Capitalism depends on labor – no labor, no capitalism. But when the labor market is run under the neoliberal dictate of a free market that is supposed to govern everything, things can, and do, go wrong. They so even in a market where nothing is for sale: the labor market.

For a considerable time, Germany’s shortage of skilled workers has been the subject of heated debate. While in the imaginary world of media capitalism only companies are concerned. In reality, politics – and surprise, surprise – workers are also concerned.

Even though capitalism is run by companies – not workers – German companies complain about not being able to find and retain qualified workers to keep operations running. Yet these are the very companies that provide only limited or on training for workers and if they do, it is only in what is needed for their own profit-making enterprises.

Worse, the training-skills problem reflects a classic, albeit unresolved, contradiction of capitalism: companies need skilled workers, but companies don’t want to invest in training them. 

As a result, the cost of training is offloaded onto the state (through taxes) or the individual (via school, university, and college fees).

Being the victim of its own ideology (the free market) and its own contradiction (not paying for training but needing trained workers), companies sound the alarm when faced with the consequences of their own doing.

To make governments listen, companies and corporate bosses complain that the shortage of skilled workers poses a significant threat to the competitiveness of the country. “Blame someone else” seems to be the mantra of Germany’s corporate lobbyists.

Meanwhile, the skill shortage – which corporate Germany is far from innocent in creating – also causes problems for worker health, economic growth, and broader societal welfare.

However, the effects of the skilled labor shortage on the workers themselves are a rather neglected topic in the public debate – apart from the situations in daycare centers and nursing staff, perhaps. 

Well, in media capitalism, it is capitalism itself that is relevant, while workers are merely auxiliaries to corporate profits.

Caused by corporate Germany, any shortage of skilled workers leads to a lack of staff in companies. A shortage of personnel becomes visible when there are fewer workers in a business division than needed to complete the work.

Depending on the type and severity of understaffing, this can have serious consequences for the working conditions of the remaining employees. It can lead to significant health impairments. The risk of a downward spiral is real.

Germany’s peak trade union body is the DGB. Its “Gute Arbeit Index 2024” – the Good Work Index – addresses this issue, with a focus on securing skilled labor.

The data is used by Ver.di – Germany’s largest service sector union with 1.8 million members – as the basis for a special evaluation of the service sector.

Almost 4,900 workers in the service industries provided information on how the shortage of skilled labor is impacting their work. A steadily worsening shortage of personnel is affecting their working conditions.

Worse, it appears that the acute shortage of skilled workers cannot be adequately addressed over the long term.

Skilled workers are defined as people who have completed a recognized vocational training program of at least two years, or have a recognized academic qualification.

On the other hand, there is also a general labor shortage – this occurs whenever the demand for labor permanently exceeds the supply. That means companies have more job openings than there are available workers. All able-bodied individuals are considered workers, regardless of their qualifications.

Interestingly, a skilled labor shortage can exist even amid unemployment. This happens when the qualifications of the unemployed don’t match the needs of employers.

Given all this, it is believed that Germany’s skilled labor shortage is affecting the economic development of 58% of companies.

In the service sector, shortages – particularly in trade, transport, and warehousing – are most frequently reported.

Even if there is no general shortage of labor and skilled workers in Germany, in several professions, demand exceeds supply many times over.

Using data from a list of 1,300 occupational categories, the government has identified 183 skilled professions in which positions are difficult to fill.

Accordingly, there are bottleneck professions in Germany: nursing, medical health, childcare, IT and software development, social work, social pedagogy, and architecture, among others.

To make matters worse, demographic change – Germany’s aging society – and poor working conditions further intensify the skilled labor shortage.

The problems of an aging population will only become more pronounced, especially in skilled professions, even if current labor market strains aren’t yet fully visible.

All in all, the shortage will intensify with the retirement of the baby boom generation (1955 to 1970). By 2030 – just five years from now – Germany’s labor market is expected to lack around 12 million workers. That’s nearly 30% of the current working population.

