The countless cranes sprouting up across the Berlin skyline are the most visible sign of Germany’s booming construction industry, but they are hardly the only evidence of the country’s robust building market.
The HDB construction industry association has forecast nominal sales growth of six percent for 2018, which would be in line with the country’s post-reunification boom after the fall of the Berlin Wall. However, capacity constraints, labour shortages and rising wages will likely serve as a check on that growth and limit it to two percent.
There are many reasons for this surge in construction activity. The country’s infrastructure, previously starved for investment, has benefited from a recent boost in government spending. Schools, roads, and bridges have all seen increased public investment. Entire hospitals are being torn down and rebuilt or remodeled. For any construction company active in these market segments, there is a wealth of work available.
At the same time, private sector spending has been equally robust, particularly in areas such as automotive manufacturing and pharmaceuticals. Companies have been making serious investments in large, high-tech factories and production buildings to support the country’s growing research and manufacturing sectors.
Finally, the overall stability of the Germany economy has continued to pay dividends. Long seen as a bulwark of economic sanity in an unpredictable world, Germany has become a prime area for real estate investment. With the population growing, office space and housing have been in short demand in cities like Berlin, Frankfurt, and Stuttgart.
While the construction industry has reaped the benefits of this growth, it has also been hampered by a shortage of skilled labor, particularly architects and engineers. In fact, the number of job vacancies in the industry between 2011 and 2015 increased by 18.8%, or from 61,001 unfilled positions to 72,484, according to the European Commission.
The shortage of talent can be partly traced back to years of lower public and private investment in construction. Discouraged by the lack of opportunities at home, many young architects and engineers looked beyond Germany’s borders for employment. Now that the local market has heated up again, those workers are sorely missed.
“This has meant a huge skills gap for people with 5 to 15 years of experience who are also German nationals,” says Jo-dee Pearce, Architecture and BIM consultant at LVI Associates. Those people who did opt to study architecture and engineering during this period often preferred to go abroad to places like the UAE, Canada, and the UK, where they would remain to pursue better job prospects and higher potential earnings, he adds.
“Germany is still seen at the lower end of the remuneration market for architects and engineers compared to other nations,” Pearce says. “This has been a problem especially for small to mid-sized German national companies.”
This may be starting to change, however. International companies are increasingly venturing into the country, and they often bring with them larger salaries and more attractive benefits packages. German businesses have been feeling the pressure to compete.
“Salaries in Germany for fluent German-speaking architects and engineers are on the rise,” Pearce says. “Currently, salaries have been rising steadily, but as labor demand continues to grow I foresee the pay scales rising at a faster rate.”
In the interim, many companies have been looking to bring in international grads, although this is a temporary solution to the country’s labor challenges. Young architects and engineers from countries such as Poland, Spain, and Italy will find a number of opportunities to help make up for the shortfall in local talent, but newcomers may also need additional training and education to deal with language or cultural barriers. Local labor resources will ultimately need to be developed to helpfully address the skills shortage.
LVI Associates is the leading specialist recruitment agency for the infrastructure sector. We were born from the fusion of two existing companies—Laking Group and Viridium Associates who recruited for the oil and gas and renewable energy markets. While working for some of the largest energy companies in the world, we realised that we could transform more careers and support greater projects and companies by opening our services to the wider infrastructure market. More than the sum of our parts, today LVI Associates provides permanent, contract and multi-hire recruitment from our global hubs in Boston, London and Singapore. Contact us to find out more.