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"Simply not enough there" - lack of staff is becoming a bankruptcy accelerator everywhere

Michael Gilka raises the alarm.

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"Simply not enough there" - lack of staff is becoming a bankruptcy accelerator everywhere

Michael Gilka raises the alarm. "The situation in the industry is precarious," reports the general manager of the Federal Association of Medium-sized Construction Companies (BVMB). And Gilka does not mean the skyrocketing prices for building materials, short-term cuts in subsidies and the sharp rise in interest rates, which in this combination have long since led to falling building permit numbers. The industry representative is talking more about the shortage of skilled workers.

According to projections by the Institute for Labor Market and Occupational Research (IAB), around 205,000 jobs are currently vacant in the construction industry. "Construction does not primarily need unskilled workers, but urgently needs skilled workers and specialists," describes Gilka and calls on politicians, for example, to ease the issue of immigration, but also to provide incentives to make training in commercial occupations more attractive.

And very quickly. Because the BVMB has long seen the ambitious goals of the traffic light government in the mobility, traffic and energy transition in danger, as well as the plans for climate-friendly renovations. According to the association, the 400,000 apartments per year promised by Federal Building Minister Klara Geywitz (SPD) are little more than wishful thinking.

"There are simply not enough people who can build them," warns Gilka. Politicians must finally recognize that the shortage of skilled workers is paralyzing the construction industry. "And this realization shouldn't only come about when hordes of academics suddenly have to wait years for their roof to be repaired, their yard paved or their house built, something has to happen quickly," complains the head of the association.

Especially since the medium-sized companies he represents are already coming under pressure. Experts even expect bankruptcies as a result of the labor shortage. And not just in the construction industry.

"The increasing shortage of labor is bringing the first companies into economic difficulties," reports Christoph Niering, insolvency administrator and chairman of the professional association of insolvency administrators and administrators in Germany (VID), WELT. "Because without sufficient staff, orders cannot be processed and services cannot be provided."

The VID sees almost all economic sectors affected, but above all the personnel-intensive sectors. “The labor market has developed into an employee market in recent years. We therefore have to say goodbye to business models that rely on the free availability of large numbers of inexpensive workers," says Niering. Especially since the demographic change will intensify the development.

"It will not be possible to fill the position as quickly and as numerously as companies will lose employees in the next few years," predicts Niering. "And that can't work in the long run." Niering itself is already handling the first insolvency cases in which a lack of workers is at least one of the reasons for bankruptcy. One case, for example, concerns a larger catering business that is missing several cooks and service staff.

Other insolvency administrators confirm this trend. "These days, our members are reporting more frequently about companies that have gone bankrupt due to the shortage of workers," says the VID. "These are companies, especially in the catering or hotel industry, which have been active for a long time, but have a need for staff that simply can no longer be met." However, those affected do not want to express themselves or show themselves publicly.

The credit agency Creditreform has also noticed that the causes of insolvency proceedings are shifting. “The financial stress is already great for many companies in view of the corona crisis, high energy prices and supply chain problems.

The shortage of skilled workers, which is currently having an unprecedented impact, is now killing some companies,” says Patrik-Ludwig Hantzsch, Head of Economic Research at Creditreform. He also sees the gastronomy and hotel industry primarily affected.

“The lack of staff there has already led to shorter opening hours or reduced menus. However, such restrictions increase the risk of insolvency because they lead to a drop in sales while fixed costs remain high,” explains Hantzsch. This is bearable for the companies for a few months. "But not for long. But the shortage of skilled workers will not disappear within a few months.” And the problem cannot be solved with money either. “Of course, employers can pay more – but only to existing staff. But there is a lack of the necessary people.”

Creditreform therefore expects the corresponding effects - at the latest in the first half of 2023. "Staff shortages will become a real driver of insolvency in the coming months," Hantzsch predicts to WELT and, in addition to the hospitality industry, also sees sectors such as retail, logistics or care as particularly at risk.

This danger does not challenge the German Hotel and Restaurant Association (Dehoga). The personnel problem is too big at the moment. Managing Director Ingrid Hartges estimates that there are around 80,000 vacancies across the country. Although she sees the bottleneck among employees only as a crisis factor.

“Several factors are always responsible for insolvencies and business closures. After 30 loss-making months of the pandemic, companies are again facing extreme challenges. Many no longer have any reserves, but instead have high loan liabilities. And that in times of sharply rising costs for energy, food and beverages.”

It is true that the Germans were still very happy to go out in the past few months. And the tourist regions are also reporting well-booked hotels and restaurants. Overall, however, the industry is still well below the pre-crisis level, as shown by current figures from the Federal Statistical Office. In the period from January to June, the price-adjusted sales losses were 22.1 percent compared to the last year before the crisis, 2019.

And the hardest time is yet to come. On the one hand, the high inflation is increasingly leading to a reduction in consumption. “On the other hand, corona measures are threatening again,” says Hartges. And last winter - despite open operations between November 2021 and March 2022 - they would have led to a drop in sales averaging 30 percent.

“The half-year balance shows that the hospitality industry is threatened with the third year of losses in a row. The worries and existential needs of the entrepreneurs are therefore great.” Hartges therefore fears numerous operational closures.

In the first quarter of 2022, there were a record 1.74 million job vacancies. Federal Labor Minister Heil is therefore working on a new immigration law. FDP parliamentary group leader Dürr is already calling for large-scale immigration of foreign workers to be allowed.

Source: WELT/ Viktoria Schulte

They then do not appear in any insolvency statistics. It was similar in the past few years and months. At the end of 2020, for example, there were around 25,000 fewer taxable companies in the hospitality industry in Germany than in the same period last year, reports Dehoga with reference to the sales tax statistics. According to Creditreform, the number of bankruptcies in the catering industry was only 1,501.

It should be similar in other sectors. At least that's what both Creditreform and the VID suspect. And the number of corporate insolvencies continues to be comparatively low. In July, for example, it was 4.2 percent lower than in the previous month, reports the Federal Statistical Office based on preliminary figures.

And in June there was also a minus of 7.6 percent. In May, the numbers had risen again – compared to the same month last year, by as much as 11.3 percent. According to the statistics, most of the 1,242 insolvencies were in the construction industry, followed by retail.

"Everything on shares" is the daily stock exchange shot from the WELT business editorial team. Every morning from 7 a.m. with our financial journalists. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.

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