The KfW-ifo Skilled Labor Barometer

The shortage of skilled workers has increased considerably in recent years and is now affecting large parts of the German economy. Among the worst affected sectors and professions are the healthcare sector, the construction industry, and science, technology, engineering, and mathematics (STEM) professions. The Covid-19 pandemic increased the severity of the problem even more acutely in sectors such as the hospitality industry. In view of the demographic change and the retirement of the baby boomer generation, this is likely to continue to be a major challenge in the coming decades. According to projections by the Federal Statistical Office (2021a), for example, the working age population (15 to 74) will shrink from 2023 onwards. The Joint Economic Forecast Project Group (2021) therefore assumes that average growth rates in the German economy will fall noticeably below one percent in the second half of the 2020s. Thus, labor shortages may become a serious obstacle to growth in Germany and lead to further bottlenecks in the supply of goods and services.

In order to obtain current information on developments in the shortage of skilled labor, the ifo Institute, in cooperation with KfW Research, has developed a skilled labor shortage indicator based on answers from the ifo Business Survey (“KfW-ifo Skilled Labor Barometer”). Its intention is to describe the shortage situation in a clear and up-to-date manner, help to inform policymakers and the public, and highlight the need for action. In addition to an overall indicator for the German economy, information is also provided for various sectors, federal states, and small and medium-sized enterprises (SMEs) compared to large companies. All indicators are published twice a year in May and November by KfW Research on their website (KfW Research 2022a).