In April 2022, Germany’s labor shortages reached an all-time high with a deficit of 320,600 STEM (science, technology, engineering, and math) workers. Today, the labor gap continues to widen as the country struggles with an aging population and attempts to digitize its infrastructure and systems. A survey by research institute IFO found that almost half of Germany-based companies have slowed down their operations due to skills shortages.
It goes without saying that such a labor shortage is harming the nation’s economy. A drought of workers means that companies may need to offer above-industry standard wages to compete with the minority of skilled professionals available. Consequently, this rise in labor costs is often passed onto the consumer via price hikes.
For instance, KfW’s Skilled Labour Barometer report predicted that unless adequate countermeasures are taken, gross domestic product may shrink to permanent recession levels within as little as three or four years. The German Chambers of Industry and Commerce has also documented the severity in which certain engineering and data processing sectors are unable to fill over 60 percent of job vacancies.
In a worst-case scenario, companies unable to find talent could relocate to a different country, leading to job losses, loss of income tax, and increased welfare spending.
Germany struggles to match fellow EU members’ digital drive
At the same time as this labor shortage, Germany is lagging behind in digitization. Despite being the EU’s largest economy, the country ranks 13th out of the bloc’s 27 members when it comes to digitization. To modernize the country, the government has announced plans to:
- Digitize health records
- Digitalize government administration
- Analyze mobility data to improve the country’s train and car infrastructure
- Leverage modern technology to fight the climate crisis
Naturally, skilled tech workers are required to kick-start these initiatives.
More tech workers are needed to meet positive market projections
Strangely, despite the skills shortages — which have caused companies to reduce targets — Germany’s tech industry is still experiencing growth. Much of this progress is due to Berlin — a hotspot for startups that are primarily focused on technologies like AI and blockchain. Similarly, the German government plans to develop a national AI strategy by 2025, aiming to convert the country into the world’s leading AI location.
Overall, Germany’s tech sector is projected to hit a valuation of USD 133 billion by 2026. Yet, to make this ambition a reality, Germany will need more tech workers than ever.
Interestingly, while Germany’s tech sector desperately tries to source workers, other international tech hubs have been hit by an avalanche of layoffs. According to The Challenger Report, the U.S. tech industry, home to the Silicon Valley mecca, increased layoffs by 649 percent in 2022. Overall, more tech workers were made redundant than in 2020 and 2021 combined.
So, with a seeming influx of laid-off tech workers globally, how can Germany-based companies tap into this sudden source of available talent?
Global hiring addresses the skills shortage
Talent acquisition has changed dramatically over the last three years thanks to the solidification of remote work. With this work model, borders are no longer barriers to securing top talent.
As a result, hiring remotely is the perfect solution for Germany-based companies seeking to stem the country’s skills shortage.
Cutting through red tape with a remote work model
A global approach to hiring can efficiently supercharge Germany’s tech industry, bypassing many government migration initiatives laden with red tape.
More importantly, evidence has shown that people, in fact, thrive in a home environment. A survey by FlexJobs found that 51 percent of those working from home during the pandemic were more productive.
Additionally, an Economist Intelligence Unit (EIU) study sponsored by remote-first company Dropbox found that 28 percent of total working hours per person are lost every year due to office environment distractions like face-to-face interruptions, ringing phones, and loud conversations.
How a diverse workforce breeds innovation
Generally speaking, looking across borders opens a company to a much wider recruitment field of qualified, trained, and experienced workers. An frequently overlooked aspect of hiring from global talent pools, but one particularly apt to sectors such as tech, is that a diverse workforce can breed innovation.
When people from different backgrounds, cultures, and geography come together, they enrich creativity, productivity, and modernization. For example, a study by Deloitte found that inclusive companies are:
- Twice as likely to meet or surpass monetary goals.
- Three times more likely to be high-performing.
- Eight times more likely to attain superior outcomes.
In the age of global remote work, having a truly diverse workforce provides a competitive edge in fast-paced industries such as tech.
However, navigating international waters can be challenging due to the many requirements and tricky compliance obstacles. Companies need to be cautious about adopting a remote work approach, but there are certain solutions to make the process easier and smoother.
Quick and compliant hiring enabled by global employment platforms
Global employment platform providers have a deep understanding of local employment laws and international HR practices. Their worldwide entity infrastructure allows companies to bypass complex regulations in unfamiliar labor jurisdictions and remain focused on their business growth and emerging opportunities.
This international hiring option allows companies to tap into global talent pools and scale with confidence. Whether you have your eye on a specific global candidate or wish to explore new markets, a global employment platform can help you make those key hires, quickly and compliantly — without setting up an entity.
Companies can hire skilled candidates within minutes, create competitive benefits packages, and streamline key HR tasks like recruiting, onboarding, contract generation, and payroll.
How partnering with a global employment platform can unlock new opportunities
Germany-based tech companies can unlock new opportunities by partnering with a global employment platform to:
- Switch to remote-first operations: Suppose your company is unsure of fully embracing a remote work model and would rather dip its toes to test feasibility. In that case, a global employment platform is a route to quickly and affordably build a remote team without the financial and legal risk.
- Dodge local skills shortages: If your company is facing local talent shortages and wishes to immediately relieve the pressure on its existing workforce, a global employment platform can help you recruit and hire skilled international workers in minutes.
- Explore emerging tech hubs or test new markets: Now that anyone can work anywhere, Silicon Valley isn’t the only place to source specialized tech talent. A global employment platform can help you gain a competitive edge by tapping into innovation hubs like Medellín, Monterrey, or Taipei.
This post was written by Globalization Partners. They are an exhibitor on the HRTech247 Payroll, Time & Attendance and Recruitment & Onboarding floors in the technology hall here
