Companies Facing Skills Shortages Provide More Supportive HR Programmes for Older Workers

Research

From 2010 onwards, there has been an emerging trend of companies offering increased support to older employees.

When companies struggle to fill their vacancies with skilled workers, this can have a considerable negative impact on overall economic development. The economic consequences of such skills shortages are largely dependent on how the companies affected choose to react. According to the results of a study carried out by the Mannheim-based Centre for European Economic Research (ZEW), on behalf of the German Federal Ministry for Economic Affairs and Energy, the vast majority of firms in Germany are still able to fill all of the skilled positions they need. There are, however, some firms finding it increasingly difficult to recruit enough skilled workers.

One of the questions investigated as part of the ZEW study was whether these companies were trying to make themselves more attractive as employers, for instance by offering higher wages to new recruits or dispensing with qualification requirements. The results of the study showed that companies experiencing a skills shortage were increasingly drawing on supportive HR measures aimed at older employees, whereas the promotion of equal opportunities, a better work-life balance for workers or further training opportunities played only a minor role. Companies’ readiness to adapt was also visible in their recruitment behaviour.

Using representative data from German establishments for the years 2002 to 2014, ZEW researchers investigated the training opportunities, supportive measures for older workers including health initiatives, as well as measures to promote equal opportunities and recruitment strategies used by German businesses. A number of different indicators showed that, following the economic recovery from the mid-2000s onwards, companies had been finding it increasingly difficult to fill job vacancies. “This trend did not, however, continue into the early-2010s, which means that recruitment difficulties did not increase further,” says Dr. Daniel Arnold, researcher in the ZEW Research Department “Labour Markets, Human Resources and Social Policy” and co-author of the study. The study does not cover the recent increase in the number of immigrants arriving in Germany.

Possibilities for supporting older workers are not yet fully exhausted

The empirical results of the analysis also indicated that companies facing skills shortages not only made greater use of certain human resources practices but also adapted their recruitment behaviour. “In terms of human resources management policies, there has been an emerging trend from 2010 onwards of companies increasingly supporting the careers of older employees,” explains Daniel Arnold. Measures such as creating mixed-age teams and reducing performance requirements for older employees are, however, still not widespread in the business world. “There is still a great deal of potential to be exploited in this area,” says Arnold. In terms of promoting equal opportunities, researchers found that there was a noticeable increase in child care support offered by firms from 2010 onwards. There is no robust empirical evidence suggesting that companies facing skills shortages were offering their staff additional further training opportunities or hiring more apprentices.

Furthermore, according to survey data from 2012 and 2013, companies who needed more time to fill job vacancies claimed to be more willing to offer applicants a higher salary or to lower the qualification requirements for the job. “With regard to the recruitment of highly qualified workers there seem to be certain differences between large and small businesses,” says Arnold. While large companies and companies in the manufacturing industry facing shortages were more likely to offer highly qualified workers higher wages, small firms experiencing similar shortages tended to hire fewer highly qualified workers.

Fewer investments and innovations during skills shortages

Finally, the study also showed that small companies facing skills shortages and companies in the service sector were making lower investments. A similar trend was observed in terms of firms’ innovation behaviour: While small companies anticipating skills shortages tended to implement fewer process innovations, firms in the manufacturing industry faced with shortages developed fewer new products. “There are signs of firms having difficulty recruiting both highly qualified workers and filling trainee positions, so we shouldn’t try to play academic qualifications and vocational training off against each other. It is much more important for workers to reach their full potential and to ensure that young people leaving school are prepared for a broad range of vocational trainings, but at the same time without neglecting the benefits of an academic education,” Arnold concludes.

For further information please contact

Dr. Daniel Arnold, Phone + 49 (0)621/1235-287, E-mail daniel.arnold@zew.de