Does Shortage of High-Skilled Labour Threaten Germany’s Ambitious Sustainability Goals?

The German car manufacturer Daimler recently announced plans to set up its own recycling factory and to increase the share of recyclable parts of its cars production. BMW made similar plans public in September last year, stating that its cars should be produced half out of recyclable parts. Both Daimler and BMW understand that their consumers, and the wider public, now demand cars that are produced sustainably and come with a lower carbon footprint. But they also have other reasons for going green. 

Access to raw materials is another motivation for using recycled car parts. There is a shortage of raw materials, and with a shortage comes higher prices. Therefore, Daimler is keen to explore how they can reduce productions costs and it invests money into it better using opportunities from a circular economy. The company says it wishes to learn more about how to use the recycling technology for future innovation, for example in the field of recyclable battery cells. Add to that the resilience argument: in a market of fluctuating prices and uncertainty about the security of supply, companies need to have a better capacity to manage core supply. 

The example of German car companies illustrates the growing link between sustainability and competitiveness. That connection has got stronger over time. However, it still is not adequately analysed and understood. And the policy strategies that follow often neglect a key point: for companies to remain competitive while going green – and for the broader carbon transition to happen – there is a great need of human capital.

But what does this mean specifically for Germany’s economy and future policy choices? A first important point is that sustainability measures proposed by Germany’s new government coalition are estimated to provide real benefits for the overall economy. According to a recent assessment by the research institute of the German Federal Employment Agency, measures related to sustainability and social housing proposed in the coalition treaty of Germany’s “traffic light” government will increase Germany’s GDP by 1.2 percent by the year 2030. Furthermore, these measures are expected to create the need for 400000 new jobs in Germany starting from 2025. The measures analysed include an increase of the ratio of electric cars and hydrogen production, a higher rate of sustainable energy in Germany’s electricity mix, more ecological farming and the renewal of gas heating in German households, among others.

However, the positive impacts of these measures are subject to Germany’s policymakers confronting an old foe – the shortage of high-skilled, specialised labour. The assessment by the German Federal Employment Agency also points to an estimated difficulty of finding sufficient high-skilled labour in several key sectors, such as energy technology and climate technology. Indeed, jobs in energy technology and climate technology are identified as focus professions for which shortages in high-skilled labour were already identified by 2025, even without the additional labour demand created by the new sustainability measures of the German government. It appears that Germany’s green revolution is threatened by the same challenges as it is the case for its digital revolution, which has been faced with a notorious shortage of IT specialists and other high-skilled labour for more than a decade now.

German policymakers have chosen ambitious goals for sustainability in the coming years. But they should also focus on supporting measures to create high-skilled labour in Germany needed to actually achieve these goals. German companies can clearly profit from sustainability – as it is also the case with digital transformation – but they need support in finding the right people. This is also key for the competitiveness of Germany’s business in the future, which is likely to be ever more closely intertwined with elements of sustainability. And this is more true than ever in the context of the ongoing war in Ukraine and the resulting need for German business to become more independent from fossil energy sources as quickly as possible. Germany’s businesses have been struggling with global competition for high-skilled digital experts for long. The race for securing high-skilled sustainability experts has only just started.