Dr. Sandra Zimmermann

Head of Scientific Dialogue

Dear readers,

The new German government faces the challenge of lifting the country out of stagnation, and its plans have direct implications for the labor market. From tax cuts for companies to tougher migration policies, these measures are set to change the work landscape and access to opportunities.

What steps are needed so that economic growth goes hand in hand with greater equality and the workforce is included in the path out of recession? From diversity as a value creator to digitalization as a productivity driver, let’s look at the current data and analyses shaping the competitiveness and resilience of the future.

Enjoy reading,

Policy under scrutiny: A closer look at Germany’s plans 

The new Union-SPD government came into office and has placed several labor-related topics on their agenda: minimum wage, citizen’s allowance, migration, productivity, etc. Meanwhile, unemployment remains high, while younger and older groups have fewer chances to re-enter the labor market – as shown by the latest index calculated by WifOR for the Frankfurter Rundschau news outlet. 

As part of the Tagesspiegel expert panel, I analyzed several of the coalition’s plans. My take: raising the minimum wage is important to tackle inequality, while limiting migration can deepen social divisions and worsen labor shortages. You can explore the articles and further insights here.

Another crucial aspect in designing fair policies is representation. However, as I highlighted in an article for WELT, the educational and job backgrounds of the parliamentarians do not reflect those of the workforce. This might make it more challenging for decision-makers to act based on practical experience.

Socioecological transformation: the green transition needs skilled workers

As the government must work to reach Germany’s net zero targets, major projects such as expanding solar energy require a valuable asset: skilled workers. 

To assess the role of the labor market in these projects and propose solutions to workforce deficits, WifOR Institute is working on a series of studies over multiple years as part of a competency cluster of the Hans Böckler Foundation (HBS). Explore the studies here.  

One recent finding: modernizing Germany’s residential buildings and improving their energy efficiency would require up to 450,000 skilled workers. Possible solutions to address this problem and boost productivity include reskilling the existing workforce and allocating resources to areas with greater capacity. 

Similarly, WifOR is analyzing the labor requirements of hydrogen expansion programs in eastern Germany. The study commissioned by Industrial Union of Mining, Chemistry, and Energy (IGBCE) will be published in the upcoming weeks. 

Integration, digitalization, and improved conditions to empower the workforce

Health is another sector affected by labor shortages – and tackling the obstacles hindering the workforce is crucial. An interdisciplinary case study on Hamburg, commissioned by the city’s social security office, details measures for organizations to attract, retain, and empower their much-needed international talent:

• Improved conditions: These include flexible staffing models.
• Digitalization: It encompasses user-friendly tools and efficient processes that ease administrative tasks.
• Integration: Applicable from language training to support with bureaucracy and housing. 

A more attractive labor environment is also rooted in a corporate culture based on respect and recognition, as well as on broader societal acceptance and welcoming attitudes towards internationals. 

Diversity is not marginal – and many employees feel stressed and stereotyped

Certain difficulties often faced by foreign employees, such as feeling disfavored at work, are also experienced by other minority groups – as shown by WifOR’s latest data. In this regard, a more respectful and inclusive environment benefits everyone, especially as the workforce is more diverse than many would guess. 

To analyze the effects of diversity, equity and inclusion (DEI) on mental health and the resulting monetary gains for society and employers, WifOR is collaborating with the Hans Böckler Foundation on an in-depth study. Some key findings of the initial representative surveys:

• Diversity decreases as the hierarchy level rises – for example, women and members of non-Christian religious communities are less frequently represented in management positions.
• One out of five employees feel pigeonholed by superiors and colleagues.
• A third of respondents described their jobs as very stressful, and one in every four of them struggles to balance family obligations with professional ones.

The results are noteworthy in connection with well-being. Extensive research underscores that employee health boosts motivation and productivity while helping to reduce sick leave and staff turnover.

• To learn more about this topic, join us at LABOR.A, the hybrid conference of the Hans Böckler Foundation, on October 1st. Register here.

Germany’s (and Europe’s) future depends on its workforce

As argued so far, better conditions are essential for the workforce to thrive – which, in turn, strengthens the economy. But what happens when there are simply not enough workers to carry out tasks? 

With growing labor shortages deepened by demographic change, organizations in Europe need to find talent where it is available. For this purpose, WifOR is developing a European-wide labor market database – with occupation and industry-specific information, as well as forecasts at the regional level. 

Based on this data – to be reflected on a dashboard – businesses will be able to identify where to find talent, its cost, and its productivity. On top of that, models will simulate the impact of widespread hiring on labor costs. This will assist organizations in their location and recruitment planning, thus creating new employment opportunities across Europe. 

In short, we need a broader look at labor policy through the lens of efficiency and inclusion. From finding talent beyond borders to ensuring employees are treated fairly, data can help shape a future in which economic growth, competitiveness, and social justice go together.

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