Ger­man firms hone tools to defuse de­mo­graphic time bomb

Kuwait Times - - BUSINESS -

WUPPERTAL, Ger­many: For more than 130 years, Knipex, a fam­ily-owned com­pany in western Ger­many, has made pliers for crafts­men around the world. Re­cently it has de­vel­oped a dif­fer­ent set of tools to help it cope with an age­ing work­force and skilled la­bor short­age.

The man­age­ment tool­kit in­cludes above in­fla­tion wage rises, sub­si­dized meals and an on­site nurs­ery, as well as train­ing for older work­ers to op­er­ate ma­chines do­ing work they used to do and flex­i­ble work­ing con­di­tions beyond the statu­tory min­i­mum.

It shows how com­pa­nies in Europe’s big­gest econ­omy are in­creas­ing their ef­forts to adapt to a long-her­alded short­age of peo­ple of work­ing age now that an eco­nomic up­turn has driven em­ploy­ment and va­can­cies to record highs. Low birth rates and in­creased life ex­pectancy are af­fect­ing many ad­vanced economies, but a sur­vey by staffing firm Man­power-Group found Ger­man com­pa­nies were far more wor­ried about at­tract­ing and re­tain­ing tal­ent than their peers in the United States, France, Italy or Bri­tain.

“Our strat­egy to avert a short­age of skilled la­bor can be sum­ma­rized like this: We sim­ply want to be seen as the best em­ployer in the re­gion, by our own em­ploy­ees and by out­side can­di­dates,” Knipex’s head of per­son­nel Kai Wiede­mann said.

While glob­al­iza­tion and dig­i­tal­iza­tion have eroded wages and ben­e­fits in many de­vel­oped coun­tries, Hol­ger Schae­fer, la­bor mar­ket ex­pert at the Cologne In­sti­tute for Eco­nomic Re­search noted the de­mo­graphic time bomb was tick­ing else­where too.

“It’s some­what like a look into the fu­ture if you look at what Ger­man com­pa­nies are do­ing,” he said. Pay rises are the most no­tice­able shift. Last year, wages rose in real terms by 2.5 per­cent, the most in over two decades. As a non­listed com­pany, Knipex does not face in­stant pres­sure from share­hold­ers if prof­its come in lower for a year or two. The build­ing of the kinder­garten, un­usual for a com­pany of 1,200 work­ers, was fi­nanced with sav­ings built up over years.

Many of Ger­many’s DAX-listed com­pa­nies are tak­ing their own mea­sures, how­ever, and even house­hold names like Siemens or BMW, who still at­tract plenty of ap­pli­cants, have trou­ble in some ar­eas.

Siemens rein­tro­duced a scheme this year to pay up to 3,000 eu­ros to em­ploy­ees who re­fer can­di­dates that it suc­cess­fully places in jobs. “The prob­lem is not leav­ing us un­scathed,” said a com­pany spokesman, ad­ding that the tal­ent pool was get­ting smaller, es­pe­cially in soft­ware de­vel­op­ment and en­gi­neer­ing. Car­maker BMW has turned to the United States, cre­at­ing a 200strong dig­i­tal in­no­va­tion hub in Chicago and hir­ing soft­ware en­gi­neers who worked for mo­bile phone pi­o­neer Nokia. Oth­ers are look­ing to ed­u­ca­tion. Soft­ware com­pany SAP said it was of­fer­ing stud­ies in IT and Eco­nomic Com­puter Science to fill knowl­edge gaps among ap­pli­cants.

Knipex, founded 1882 by the great-grand­fa­ther of CEO Ralf Putsch, has given above in­fla­tion pay rises for three years. Its other mea­sures have cost roughly 1 mil­lion eu­ros per year, while an­nual sales are more than 100 mil­lion eu­ros. With an eye on com­peti­tors such as Fa­com and Ge­dore, the com­pany, lo­cated in the western city of Wuppertal in Ger­many’s most pop­u­lous state, North Rhine-West­phalia, it has lim­ited price rises, but for Wiede­mann, the in­vest­ment is pay­ing off. “We’re get­ting many more job ap­pli­ca­tions now,” he said.

Kata­rina Dudesin, who came to Ger­many in 2003 from Bos­nia-Herze­gov­ina, works 20 hours per week in pliers pro­duc­tion while her two small­est kids are in the com­pany kinder­garten, which she said had more staff and cost 10 per­cent less than equiv­a­lents.

“It makes life so much eas­ier,” Dudesin said, ad­ding that it had en­abled her to re­turn to work more quickly than oth­er­wise. De­spite a re­cent rise in the birth rate and the ar­rival of nearly 900,000 mi­grants last year, ex­perts es­ti­mate the work­ing age pop­u­la­tion, whose pen­sion con­tri­bu­tions sup­port the grow­ing num­ber of re­tirees, will shrink by up to 6 mil­lion by 2030.

At Knipex, roughly a third of em­ploy­ees are aged 50 or older. Most will re­tire within the next 10 to 17 years. “This will be a crunch for the com­pany,” Wiede­mann said, while ad­ding that train­ing older work­ers to pro­gram ma­chin­ery that now does some of the more la­bor-in­ten­sive jobs has helped.

A study by Bos­ton Con­sult­ing Group pre­dicted Ger­many’s GDP per capita would grow by only 0.5 per­cent in 2030, far be­low the av­er­age of 1.3 per­cent. Main­tain­ing the cur­rent labour force would need im­mi­gra­tion of at least 400,000 peo­ple ev­ery year un­til 2050, the In­sti­tute for Em­ploy­ment Re­search es­ti­mates.

But Chan­cel­lor Angela Merkel’s open-door pol­icy for mi­grants has met a pop­u­lar back­lash and while most of the re­cent ar­rivals are of work­ing age, many strug­gle to get jobs, partly due to lan­guage bar­ri­ers and a lack of cer­ti­fied qual­i­fi­ca­tions.

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