Demographic change & skills shortage: what to do?
Demographic change – I’m sure you’ve already read a lot about it:
Although the world’s population is growing, the number of Germans is decreasing. A declining population may be good for the climate, but it also poses a whole handful of serious problems: Not only are there fewer and fewer people paying into our social security systems, but the shortage of skilled workers is also a consequence of demographic change and is causing serious problems for companies.
In this article, we look at the facts, figures and background, the challenges that demographic change poses for companies and how you can tackle them.
What is demographic change? The definition
Demographic change is a major change in the population structure. Among other things, demography looks at the number of citizens, the age structures of society and their causes, such as birth and death rates, immigration and emigration, and the average age.
Population decline
Baby boomer generation
The chart above shows the age structure of our society in Germany today, as of 2017.
You can see how many citizens of all ages there are.
If you take a look at the 50-year-olds, you will see that the members of this generation are called baby boomers. As the name suggests, baby boomers are particularly well represented. This is due to the fact that from 1958 onwards, after the living situation had improved and stabilized somewhat after the war, successively more children were born. The annual number of births increased until 1964, which was the year with the highest birth rate.
Pill bend
After that, the birth rate fell again because the contraceptive pill came onto the market and women took advantage of the opportunity to actively practice family planning.
Until the 1970s, more people were born each year than died. However, this changed in 1972; since then, the death rate in Germany has been higher than the birth rate. In other words, Germans are tending to become fewer and fewer, as you can clearly see in the chart above.
Declining birth rate
There are many reasons for this; however, it is noticeable that in societies where mothers, children and families expect more security, e.g. in terms of childcare, employment, etc., the joy of giving birth is somewhat more pronounced. Examples are the GDR with its high birth rate or France today, with a birth rate of 1.96 children per woman in contrast to Germany with 1.50.
Retirement of the baby boomer generation
In 2019, the baby boomer generation will be between 54 and 64 years old. She currently holds many responsible, senior positions and has gained a great deal of expert knowledge and experience in the course of her professional career. Over the next few years, the members of this generation will gradually retire.
As a result, a lot of expertise will be lost and, above all, many vacancies will arise for which there will not be enough employees to fill them.
The history and future of our demography
The chart above shows the current age structure (2017) in comparison with the past and (predicted) future.
The future is particularly interesting for us: in around 40 years’ time, in 2060, even fewer children are expected to be born than today.
The number of older people, on the other hand, is increasing significantly. Not only are many more people up to 100 years old compared to 2017 or even 1950; there are significantly more people over the age of 60 overall.
Our life expectancy is increasing!
Even though our society is getting older and older, it is good to be able to see that we will live longer and longer.
Just imagine: a girl born today has a life expectancy of 92.8 years, a boy 87.8 years!
And, as I said, that is the average. It is expected that 28% of girls and 7% of boys will live beyond the age of 100.
Our life expectancy is already relatively high compared to earlier times and compared to other countries.
Ageing and pensions
Falling birth rates and longer life expectancy are significantly changing the age structure of our society. There are significantly more pensioners and, in contrast, significantly fewer young people who could pay into the pension fund.
Here we take a brief look at the development of the ratio of pensioners to pension contributors to date. The ratio was already 1:2.1 in 2015.
Companies and demographic change
Problem of skills shortage
The pension has already been discussed extensively elsewhere.
But what are the consequences of demographic change for companies?
Michael Carl is a futurologist at the think tank 2b ahead – and was a keynote speaker at one of our Leadership Lounges. His research has shown that in less than 10 years, 6.5 million more people will leave the labor market than will enter it. – Remember: the baby boomers are retiring and leaving gaps.
Michael Carl’s best-case scenario showed that
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even if the retirement age were set higher,
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women would return to life more often and more quickly after maternity leave,
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if the health of employees could be stabilized so that there would be fewer absences due to illness
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and if the majority of people who have been granted asylum here were quickly put to work,
there will still be 3 million too few workers on the market.
These are gloomy prospects for companies. Because one thing is clear: no workforce, no performance.
Skilled workers – but where from?
Companies are coming under increasing pressure in this respect: companies are already struggling to find trainees for skilled trades. There is a shortage of skilled workers in the healthcare and nursing professions, in gastronomy and in the STEM professions (math, IT, natural sciences and technology). There is no improvement in sight.
