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Globalisation 2.0
Skills shortage in Germany

How digital outsourcing can provide relief
4.8 Minutes
Globalisation 2.0

Digital outsourcing could help in the fight against the skills shortage.

© IMAGO / Joerg Boethling

Last week, the IW Cologne published the MINT Spring Report 2024 . The result was sobering: the industry is lacking around 244,000 skilled workers . Against the background of these figures, the IW Cologne recommends “using the potential of immigration even more effectively” . After all, the proportion of employees from third countries in the industry has risen rapidly over the past ten years. But at the same time, the need for workers will continue to grow in the coming years due to digitalization .

The authors of the report leave unanswered the question of whether migration alone can solve the skilled worker problem . “The integration effort that we as a society would have to achieve, especially in such a short time, is not at all realistic. “That’s why we have to look for other ways to solve the shortage of skilled workers ,” says Stefan Schott , head of the Global Partnership Hub of the Friedrich Naumann Foundation in Nairobi.

No extended workbench

One approach could be to use digitalization to outsource work processes to the Global South . “In principle, any service that does not have to be physically provided can be outsourced,” says Schott. So it shouldn't be about industrial outsourcing in the sense of an extended workbench , but rather about collaboration via digital networks . “So far, India and the Philippines have been pioneers in this area. However, Africa offers great potential,” says Schott. With the growing young population, there are many workers who are entering a labor market that does not offer enough jobs .

In contrast to migration to the Global North, the skilled workers and thus the economic power remain in their home countries and a brain drain is avoided. In addition, digital outsourcing would create well-paying jobs. “Digital outsourcing should not only be about the classic example of the call center , but also a wide range of areas such as data analysis and software development ,” says Schott. “But research and development can also be carried out digitally by employees in Africa.”

Bilateral agreements required

In a corresponding policy paper, the Friedrich Naumann Foundation calls on politicians to create a legal framework through bilateral agreements in order to create labor and social law standards.

The fact that these are urgently needed has been shown in the past, particularly in Kenya. Time magazine revealed that the American company Open AI, which developed the chatbot Chat GPT, exploited Kenyan workers. Facebook parent company Meta also had to face several court cases in Kenya .

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Hardly reliable numbers

At the same time, the question remains as to whether outsourcing can actually effectively help address the shortage of skilled workers. To date, there are hardly any reliable figures for the potential in Germany .

“The question is where the skilled worker shortage is in Germany ,” says André Hoppe , assistant professor of management accounting and expert in strategic cost management at the KU Leuven. The greatest need is in the skilled trades, for teachers and educators and in the health sector and nursing . “We definitely have a shortage of skilled workers in the mint sector too.”

Potential for SMEs

However, the most pressing need is primarily in those industries that cannot outsource workers digitally. And even companies for which digital outsourcing is fundamentally possible remained hesitant. “Outsourcing offers great potential for small and medium-sized companies. But the hurdles are still high ,” says Hoppe. Above all, medium-sized companies are concerned about the question of quality control. “ Basically, you can say that German companies are primarily still doing nearshoring ,” says Hoppe.

Schott is also aware of the hurdles. It is therefore important that the federal government puts the issue on the agenda now. Above all, this includes making visa requirements more flexible for people from African countries in order to enable an exchange between German companies and skilled workers from Africa. This is the only way to reduce possible obstacles for German companies when it comes to outsourcing.

By David Renke. This article was originally published on Africa.Table.

A new model for the globalization of the world of employment

A new model for the globalization of the world of employment

Two opposing trends characterize the global world of employment. In the global South, the supply of labor is increasing,
while the global North is confronted with a decline in the working population and a shortage of qualified workers.
Both developments have demographic causes. Many countries in the global South continue to have high birth rates. The
resulting population growth, combined with improved access
to education, is leading to a significant increase in the working
population. Despite comparatively high growth rates, very few
economies in the South are creating enough jobs to provide
all young jobseekers the prospect of an economically viable
and secure future. Typical consequences are social instability
and uncontrolled migration to the supposedly greener pastures in the North.
Conversely, the global North is struggling with the challenges
of low birth rates, ageing and in some cases even shrinking working population. The so-called baby boomers, the generation born between 1946 and 1964, are gradually retiring.
The number of young people now entering the labour market is insufficient to fill the jobs that the baby boomers are
vacating. The result is shortage of supply in skilled workers
in many sectors. For many companies, the lack of qualified
employees is becoming an existential threat. In macroeconomic terms, the shortage of skilled workers negatively impacts
growth and prosperity in the affected economies.
In real terms, the seemingly simple solution of migrating skilled labor from the South to the North to meet the growing
demand is now increasingly becoming a complicated affair.
After a decade of record immigration of refugees to the global
North, the willingness to take in more people has drastically
reduced. The fear of a supposed “over-foreignization” has driven the poll ratings of populist parties on the extreme right to
record highs.
.

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