Introduction: Unveiling Germany's IT Skills Shortage
In an era where technology reigns supreme and digital transformation is the driving force behind industries, Germany, a global powerhouse in engineering and innovation, faces a conundrum. The Federal Statistical Office Destatis recently unveiled a stark reality – German companies are struggling to fill vital IT positions. A mere glance at the numbers reveals a telling story: in 2022, approximately 22% of companies with at least ten employees boasted their own IT specialists, yet more than 10% of these same companies had to advertise vacancies for IT professionals in 2021, with a staggering 77% encountering serious difficulties in securing the right talent.
These figures are not isolated statistics; they mirror a nationwide trend. Bitkom, Germany’s digital association, echoed this sentiment in January 2022, highlighting a startling shortage of IT professionals across sectors – a deficiency that threatens to stymie the nation’s digitalization efforts. Fast forward to November 2022, and the situation has worsened. The demand for IT experts has surged to 137,000 professionals needed in various industries, with demographic shifts exacerbating the crisis.
But what underlies this alarming shortage? Is it a scarcity of skilled workers, or does the challenge run deeper? As we delve into this multifaceted issue, we will explore the demographic shifts, educational nuances, and societal factors contributing to Germany's IT skills gap. However, this blog post is not just about identifying problems; it's also about exploring solutions. From innovative recruitment strategies to reshaping organizational structures, we will uncover strategies employed by both academia and businesses to navigate these turbulent workforce waters. Furthermore, we'll delve into the evolving competencies and skills demanded by today's digital landscape and how individuals and organizations can adapt to thrive.
The Evolving Job Market: Data and Trends
The Federal Statistical Office Destatis (2022) reports that German companies are increasingly finding it difficult to fill vacant IT positions. In 2022, around 22% of companies with at least ten employees had their own IT specialists. In 2021, over 10% of such companies had advertised IT specialist vacancies, and a significant 77% of them encountered difficulties in filling these positions, according to their reports (2022). This data underscores the growing demand for IT professionals in the job market.
In January 2022, Bitkom (Germany’s digital association) reported a growing shortage of IT professionals in Germany, with 96,000 IT job vacancies across all sectors, a 12% increase from the previous year. This shortage, based on a Bitkom study involving 850 companies, is hindering digitalization efforts. Two-thirds of companies noted a shortage of IT specialists, and an equal number expected this shortage to worsen (Bitkom, 2022). They continue to explain, that by November 2022, the IT skills shortage in Germany had escalated further, with 137,000 IT experts needed across all sectors. Demographic changes, including fewer young IT professionals entering the workforce and more experienced workers retiring, were cited as the main challenges. Only 8% of companies considered the IT specialist supply sufficient, while 74% reported a shortage (Bitkom, 2022). A significant 70% expected the shortage to worsen in the future, according to Bitkom (2022). These trends highlight the urgent need to address the shortage of skilled IT workers, which poses a significant obstacle to Germany's digital transformation.
Shortage of IT professionals in Germany (2022)
Bitkom, 2022. IT-Fachkräftelücke wird größer: 96.000 offene Jobs. https://www.bitkom.org/Presse/Presseinformation/IT-Fachkraefteluecke-wird-groesser
“Neue Fische” (2023), a provider of IT education for dropouts and lateral entrants in Germany, says that the personnel gap is projected to significantly widen over the next two years, potentially reaching approximately 765,000 vacancies. Moreover, by 2030, there could be a shortage of roughly 140,000 IT professionals in the public sector, especially in metropolitan areas where the demand for IT experts is steadily rising, according to them (2023).
Demographic Challenges and the Student Enrollment Decline
The Institut der deutschen Wirtschaft (Institute of the German Economy - IW) says that one noteworthy aspect is that career changers find it more feasible to enter IT professions than other fields like legal professions (2023). The reason for this might be that in IT academic roles, practical experience and informal education appear to be more crucial than in other occupations (IW, 2023). Learning on the job is facilitated in the IT sector, particularly for career changers. With further education courses, programmer boot camps, and hands-on experience, companies can make this possible. Furthermore, immigration or remote hiring opportunities for international IT professionals are less dependent on formal education, with practical skills playing a significant role (IW, 2023). The IW (2023) discusses the significant IT skills gap in Germany, focusing on IT experts in contrast to average specialists. This gap is challenging to close, especially as the number of STEM (science, technology, engineering, and math) students entering universities has declined, possibly leading to a further decrease in the number of graduates. The IT skills shortage is emphasized by a record 42,000 unfilled IT job vacancies and 67,924 total job vacancies in the field (IW, 2023). However, the number of unemployed IT professionals has only slightly changed over the past decade. The shortage of IT experts with university degrees is particularly acute. In the past year, 33,932 vacancies for IT experts could not be filled by qualified unemployed individuals, representing a 76.6% increase from the previous year, according to the IW (2023). Overall, this trend is attributed to digitalization and the strong economic situation in the digital industry.