Companies must protect themselves and ensure now that they will still be able to employ suitable specialists in the future.
However, the balance of power is changing: Today, many company doors are open to employees. They don’t have to take what they can get, but have the opportunity to decide where they like it best. Even if this has not yet reached all sectors, the trends are clear.
A baffled master craftsman, who a few years ago could not save himself from applicants, heard a potential trainee say after the interview: “I like you. You’ll be on my shortlist. I’ll get in touch when I’ve made up my mind.” He said and left.
In future, companies will no longer be able to cherry-pick the best, but will have to take whoever they can get.
Becoming attractive for employees
There is also good news: The chances of finding and hiring suitable employees can be increased if companies make themselves attractive to them.
Ask yourself the following questions:
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Where and, above all, how do you want to address the highly sought-after specialists?
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Why should a specialist who has the choice of working in several companies choose your company of all companies?
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What – apart from good pay – do you have to offer your employees?
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What will keep the employee in your company?
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How do you become an employer that is perceived positively from the outside?
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What do potential employees perceive as positive?
Attracting young employees
Times are changing: employees used to value different things than they do today.
Whereas in the past – and even today for older employees – a visibly high status within the company structure, a big company car, their own office and, above all, a generous salary were considered attractive, the new generations are attracted by other factors.
Feel-good factors team and creative environment
It is important for young people to have a great team and to feel comfortable at work. They enjoy having a say and appreciate a creative environment and a good work-life balance.
Google has responded very well to these needs and enjoys great popularity as an employer. At Google Hamburg, for example, the canteen serves freshly squeezed fruit juice and healthy food freshly prepared by chefs all day long free of charge, the rooms are creatively furnished – and employees can organize their own working hours. After all, employees should feel comfortable and give their best.
Family compatibility
The younger generations also attach more importance to their family life. So how family-friendly is your company? Check: Is it attractive for people in the family phase to work for you?
Reaching young employees
Of course, you will hardly reach young people with an ad in the city gazette – and ads on Internet portals are often not necessarily successful either. Mercedes has launched an exemplary campaign here: When they realized that hardly any young people were applying for an apprenticeship at Mercedes, they asked the existing apprentices to report on their apprenticeships via video and photo on WhatsApp and their social media channels. And lo and behold – more young people were interested and applied straight away.
In our article Generation Y, Generation X, Generation Z – Differences & Opportunities, we take a closer look at the characteristics and preferences of the different generations.
Keeping older employees in the company
The natural course of events, one might think, would be that the older people leave and the younger ones replace them. We have already explained in detail that this will not be the case. There will be fewer and fewer younger workers. This means that it is not only important for companies to adapt to the small number of young employees, but also to make an effort to recruit older employees.
The needs of older employees
In a study, Ehrentraut O., Fetzer S. found that the number of employees +55 would have to more than double in order to guarantee a sufficient level of social prosperity. And not only society, but also companies need people over 55.
Their needs, in turn, are completely different from those of twenty-year-olds.
How do you make the working environment and working situation attractive for older people so that they want to stay with the company for longer?
New working models
There are already new models, such as voluntary continuation of employment or flexible transition to retirement.
The appreciation of older employees must also increase. Why should people in their 60s be considered old and no longer employed?
The savings bank set an example here: they brought former employees back from retirement on a daily basis, because they needed people to look after older customers – and older employees were best at that. A win-win situation for everyone involved.
Employer attractiveness
Ultimately, there is a lot that you as a company can do to appear attractive to potential employers. But beware of only working on your public image. Because if your employees do not feel comfortable in your company, sooner or later this information will be found on a corresponding Internet platform. Besides, what would you gain from hiring an employee who initially thinks your company is attractive, but then quits at the next opportunity because you haven’t kept your promises? That would only cost you a lot of time and money.
Employer branding
How exactly do you become an attractive employer? The path to get there is sometimes a little longer and there are a few things to consider. But it’s worth it!
One of our next articles looks at the topic of employer branding. Here we describe in detail the individual steps to successful employer branding, show the dos and don’ts and report on examples. You read about us!
And if you can’t wait:
We are happy to help you with employer branding!
We have already helped many companies to become attractive employers. We would be delighted to support your company with employer branding!
We show many graphics in this article, most of which are from thewww.demografie-portal.dedesFederal Statistical Office, which has kindly authorized their publication.
