At first glance, things look pretty healthy in the German labor market. Unemployment has almost halved since a major round of reforms in 2005 ushered in a new era of job creation. Even the pandemic hasn’t changed the picture much: the unemployment rate has only increased slightly, from 5.0% to 5.9%, since the start of the coronavirus crisis. Thanks to the possibilities of short-time working, most people have been able to keep their jobs. The pandemic has also proven that working from home is possible in Germany.
Nevertheless, German workers are going through a period of great change and many experts believe that the country is not prepared for what is to come. “We will see an incredible upheaval in the German labor market in the 2020s,” Federal Labor Minister Hubertus Heil (SPD) said in a recent statement.
Most experts agree that the drivers of this change are digitization and automation as well as other technological changes such as the rise of electromobility.
The knowledge economy
The effects of this transformation differ enormously from one sector to another. But Hilmar Schneider, CEO of the IZA Institute of Labor Economics in Bonn, sees a clear trend. “The days of hard physical labor are practically over,” he told DW. “We are doing more and more intellectual or knowledge work.”
Low-skilled or unskilled jobs are increasingly being replaced by robots and computers, or poorly paid. “We have come a long way on this path and have achieved a kind of balance,” said Schneider. “What can be automated is already automated.”
Hilmar Schneider says the days of hard physical labor are over in Germany
Automation is already very present in various industrial sectors, but major changes in the logistics sector are still ahead of us. For example, trucks are always driven by people, but according to industry experts it is only a matter of time before these tasks are handled by autonomous vehicles as well. The same goes for the taxi industry and other mobility services.
Degrees alone won’t save you
Sociologist Roland Verwiebe, professor of social structure and social inequalities at the University of Potsdam, recognizes that many jobs will be lost. But unlike Schneider, he doesn’t think a balance has already been struck or that only the unskilled have to worry.
Digitization meant the transformational end of an era, he told DW. He believes that highly skilled workers will also be significantly affected.
He cited translators, whose businesses are threatened by constantly improving software such as Google Translator or DeepL. “Lawyers are also potentially affected,” he said, noting the amount of legal expertise available online.
The banking industry has seen these types of changes before, with several interface jobs lost to machines and online services.
But even though digitization has been known for a long time, Germany is in serious danger of falling behind.
The pandemic has revealed major weaknesses in digital infrastructure, particularly in public administration. Health authorities were regularly overwhelmed and seemed to rely more on fax machines than online systems to manage the crisis.
The pandemic has led to a lot more working from home in Germany. But it also revealed huge gaps in the country’s digital infrastructure.
But the state’s failure is even greater when it comes to imparting digital skills to young people. “It is a political failure of the highest degree that digital education is not a subject in school,” said Verwiebe.
But it’s not just digitization or the associated lack of adequate training that puts jobs at risk. Other technological changes are blowing revolutionary headwinds. The boom in electromobility alone will cost at least 200,000 jobs in the German auto industry over the next four years as electric cars become cheaper and cheaper. This is the result of a study carried out by the ifo institute on behalf of the automotive industry association VDA.
It’s not all bad news. According to recent estimates, an overall net gain in jobs could be created by new roles in the production and maintenance of electric cars.
New jobs are also being created in other industries. Around 2.1 million jobs will be created in Germany by 2035 in jobs that are difficult to replace by technology, according to a study by management consulting firm Deloitte. Most of them are in the fields of health, education and training, and management and administration.
Whoever leads the next German government, how they deal with changes in the labor market will be key to their success.
But that’s no consolation for people who will lose their jobs due to digitization, as they often lack the skills needed to land the new jobs. minimum wage or a little more.
In comparison, the rate is at most half the level in the Netherlands, France and the Scandinavian countries. The only solution is education and training. In the auto industry alone, about 800,000 workers – virtually everyone who works in the industry – will soon need new or different skills, according to management consulting firm Boston Consulting Group.
On top of all this, Germany’s need to attract workers from abroad is not going to diminish, Schneider said, pointing to an aging society.
“We need concepts designed to attract highly qualified people to the country,” he argued. Here, too, he thinks there is “a lot of catching up to do”.
This article was adapted from German