In their report “Neue Fische” highlights the evolving dynamics of the global economy, characterized by complexity and speed (2023). As a result, employees are facing the need for continuous upskilling, reskilling, and even switching to entirely new professions. Traditional career paths are becoming obsolete, and lifelong learning is essential (Neue Fische, 2023). To address these challenges, companies and HR departments must adopt a comprehensive strategy to integrate training and further education into the everyday working lives of their employees. Acknowledging the transformative impact of concepts like New Work, digitalization, and the intricacies of VUCA (Volatility, Uncertainty, Complexity, Ambiguity), the report underscores the evolving conditions of the labor market (2023). These changes are redefining job roles and altering skillset requirements, necessitating a fresh approach to workforce development. Furthermore, the traditional paradigm of hiring criteria is undergoing a profound reevaluation. The conventional emphasis on strictly standardized CVs is being challenged. Instead, according to “Neue Fische” (2023) the focus is shifting towards assessing soft skills, intrinsic motivation, and adaptability, especially in technical roles where much of the required knowledge can be acquired on the job. This shift reflects the dynamic nature of the modern workforce and the need to embrace change proactively (Neue Fische, 2023).
A Different Perspective on Causal Relations
In an interview with “Zeit Online”, a German news outlet, the professor from the University of Hamburg Thomas Straubhaar, the key issue highlighted by him is not a lack of skilled workers but rather a lack of effective leadership and coordination in the job market (2019). The following points were made by him during said interview:
The prevailing job market scenario isn't primarily marked by an outright shortage of skilled workers; rather, it is characterized by a significant misalignment between the expectations of employers and those seeking employment, according to Straubhaar (2019). Employers, in many instances, are inclined toward seeking cost-effective labor while adhering to traditional working conditions. In contrast, job seekers are increasingly seeking better terms, including improved working environments, flexible work hours, and more competitive compensation packages. To bridge this widening gap, a critical imperative is the creation of more attractive working conditions that resonate with the evolving expectations of the workforce. This entails flexible work arrangements, upgraded compensation structures, and improved working environments. These facets are pivotal, says the professor (2019), in not only attracting but also retaining skilled workers in a highly competitive job market in the long run. Straubhaar's perspective introduces an intriguing concept. Rather than merely elevating salary structures, he proposes that certain sectors should channel greater investment into digitalization efforts. This strategic pivot could significantly enhance job quality and make employment opportunities more appealing to prospective employees. It underscores the idea that innovative working environments can be equally compelling as higher paychecks. Furthermore, addressing the evolving employment landscape necessitates a robust emphasis on continuous learning and development throughout an individual's professional journey. The rapid pace of technological advancements demands that workers continually upgrade their skills to remain relevant in the job market. Lifelong learning is no longer an option but a prerequisite, according to the professor (2019).
A Multifaceted Approach to Solving the Shortage
Through extensive research by the consulting firm McKinsey & Company, a report was published in January 2023, providing insights and recommendations for organizations, particularly in recruiting and retaining digital professionals and addressing the evolving demands of the workforce. To thrive in the evolving conditions of the labor market, organizations must implement several strategies. First and foremost, according to the report, they need to expedite their recruitment processes to attract the highly sought-after digital professionals. Swift responses to applications are essential for securing top talent (McKinsey & Company, 2023).
- Identifying "Moments of Truth" in an employee's career journey is equally vital. These pivotal moments, such as job interviews, early work experiences, and feedback sessions, significantly impact overall employee satisfaction and retention. Organizations that focus on enhancing these moments can gain a competitive edge.
