IW study: Skilled labor shortage is slowing down infrastructure projects

The shortage of skilled workers could become a problem when using the 500 billion euros from the state's special pot to modernize the infrastructure.

Money alone does not create capacity for implementation, according to a study by the German Economic Institute (IW), which is available to the Reuters news agency and is due to be published today.

Bottlenecks in technical activities are particularly high

"Whether the projects succeed depends crucially on whether there are enough qualified specialists available to plan, build and operate them." And there are question marks here, especially when it comes to jobs in the infrastructure, energy transition and digitalization segments.

"If you count overlapping professions only once, an average of 148,047 skilled workers were missing for the investment agenda between July 2025 and June 2026. These three professional groups therefore account for 44 percent of the skills gap across all professions."

According to the Cologne researchers, the bottlenecks are greatest in technical activities for the physical implementation of infrastructure projects. "This includes construction electrical engineering, sanitary, heating and air conditioning technology, electrical operating technology as well as mechanical engineering and operating technology."

There was a lack of skilled workers with completed vocational training. "The funds from the special fund are likely to trigger a further increase in demand for these professions, while the labor supply will only grow inadequately without vigorous countermeasures."

Skilled labor shortages remain a massive problem

The federal government, as well as leading economists and the International Monetary Fund, recently significantly increased their forecasts for the German economy. In addition to good export figures, this is primarily due to government investments in infrastructure and the defense sector. Gross domestic product is expected to rise by a total of 1.3 percent this year and then by 1.1 percent in 2027. In 2028, things are expected to increase more slowly by just 0.6 percent.

According to the IW, the shortage of skilled workers, which is primarily due to demographic developments and can only be partially offset by immigration, is one of the biggest structural problems in Germany. "Unfilled positions initially mean lost value creation in the short term, but in the long term they also mean less innovative power and economic growth." In 2025, 54,000 training positions remained unfilled across all professions and almost 40,000 applicants remained unplaced.

Investment backlog also in the private sector

“It is true that the state is clearing up its investment backlog,” said IW economics director Michael Grömling. “However, public spending cannot replace private investment for sustainable growth.” The fact that the federal government wants to attract such money to Germany with the investment summit starting this Monday is a step in the right direction, because according to another IW study, the private sector's investment mood has been poor in recent years.

Accordingly, the German economy has lost hundreds of billions in investments since the beginning of 2020 due to the corona pandemic, the war in Ukraine and the Middle East conflict. Companies invested around 470 billion euros less than would have been expected based on the historical trend. The state, on the other hand, invested around 50 billion euros more.

Taken together, this leaves estimated investment losses of around 420 billion euros. Private investments in the second quarter of this year were still more than ten percent below the annual average for 2019. Public investments, on the other hand, are 20 percent higher than in 2019.