Training key as German labor market braces for digitalization, automation | Enterprise | Economic system and finance information from a German perspective | DW

Woman working from home

At first glance, the German labor market looks quite healthy. Unemployment has almost halved since a series of reforms in 2005 ushered in a new era of job creation. The pandemic has not changed much in the picture either: the unemployment rate has only increased slightly from 5 to 5.9 percent since the beginning of the coronavirus crisis.

Thanks to the short-time working option, most people were able to keep their jobs. The pandemic has also proven that working from home is possible in Germany.

Nevertheless, Germany’s workers are going through a time of great upheaval and many experts believe that the country is not prepared for what is to come. “We will experience an incredible upheaval in the German labor market in the 2020s,” said Labor Minister Hubertus Heil recently.

Most experts agree that the drivers of this change are digitization and automation as well as other technological changes such as increasing electromobility.

The knowledge economy

The effects of this transformation differ enormously depending on the industry. But Hilmar Schneider, CEO of the Institute for Labor Economics IZA in Bonn, sees a clear trend. “The days of hard physical work are basically over,” he told DW. “We are doing more and more intellectual or knowledge work.”

Jobs that require little or no qualifications 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 equilibrium,” said Schneider. “What can be automated is already automated.”

Automation is already a reality in various industries, but big changes in the logistics industry are yet to come. Trucks, for example, are still driven by people, but industry experts believe that it is only a matter of time before these tasks are also taken over by self-driving vehicles. The same applies to the taxi industry and other mobility services.

Diplomas alone will not save you

The sociologist Roland Verwiebe, professor of social structure and social inequality at the University of Potsdam, agrees that many jobs will be lost. But unlike Schneider, he does not believe that a balance has already been achieved or that only the unqualified have to worry.

Digitization meant the transformative end of an era, he told DW. He assumes that highly qualified workers will also be severely affected.

He quoted translators whose businesses are threatened by constantly improving software such as Google Translator or DeepL. “Lawyers are also potentially affected,” he said, pointing to the amount of legal expertise available online.

The banking sector has already gone through these types of changes, with many back and front office jobs being lost to machines and online services.

Digital blues

But even if digitization has long been a central issue, Germany is threatened with a permanent relapse.

The pandemic revealed major weaknesses in the digital infrastructure, especially in public administration. The health authorities were regularly overwhelmed and relied on fax machines rather than online systems to cope with the crisis.

The pandemic led to a lot more people working from home in Germany. But it has also revealed major gaps in the country’s digital infrastructure

But the failure of the state is even greater when it comes to teaching young people digital skills. “It is a political failure of the highest order that digital education is not a school subject,” said Verwiebe.

But not only digitization or the associated lack of training endanger jobs. The rise of electromobility alone will cost at least 200,000 jobs in the German automotive industry over the next four years, as their production is sometimes less complex or requires different skills. This is the result of a study by the Ifo Institute on behalf of the Association of the Automotive Industry VDA.

New jobs

It’s not all bad news, however. Recent estimates suggest that new roles in the production and maintenance of electric cars could create an overall net increase in jobs.

New jobs are also being created in other sectors. According to a study by the management consultancy Deloitte, around 2.1 million jobs will be created in Germany by 2035 in professions that are difficult to replace with technology. Most of them work in health, teaching and training, as well as in management and administration.

German chancellor candidates

Whoever leads the next German government, how they deal with the changes in the labor market, will be the key to success

But that is no consolation for people who lose their jobs as a result of digitization, because they often lack the qualifications to secure the new jobs. The problem is exacerbated because Germany’s low-wage sector is exceptionally large: every fifth employee in Germany is unemployed at the minimum wage or something above it.

In comparison, the rate in the Netherlands, France and the Scandinavian countries is at most half as high. The only solution is education and training. In the auto industry alone, according to the Boston Consulting Group, around 800,000 employees – practically all employees in the industry – will soon need new or different qualifications.

In addition, Germany’s need for workers from abroad will not decrease, said Schneider, referring to an aging society.

“We need concepts that attract highly qualified people into the country,” he argued. Here, too, he sees “a lot of catching up to do”.

This article was taken from the German