- Adapting to the "Working Model of the Future" is another critical aspect. Hybrid work arrangements necessitate addressing questions related to working hours, locations, and conditions. Flexibility, variable forms of cooperation, and the creation of innovative digital workspaces are essential components of this transformation.
- Empowering executives to act as digital facilitators is imperative in restructuring IT organizations for agility. Smaller, agile teams are replacing traditional structures, and managers need to facilitate decision-making processes and align teams with the organization's vision. Training and exchanges with digital leaders can help them adapt effectively.
- Furthermore, organizations should enable specialist careers for digital professionals who aspire to roles beyond the traditional. Transparent communication about these opportunities plays a pivotal role in attracting and retaining talent.
- Providing updated digital infrastructure is crucial to ensure that digital professionals have access to the latest tools, hardware, cloud infrastructure, and programming environments. This not only enhances productivity but also contributes to job satisfaction.
- Promoting diversity and inclusion should be integral to HR strategies. Research indicates that diverse organizations tend to outperform others in terms of profitability. Moreover, these aspects have become critical factors for job applicants, making it essential for organizations to embrace diversity and inclusion.
- Lastly, organizations should focus on nurturing "future skills" through training programs. These skills, including innovation competence, digital collaboration, agile working, and data analytics, prepare the workforce for the evolving challenges of the digital age. By implementing these strategies, organizations can thrive in the ever-changing conditions of the labor market.
Even Straubhaar includes the importance of recruitment in his view of the situation. He also predicts a sustained decline in student enrollment in fields related to mathematics, computer science, natural sciences, and technology (2019). This decline underscores the fact that relying solely on recent graduates to fill the burgeoning skills gap isn't a pragmatic short- to medium-term solution. To circumvent this challenge, he suggests, one potential solution is to tap into the global talent pool by recruiting skilled workers from abroad (2019). Additionally, the professor advocates for an inclusive approach that involves integrating lateral entrants from different occupational backgrounds and individuals with lower qualifications who have undergone upskilling initiatives (2019). This multi-pronged strategy could prove instrumental in addressing the pressing issue of skills shortage.
The report of the IW (201) also suggests that integrating newcomers and lateral entrants into the IT sector, along with recruiting international specialists, is essential to address the growing shortage of IT professionals. It also highlights that IT professions offer good opportunities for career changers, with nearly half of the new employment relationships in IT academic occupations being career advancements or lateral moves, a higher proportion than in other fields (IW, 2023).
Looking ahead to 2030, according to “Neue Fische”, the workforce is on the brink of a significant transformation, with approximately 6.5 million employees slated to require entirely new skills and qualifications or undergo substantial retraining (2023). Moreover, more than four million workers will find themselves transitioning into entirely different professions, calling for a fresh set of competencies, notably including creative problem-solving abilities (Neue Fische, 2023). In this rapidly evolving job landscape, the concept of lifelong learning has assumed unprecedented importance. Companies are now compelled to provide tailored reskilling and upskilling opportunities that span an employee's entire career (Neue Fische, 2023). The ability to adapt and acquire new skills is emerging as a central requirement. Interestingly, lateral entrants are emerging as a valuable resource for companies, according to “Neue Fische” (2023). These individuals, armed with interdisciplinary knowledge, bring a wealth of fresh perspectives, creativity, unconventional problem-solving skills, and a strong motivation to embrace change. Their adaptability makes them particularly valuable assets (Neue Fische, 2023).
Bitkom President Achim Berg (2022) emphasized the critical role of IT experts in driving digitalization, advocating for women's empowerment in IT, promoting qualified immigration, and improving education and training to address the skills gap.
