KfW Research: Fewer businesses are complaining about skills shortages

• In Germany, 27 per cent of companies report difficulties due to lack of workers
• Weak economy is main reason for decline
• Services sector remains most affected by skilled worker shortages

The shortage of skilled workers in Germany has abated noticeably but remains on a historically high level. At the beginning of the second quarter of 2025, 27.2 per cent of enterprises complained about adverse effects due to a shortage of staff. In the fourth quarter of 2024, that figure was just under 32 per cent, and in the summer of 2022 as much as 49.7 per cent. The reason for the decline is the weak German economy. It has led to declines in sales and orders as well as layoffs and hiring stops, particularly in manufacturing. The great uncertainty over the course of the US administration is also weighing on businesses.

These are the findings of the KfW-ifo Skilled Labour Barometer, which is based on evaluations of the ifo economic surveys. Around 9,000 enterprises, among them 7500 SMEs, are polled for the analysis once every quarter.

“Skills shortages remain a barrier to growth for a substantial share of businesses. The fact that fewer businesses currently feel that this is a serious problem is only a snapshot,”

said Dr Dirk Schumacher, Chief Economist of KfW.

“Skills shortages will intensify again in the coming years if the economic situation improves as predicted. Countermeasures such as increasing labour force participation and boosting skilled migration and productivity growth must be urgently taken.”

In manufacturing, fewer than half as many enterprises reported skills shortages at the beginning of the second quarter than at the height of the shortage in 2022 (down from 44.5 per cent to 17.9 per cent). But the number of affected industrial enterprises is still significantly higher than the long-term average. Between 1991 and 2010, on average a mere 3.7 per cent of manufacturing enterprises reported having been negatively impacted by a shortage of skilled workers. The average figure was 9.8 per cent over the entire survey period from 1991 to the present.

Skills shortages are still particularly pronounced in the services sector, even if they decreased here as well. Worker shortages were reported by 32.9 per cent of service providers; down from 39.1 per cent in the fourth quarter of 2024. The problem is particularly pronounced for lawyers and tax consultants, 64.6 per cent of whom are affected by skills shortages. It also affects more than 40 per cent of road and rail transport services.

In the industrial sector, manufacturers of garments are currently not affected at all (0 per cent), while manufacturers of furniture (9.7 per cent) and pharmaceutical products (10.0 per cent) are affected to a relatively small extent. In contrast, shortages are severely impacting on producers of leather, leather goods and shoes (55.0 per cent) and metal products (26.5 per cent).

The KfW-ifo Skilled Labour Barometer is published twice a year in early summer and in autumn. The current edition is available at: KfW-ifo Skilled Labour Barometer | KfW.