Moreover, working and wage conditions in many bottleneck professions remain poor. This discourages young people from entering vocational training or apprenticeships in these fields.

Worse still, it can also lead to the emigration of skilled workers – either abroad or into industries offering better working conditions and pay.

Training positions remain unfilled. At the same time, applicants leave empty-handed. The “fit and supply” logic of a neoliberal free market labor model reveals a structural mismatch – the hallmark of a failing system zealously clinging to the disastrous ideology of market self-regulation.

The proportion of university graduates entering vocational training has gradually increased over the past decade – fewer people are opting for university.

Meanwhile, the chances of young people with lower-level school certificates finding a vocational training place have further deteriorated.

Staff shortages are now visibly high. Almost half of all workers in the service sector report acute staff shortages in their field: 47% responded that this applies “to a very high degree.”

For workers in health and care, the situation is most severe: 54%, followed by education and other services (both 52%), and public administration (49%).

Of course, poor working conditions exacerbate the labor shortage. Only 24% of workers with good working conditions say their area is “highly affected” by staff shortages. That figure nearly triples for those with poor working conditions – 67%.

Workers most affected by staff shortages report that management demands they:

• take on additional tasks (76%),
• work at a faster pace (61%),
• work overtime (60%), and
• endure longer working hours (59%).

Worse, 42% of workers report colleagues leaving due to staff shortages. Loyalty is declining. Many workers are increasingly willing to change employers.

Meanwhile, the quality of services suffers. 38% of workers affected by shortages say they’ve had to cut the quality of their work due to excessive workload.

Unsurprisingly, workers affected by understaffing become less likely to recommend their employer. A staggering 76% say they would not recommend their employer to a friend.

In the wake of all this Ver.di has issued four key recommendations to make jobs more attractive and solve the problem of an acute labor shortage in Germany:

Solution 1: Reduce workload and improve working conditions

A significantly higher proportion of workers believe they can “hold out” until retirement if conditions improve. Among those with good working conditions, 82% think they can make it. Among the overworked with poor conditions? Only 19%.

Solution 2: Sharply increase qualification and training provisions

Nearly a quarter of service sector workers feel only “slightly” (22%) or “not at all” (4%) adequately qualified for their job. This reflects the fact that very few employers in the service sector provide meaningful training.

Solution 3: Improve work-life compatibility

Only one-third (31%) of service workers say their employer supports parents – through childcare, time off, flexibility, or subsidies. The main reasons for switching to part-time work are childcare (49%) and excessive workload (42%). The potential here is significant: 37% of workers are part-time, 80% of whom are women.

Solution 4: Strengthen working-time flexibility for workers

Only about half (54%) of service sector workers have access to flexible hours. Yet 45% still lack access: 27% have limited flexibility, 18% none at all.

Overall, this investigation into Germany’s labor shortage in the service sector reveals the classic contradictions of managerial capitalism.

On the one hand, there’s the ideological fantasy that a neoliberal free market will magically balance labor supply and demand. Yet, despite the promises of market equilibrium, no such balancing has occurred.

On the other hand, the relentless drive for profits prevents employers from making work in Germany’s service sector more attractive.

In other words, it will take trade unions and state intervention to save companies from their own self-destruction, as the consequences of the labor shortage will only worsen.

In short, the capital side of Germany’s so-called social partners – employers and managers – have only two options – even if they don’t realize it:

1. Be compelled into collective bargaining with trade unions to address the four key issues Ver.di has outlined. This would actually help solve the labor shortage.
2. Failing that, the state must intervene – at least temporarily – to patch over a systemic failure driven by the false belief that the free market can fix everything. It never has. It never will.

It’s time to end the misplaced neoliberal delusion of a free labor market that can balance supply and demand. The ideology that caused the labor shortage cannot be the one to fix it.

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