Skills shortage key hurdle for German energy transition and infrastructure modernisation – report

The shortage of skilled labour is “one of the most serious structural problems” facing the German economy and represents a major obstacle to implementing key policy aims, including the energy transition and major infrastructure projects, according to a report by the German Economic Institute (IW), an employer-funded think tank.

The 500-billion-euro special fund for infrastructure and climate neutrality set up by the government in 2025 would likely trigger further demand in areas already facing a skilled labour shortage, such as electrical systems for buildings, plumbing, heating and air-conditioning technology, electrical plant engineering, as well as mechanical engineering and industrial engineering, IW said. At the same time, “labour supply will grow only insufficiently unless vigorous countermeasures are taken,” said the report, which was commissioned by the BlackRock Foundation, the philanthropic arm of asset manager BlackRock, which has a significant financial interest in infrastructure investment.

The main reasons for the skilled labour shortage are demographic change and mismatches between companies’ requirements and the skills of the workforce. Between July 2025 and June 2026, there was an average shortfall of over 148,000 skilled workers in infrastructure, the energy transition and digitalisation, IW said. The scarcity of skilled workers means that different sectors that are seen as political priorities have to compete for the same pool of labour. 

IW emphasised that Germany should integrate investment programmes with strategies for improving the supply skilled labour that require close coordination between policymakers, companies, administrations, educational institutions and social partners. Only then would public spending “finally have the impact that Germany needs right now, and the challenge will become an opportunity to achieve Germany’s goals in the areas of infrastructure, the energy transition and digitalisation.”

Energy systems around the world must be reshaped to reconcile rising global energy demand with international climate targets. But a growing lack of skilled workers threatens this transition. Researchers have also warned that a lack of skills and knowledge could jeopardise urgently needed measures to adapt to existing effects of climate change. Financing difficulties, especially in developing countries, regulatory hurdles, a lack of forward-looking plans for training and education, as well as anti-immigration sentiments and policies are among the many challenges that hamper efforts to boost the available workforce.