Thu. Nov 30th, 2023
    Automation: Addressing Labor Shortages in Germany

    The labor shortage crisis in Germany continues to drive companies towards automation. With the retirement of the head of the grinding unit at S&D Blech, the company has found it challenging to fill the skilled but physically demanding position. As a result, they have made the decision to replace the retiring worker with a robot. S&D Blech is not alone in this trend, as other small and medium-sized companies are also turning to automation to alleviate the pressure caused by the diminishing workforce resulting from the retirement of the baby boom generation.

    In June, official data revealed that around 1.7 million jobs in Germany remained unfilled, creating a significant strain on businesses. It is estimated that over half of the companies are struggling to find suitable candidates for vacancies. The German Chambers of Commerce and Industry (DIHK) predicts that this labor shortage could cost Europe’s largest economy nearly 100 billion euros ($109 billion) each year in lost growth.

    Managing director Henning Schloeder of S&D Blech explained that the difficulty in finding a replacement for the retiring head of the grinding unit is not only due to his expertise but also the physically demanding nature of the job, which discourages potential candidates. The grinding process involves high heat, continuous noise, and potentially dangerous sparks.

    While increased female participation in the workforce and immigration have partially offset demographic changes, the shrinking workforce due to retiring baby boomers and a smaller new cohort entering the labor force is expected to reduce the pool of workers by 7 million people by 2035, according to the Federal Employment Agency. These shifts in demographics, not limited to Germany, highlight the need for advanced automation technologies, such as robotics and AI, to alleviate the labor shortages.

    Germany already has a significant investment in automation technology, with strong adoption in the automotive and industrial sectors. The country is the world’s fourth-largest market for robots and the largest in Europe. The International Federation of Robotics reported around 26,000 robot installations in Germany last year, a number surpassed only in 2018. Automation has become increasingly accessible to smaller companies as robots become cheaper and easier to operate.

    Automation not only addresses labor shortages but also provides various benefits to companies. Robots allow businesses to continue production during non-working hours, increase productivity, and improve workplace safety. The perception of robots among workers and trade unions has also shifted, with many seeing them as valuable tools that can help address labor shortages and improve work conditions. Robots are particularly helpful for strenuous tasks, lifting heavy loads, and reducing physical strain on employees.

    Frequently Asked Questions

    1. What is causing the labor shortages in Germany?

    The labor shortages in Germany are primarily caused by the retirement of the baby boomer generation and a smaller new cohort entering the workforce. Other factors contributing to the shortage include low birth rates and difficulties in finding suitable candidates for certain skilled and physically demanding positions.

    2. How are companies addressing labor shortages?

    Many companies in Germany are turning to automation technologies, such as robotics and AI, to address labor shortages. By replacing certain tasks and positions with robots, businesses can continue operations, increase productivity, and mitigate the impact of the shrinking workforce.

    3. What are the benefits of automation for companies?

    Automation offers several benefits for companies, including increased productivity, improved workplace safety, and the ability to operate during non-working hours. Robots can handle strenuous tasks, lift heavy loads, and reduce physical strain on employees, making work conditions healthier and safer.

    4. How do workers and trade unions view automation?

    The perception of automation among workers and trade unions has shifted in recent years. Many now see robots as valuable tools that can help address labor shortages and enhance work conditions. When implemented as part of a long-term corporate strategy, automation is seen as a means to make work healthier, more interesting, and safer.