The largest European economy currently enjoys one of its longest growth periods, with a decade of high employment rates, while the unemployment rate keeps on declining and will close around 3.5% this year.

Nevertheless, the dynamic of its labour market, which has promoted private consumption and contributed to the good situation of public accounts, threatens to become the Achilles heel of the economy, something which may have serious consequences in the long term.

The advisory council of the German government in economic matters, the so called “five wises”, pointed out in its annual report that the country’s growth is being slow down due to external factors, such as commercial tensions and Brexit, but also by internal elements, such as the “bottle necks” in the labour market.

The Institute for Labour Market Research (IAB), which depends on the Federal Employment Agency (BA), has announced that the third quarter of this year ended with 1.24 million vacancies in Germany, the highest number in the country’s history.

According to IAB, the larger number of vacant jobs can be found in the services sector (658,000), but vacancies extend all over the economy: agriculture (10,000) construction (123,000), distribution (87,000), communications (49,000), and finances (12,000).

The Institute of German Economy (IW) states that companies, particularly SMEs, face problems to fill two out of three vacancies, and that nearly half the companies in the country consider they are not growing accordingly to their possibilities because they fail to find the necessary professionals.

Even the European Central Bank (ECB), in its last report, partially linked the strong price increase of housing in Germany to the lack of qualified staff in the construction sector. The German government is aware of the problem and has moved forward with a set of measures that are part of a national strategy to face the qualified staff deficit in the German economy.

One of the main recommendations is an economic migratory law that enables the arrival of workers from countries beyond the European Union, an initiative that is currently being debated by the large coalition of conservative and social democrats representatives.

These efforts join others implemented by the Executive power during the past few years, with uneven success, such as the idea to bring young unemployed people from southern Europe –particularly Spain- so they attend a professional training course in Germany.

The massive arrival of refugees in 2015 and 2016 (over one million people), was also analyzed as an opportunity for the labour market. However, their access to employment is being, in the best of cases, slow. Plenty of refugees have faced two major difficulties to access the labour market: validation of degrees and the German language.

Nevertheless, foreign people are accessing more Jobs in Germany, and the foreign population share is nearly 12% in the most diverse sectors.

According to IW, during the last six years, the number of non-European Union workers in the MINT (mathematics, computer sciences, natural sciences and technology) academic jobs has reached 53% (60,000 workers).  In addition, the German Association of Construction (HDB) estimates that the share of foreign workers in the sector has gone from 9% in 2012 to 16.2% in 2017, (127,700 workers).