Skills shortage hampers sustainable innovation at German companies - report

A lack of skilled workers makes it increasingly difficult for German companies to bring innovative technologies and procedures to the market, according to analysis by the Leibniz Centre for European Economic Research (ZEW). “Companies affected by the shortage of skilled workers are finding it increasingly difficult to carry out innovative projects due to the lack of expertise and capacity, resulting in a loss of innovation strength,” said the researchers. This obstacle to innovation is making it increasingly difficult for the German economy to fully benefit from the global trend towards more sustainable technologies, newspaper Die Welt reported. Start-ups like electronic waste recycler Cylib, or low-carbon concrete and cement producer Alcemy, are among the many companies having difficulties scaling and bringing their products or services to market as a result of the shortage, the newspaper said.

In a country ranking of innovativeness published by the Federation of German Industries (BDI), Germany has lurked around the 10th place for years out of the 35 countries surveyed, far behind leaders like Switzerland, Denmark and Singapore. The BDI warned that this performance curtails investment flows to the country. At the same time, the number of patent applications from Germany is stagnating, meaning the country could soon lose its second place ranking – behind only the U.S. – to China, which is applying for patents at a faster pace. While larger companies, such as Siemens, BASF or Bosch, continue to lead the patent application list, smaller businesses and start-ups are especially impacted by the lack of access to skilled labour, an industry survey showed. One in two start-ups complains of difficulties in finding enough staff, the country’s Startup Association found. This is despite the share of new hirings from abroad growing from 4 percent to 15 percent in ten years, according to figures by the Institute for Employment Research (IAB).

The skills shortage is also threatening expansion targets for renewable energy sources and other future industries. Observers have warned that Germany risks losing its leading position in several key industries due to a combination of higher energy prices in the aftermath of the energy crisis, fast developments in technologies such as e-cars by foreign competitors and difficulties to attract sufficient investments and skilled labour.