Wainwright Marks Management - Germany Faces Skilled Labor Shortages

Wainwright Marks Management analysts say one of the biggest challenges facing Germany is a lack of skilled labor. While this is a problem for small businesses in the Eurozone, it is good news for wage growth. With unemployment in the Eurozone at record low levels, as much as 25% of small businesses are struggling to source enough skilled labor, a problem which has been increasing in recent years as the rate of unemployment shrinks.

Wainwright Marks Management analysts say economies with a higher rate of unemployment would face the opposite issue. As many as 25 percent of businesses in Spain and Italy report that attracting enough new customers is their number one problem.

The shortage of skilled labor is a problem for Germany's small businesses in particular but labor shortages are also monitored by the European Central Bank. Shortages of labor help to boost wage growth which in turn adds pressure on inflation. Eurozone inflation has been less than its target of 2 percent for the majority of the past seven years.

In France, there is also a shortage of skilled labor and even though France has a higher rate of unemployment than Germany, more than a quarter of French companies reported that lack of skilled labor was the number one issue affecting business growth.

Wainwright Marks Management analysts say that labor shortages are often an indication of robust domestic demand, the primary driver of Q1 growth in the Eurozone.