The German construction industry is expecting to cut 10,000 jobs. What does this tell us about the shortage of skilled workers?
The construction industry association HDB has announced this figure as an estimate for 2024. According to Managing Director Tim-Oliver Müller, this is due to the weak economy, which should come as no surprise: Construction has been struggling for months. Higher key interest rates and inflation for all kinds of everyday expenses are dampening customers' interest in new homes.
- 55% of 450 construction companies surveyed fear that their situation will deteriorate in 2024
- 60% want to keep the workforce stable, 12% want to expand
- 29% would like to cut jobs
- It would be the first job cuts since the 2008/9 financial crisis.
Incidentally, a few weeks earlier, the SME industry association ZDB had already warned of even more job cuts: 30,000 jobs.
That doesn't change the shortage of skilled workers... nothing at all. Quite apart from the fact that the communicated figures are probably also meant as a bit of a political message, they only represent 1% (HDB) or 3% (ZDB) of the almost 970,000 employees in the sector.
Secondly, the current situation is, well, an economic shock. Keyword business cycles: sometimes things go up, then down, then up again. Of course, structural factors also play a role, but the situation in the construction industry is largely guaranteed to be cyclical. After all, we are talking about key interest rates and sluggish demand in a country where the metropolitan areas are drowning in housing shortages.
Thirdly, this means that some companies are downsizing, but these are either the ones that are not making the best decisions or are already in a critical situation - I'll allow myself that much risky remote diagnosis. Take the aviation industry, for example: massive job cuts were made during the Covid crisis, but when air traffic picked up significantly in 2022, airlines and airports were completely overwhelmed. It was an overreaction to a shock (which was actually difficult to assess in this case). Perhaps some companies are also overreacting to a deterioration in their situation. In any case, those construction companies that hold on to their rare tradespeople will be in a much better position as soon as the economy picks up again.
The shortage of skilled workers therefore remains unbroken. It is a structural problem. Many of the companies I work with have made exactly this mistake in the past: as an overreaction to an economic problem, they exacerbate a structural problem for themselves. As soon as the economic situation improves, they fall behind their competitors, who are smarter.
Of course, that doesn't mean you should never cut jobs. Sometimes that's what the business needs. But if you cut and fire without considering the shortage of skilled workers, don't be surprised if you end up falling behind.
