion of manufacturing companies that have already paid out or plan to pay out the bonus is 93%, it is 86% in trade and 85% in the service sector. A comparison of size classes shows that the larger the company, the more likely it is that a payment has been made or is planned.