When it comes to retention of current workers, the company IT-Talents who is supporting further education and job opportunities for the IT sector, came up with a few essentials that might help companies to adjust to the changing environment and demands of the modern job market to win the so-called “war of talents” (Steven Hankin of McKinsey & Company, 1997). In today's competitive job market, companies are taking proactive steps to bolster their employer branding strategies. A central component of this strategy involves offering enticing benefits and modern working time models, particularly geared toward attracting young IT professionals (IT-Talents, 2019). By doing so, these companies aim to carve out a distinctive identity in the minds of potential recruits. The goal is to position themselves as employers of choice in a landscape where attracting top talent is an ongoing challenge. Another noteworthy shift is in the way companies communicate with potential candidates. According to IT-Talents (2019) a departure from the formal and often stilted language of the past, firms are adopting a more informal, approachable, and relatable tone in their interactions. This transformation in communication is significant, as it treats prospective employees as valued customers rather than mere job applicants. By using clear, understandable language devoid of empty jargon, businesses endeavor to establish a genuine connection with IT experts (IT-Talents, 2019). This approach resonates with candidates and fosters a sense of authenticity in the hiring process. Amid the rapid pace of innovation in both the IT industry and the broader field of human resources, agility is emerging as a defining trait. Companies that demonstrate agility in adapting to these constant changes position themselves as frontrunners in the quest to recruit and retain new employees (IT-Talents, 2019). This agility enables them to swiftly pivot in response to evolving industry trends and workforce dynamics. Ultimately, it is the businesses that are nimble and responsive to change that are likely to thrive in the dynamic landscape of modern employment.
On the other hand, McKinsey & Company (2021) advocates for companies to realize that ****in the rapidly evolving conditions of the modern workforce, various competencies have emerged as essential pillars for personal and organizational success, which is why they made a list of modern skills that organizations should keep in mind when recruiting and retaining IT talents.
- For one thing, technological competencies take center stage. These encompass the knowledge and skills necessary for the efficient utilization and design of technologies. This category spans a wide spectrum, from software development to data analytics and artificial intelligence (AI). Those proficient in technological competencies are often specialists who possess the latest expertise and can wield it purposefully to address the demands of the digital age.
- Secondly, digital key competencies have assumed paramount importance. These competencies empower individuals to adeptly navigate and actively participate in an increasingly digitalized environment. In a world where professional life and social engagement are profoundly influenced by digitalization, these abilities have become indispensable. Whether it's effectively working in a remote setting or leveraging digital tools for collaboration, these competencies define one's capacity to thrive in today's interconnected world.
- Amid the rapid digitization of work and society, classical competencies remain the foundational building blocks for both personal and organizational achievement. These competencies encompass timeless skills such as problem-solving and resilience. They are the bedrock upon which success is built, providing individuals and organizations with the fortitude to overcome challenges and persevere in the face of adversity.
- In addition, transformative competencies emerge as a distinctive category, pivotal for addressing pressing societal challenges. These competencies equip individuals to recognize and grapple with major issues, such as climate change or global crises like the COVID-19 pandemic. Within this category, competencies like mission orientation, innovation prowess, dialog and conflict resolution skills, and the capacity to inspire others toward a shared vision come to the forefront. Effectively addressing these challenges necessitates the ability to assess complex situations, develop change-oriented objectives, generate innovative solutions that challenge the status quo, understand diverse perspectives, and persuade others to collectively pursue a common mission.
Collectively, these competencies represent a comprehensive framework for navigating the intricate demands of the contemporary professional landscape, ensuring individuals and organizations are not just equipped to tackle current challenges but are also poised to thrive in a future marked by constant change and transformation. Transformative competencies enable individuals to understand social challenges, develop visionary solutions, and motivate others to enact change. This framework was developed in collaboration with experts and aligns with global initiatives like the UN's Sustainable Development Goals and the OECD's Learning Compass (McKinsey & Company, 2021).
In Summary: Navigating Germany's IT Skills Shortage
Germany's ascent in the global digital landscape has been remarkable, but it now faces a formidable challenge — a shortage of skilled IT workers. This shortfall threatens to impede the nation's progress in an era where technology is the driving force behind innovation, productivity, and competitiveness. While the shortage is a pressing concern, it is essential to understand its multifaceted nature and explore potential avenues for resolution.
The Complex Causes: The roots of Germany's IT skills shortage are multifaceted. Demographic changes, including fewer young IT professionals entering the workforce and a growing number of experienced workers retiring, have significantly contributed to this crisis. Furthermore, the decline in student enrollment in fields like mathematics, computer science, natural sciences, and technology indicates that relying solely on recent graduates to fill the burgeoning skills gap isn't a pragmatic short- to medium-term solution. These factors combined have created a perfect storm of challenges.
Strategies for the Future: Amidst the challenges lie opportunities for Germany to fortify its IT workforce. Innovative recruitment strategies are essential, including efforts to tap into the global talent pool by recruiting skilled workers from abroad. Additionally, an inclusive approach that integrates newcomers and lateral entrants from various occupational backgrounds, along with individuals who have undergone upskilling initiatives, can help address the growing shortage of IT professionals.
