Whilst Germany stands out as a model in the global economic crisis, Europe’s bright star must face with a major challenge in order to keep its position: how to maintain its growth with a declining population.
The German population is among the oldest in the world. In fact, out of 80.5 million inhabitants only 13% are less than 15 years old and 22% less than 25. With a birth rate of 1.36 children per woman, generational renewal is not at all sure and estimates predict a loss of 15 million inhabitants by 2060. In 2013, Germany’s age structure was diamond shaped, due to less and less births. (CIA WORLD FACTBOOK)
Due to this low birth rate, by 2050 there will only be two employed people per retiree. Faced with these statistics, the war for talent will go into an even tougher battle What solutions will companies adopt in view of this blight scenario?
• Managing age structure in companies
By putting demographic tools at the heart of human resources, groups are finding ways to develop efficient solutions to the problems caused by the ‘demographic time bomb’. Since the 1980s, companies have been using an age pyramid in order to prepare for the evolution of staff ageing. For Bernard Martory, author of ‘Contrôle de Gestion Sociale’:
“Social management is one of the components and one of the extensions of management control. It is a system to support the social orientation of the organization with the objective of contributing to the management of human resources in both performance and costs.”
Two major strategies emerge from these studies: keep older staff as long as possible, or prepare for ageing by going in search of young talent.
• Older staff: experienced talent that must be retained
German companies court experienced talents and encourage them to work longer. Keeping staff longer in a job means adapting their duties and the infrastructure: for example office chairs and workstations designed to avoid back problems and work areas adapted for people of reduced mobility.
Beyond ergonomic work stations, training will play an essential role in keeping older people in work; it will combat skills becoming obsolete.
Furthermore, some German companies are experimenting with new forms of contract in order to push back the age of retirement. Thus, Allanz’s ‘silver liner’ contract offers a position of external consultant to top managers wishing to retire before their replacements have been appointed.
• Renewing the workforce: the hunt for young foreign talent
While the number of workers retiring is accelerating, the quantity of German workers entering the job market is reducing each year and the number of young, unskilled jobseekers is increasing. By 2025 the number of young Germans with a bachelor’s degree will have dropped by a third if the current trend continues. So the hunt for talent will go abroad.
Without sufficient young graduates, Germany will open its borders and try to attract highly talented foreigners from other EU countries and from overseas. In order to facilitate immigration, foreign educational qualifications have been recognised by law since 2011. Students from outside Europe are able to validate their skills and knowledge through a simplified procedure. The same year, Germany opened its job market to European countries, excluding Bulgaria and Rumania. Re-examining the mobility of young graduates and redefining the principle of borders is a starting point in the fight against the shortage of skilled labour.
• Keep Germany a country of innovation and invention
Having a workforce that is more experienced than that of other countries can be an asset if the German economy is playing its cards right. More experienced talent is costlier than young talent but also brings more expertise into an organization. Having two or more generations meet inside a business should ignite more sparks of innovation and invention than a company dominated by a single generation. This is especially true for white collar jobs where experience matters, in contrast to mainly cheap labor in countries like China, where manufacturing is strong and experience is not an asset when working in a production site. Countries such as Japan face a similar situation and can only make up for what they are lacking if they focus on knowledge-based growth. The label “Made in Germany”, a sign for quality and longevity, might eventually become “Invented in Germany”.