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German Companies Turn to Automation Amidst Labour Shortage

Germany is facing an acute labour shortage, with approximately 1.7 million jobs unfilled in June, according to official data. The country’s post-war “baby boom” generation is gradually exiting the workforce, leaving a shortage of skilled workers to fill vacancies. The German Chambers of Commerce and Industry estimates that more than half of companies are struggling to find suitable candidates for positions, resulting in an estimated cost of nearly 100 billion euros ($109 billion) per year to Germany’s economy.

S&D Blech, a machine parts producer, is one of many small and medium-sized companies turning to automation to address the shortage. The company plans to replace the retiring head of the grinding unit with a robot. Other firms, including bakeries, laundries, and supermarkets, are also investing in automation as robots become cheaper and easier to operate.

Germany is already the world’s fourth-largest market for robots, with heavy investments in automation by car makers and industrial giants. In 2020, around 26,000 robots were installed in Germany, a figure second only to 2018. Companies see robots as a solution to staff shortages and a means of ensuring their future survival.

Automation also offers benefits in terms of worker safety and productivity. Robots have become easier to use, with no programming skills required, and many now come with a Human Machine Interface similar to a smartphone. A survey published in June found that nearly half of German employees view robots as helpful in addressing labour shortages.

Even trade unions, previously wary of job losses, now view automation in a positive light. When adopted as part of a long-term corporate strategy, robots can make work healthier, more interesting, and safer. However, it is important to note that humans still possess flexibility and are better suited for complex and differentiated production processes.

With demographic changes and labour shortages affecting other developed economies, the impact of advanced automation technologies will be significant. Economists predict that innovations like robotics and AI will revolutionize the world of work, leading to different ways of performing tasks in the long term.

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