Fostering Lifelong Learning: The rapidly evolving job landscape necessitates a robust emphasis on continuous learning and development throughout an individual's professional journey. The ability to adapt and acquire new skills is emerging as a central requirement. Companies must provide tailored reskilling and upskilling opportunities that span an employee's entire career. This emphasis on lifelong learning is no longer an option but a prerequisite in the digital age.
Embracing Soft Skills: The modern workforce isn't just about technical know-how; it's equally about soft skills. Recognizing the importance of transformative competencies and soft skills empowers individuals to remain relevant in the digital age. Competencies such as innovation prowess, problem-solving abilities, adaptability, and collaboration are increasingly valuable. These skills are essential not only for personal growth but also for organizational success in an ever-changing landscape.
Collaboration and Innovation: Navigating the IT skills shortage is not a challenge that Germany can tackle in isolation. It calls for collaboration between government, businesses, educational institutions, and the workforce. By addressing the root causes of the shortage, bridging the divide between employer and employee expectations, and nurturing a digitally adept and adaptable workforce, Germany can continue to thrive as a global tech leader.
A New Chapter in Germany's Digital Evolution: The future remains uncertain, but Germany has the tools and resources to shape its digital destiny. By implementing innovative strategies, fostering a culture of lifelong learning, embracing diversity and inclusion, and recognizing the importance of soft skills and transformative competencies, Germany can continue to lead in innovation and technology.
The IT skills shortage, while challenging, can serve as a catalyst for transformation. Germany has the opportunity to not only address this pressing issue but also emerge stronger and more resilient in the dynamic landscape of the digital age. The path forward is clear: adaptation, innovation, and collaboration. As Germany navigates this IT skills shortage, it has the potential to write a new and exciting chapter in its digital evolution, ensuring it remains at the forefront of global technological progress.
Sources:
Bitkom, 2022. IT-Fachkräftelücke wird größer: 96.000 offene Jobs. https://www.bitkom.org/Presse/Presseinformation/IT-Fachkraefteluecke-wird-groesser
Bitkom, 2022. Trotz Krieg und Krisen: In Deutschland fehlen 137.000 IT-Fachkräfte. https://www.bitkom.org/Presse/Presseinformation/Deutschland-fehlen-137000-IT-Fachkraefte
Destatis, 2022. Unternehmen haben zunehmend Schwierigkeiten bei der Besetzung von IT-Stellen. https://www.destatis.de/DE/Presse/Pressemitteilungen/2022/11/PD22_495_52911.html
Flake, Regina / Tiedemann, Jurek / Jansen, Anika, 2023, Fachkräftemangel in IT-Berufen – gute Chancen für Auf- und Quereinsteigende, Studie im Rahmen des Projektes Kompetenzzentrum Fachkräftesicherung (KOFA) in Zusammenarbeit mit dem Bundesministerium für Wirtschaft und Klimaschutz (BMWK), Köln.
IT-Talents, 2019. Der „War for Talents“ in der IT-Branche. https://employer.it-talents.de/blog/war-for-talents-it-branche/
Neue Fische, 2023. HR aufgepasst: So kommt ihr an rare Tech-Talente!
Neue Fische, 2023. Neue Studie: Bootcamps lindern IT-Personalmangel. https://www.neuefische.de/community/knowledge/neue-studie-bootcamps-lindern-it-personalmangel
Neue Fische, 2023. Quereinstieg – der Mythos vom Makel.
McKinsey & Company, 2021. Future Skills 2021. https://www.hochschulbildungsreport2020.de/2021/future_skills_2021
McKinsey & Company, 2023. Action, bitte! Wie der öffentliche Sektor den Mangel an digitalen Fachkräften meistern kann. https://www.mckinsey.de/news/presse/2023-01-25-it-talent-im-public-sector
Zeit Online, 2019. Hamburg leidet nicht am Fachkräfte-, sondern am Führungsmangel. https://www.zeit.de/2019-06/thomas-straubhaar-fachkraeftemangel-hamburg-arbeitsmarkt
Zeit Online, 2023. Fachkräftemangel in IT-Berufen erreicht Rekordniveau. https://tinyurl.com/45jc4fan
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