7 ms·

I think the author misses a key ingredient when he talks about the “lack of skills”: German companies are notoriously stingy (or frugal, however you want to cal

by ar0 9y ago

I think the author misses a key ingredient when he talks about the “lack of skills”: German companies are notoriously stingy (or frugal, however you want to call it) when paying their engineers. Combined with a hesitation to greatly differentiate pay between great and average staff (due to culture and also the “Gesamtarbeitsverträge” between employers and unions), this means that really great and innovative employees will be able to earn far more in nearby Switzerland or far Silicon Valley. I’m always a bit sceptical when (allegedly free-market loving) managers talk about a skill shortage: remember, economic theory states that in a free market there will be no shortage, because prices will rise to accommodate supply and demand.

isolli 9y ago
Dean Baker often complains about this, most recently here [0] > Apparently German employers don't understand basic economics. Their ignorance is jeopardizing the whole economy, according to the DIHK Chambers of Industry and Commerce. [0] http://cepr.net/blogs/beat-the-press/reuters-says-german-employers-don-t-understand-labor-markets-don-t-raise-wages-in-spite-of-labor-shortage http://cepr.net/blogs/beat-the-press/reuters-says-german-emp...
carlmr 9y ago
As someone working in Germany, yes, this is a serious problem. I don't think German managers don't understand economics, but instead they pay journalists to write about skills shortages to get cheaper immigrants here. The drive to cheap instead of good is what's holding a lot of us back though. Engineers are still seen as a cost instead of something which can (and does) earn money. But bad (and cheap) engineers cost money.
ealexhudson 9y ago
The "supply and demand will equilibriate" position only works in an entirely elastic scenario. It rarely works out that cleanly. London is a good example; wages are already extremely high in tech - to the point that many companies cannot hire. But supply is still not there, for a bunch of different reasons - e.g. people unwilling to continue/make a new life in the UK due to Brexit. Wages would have to rise _even further_ to offset that, way beyond the point it makes economic sense for a company to do that. You can have very high prices and still insufficient supply. The prices are supposed to attract supply; but e.g. when a country is not seen as being welcoming to immigrants (or, in fact, has legal restrictions in place) the only flex is in people training/retraining, which is a many-years response to an immediate problem.
- chopin 9y ago
  If you are making north of 100k, a two hours commute (each way) is not attractive. I would deem this a more limiting factor and is one reason I'd never would move to a company in Munich (I am living in Germany).
  - furqs 9y ago
    There's no way to have a 2 hour commute in Munich unless you live in Salzburg, Austria. The problem with Munich is the lack of good tech companies here.
    - wink 9y ago
      If you think there are no good tech companies in Munich, what's then left in Germany? :P I do agree the more hip ones are in Berlin, and maybe Hamburg - but I'd still say your statement is unfair, if not taken in the context of lack of "good tech companies" in Germany overall.
    - chopin 9y ago
      My personal limit is more 45 min. Within that radius I'd have to find a home which is comparable to my current one. I don't think any employer would pay that much more to afford it.
- roel_v 9y ago
  What are those 'extremely high salaries in tech' you speak of, outside of a select few Canary Wharf positions? UK salaries in tech are abysmal from what I see - and just last year I heard a UK 'entrepreneur' brag about how cheap engineers are in the UK at a software business conference. Also keeping in mind CoL - who wants to take a London job when it means 2 hour commutes one way in order to have some disposable income left?
endymi0n 9y ago
Absolutely spot-on. Companies here usually hire the best people for their budget, not for their bottom-line. The positive side of this comes to my mind too however, which is also a very German trait. There ARE a lot of very successful digital companies in their niches (even global players) - just right now Adjust, Remerge, Sociomantic and others come to my mind. However, German companies often times for a lot of cultural reasons stop growing at some point and lacking the ambition for total world domination, explaining the lack of showing up at the very top of the list, as measured by the OP. I do observe a lot of the tradition of the German Mittelstand continuing in the mindset of current start-ups. Through the usually frugal, social and grounded approach that Germans are taking, you rather get a lot of successful medium sized companies, rather than a few A players. What you need for those is usually a single, ultra-ambitioned founder investing decades of their life. The American make-or-break mentality and winner-takes-it-all attitude is much better at producing those - but also at the cost of leaving lots of smaller companies and lesser skilled people behind.
- adventured 9y ago
  What would you guess explains the difference between the world domination pursuit in eg the luxury auto market, versus technology companies? Or with a company like Bayer (which just ate Monsanto) and other industrial giants like Siemens?
  - UweSchmidt 9y ago
    American companies lead digital innovation, building on a lead that was established way back, with Fairfield Semiconductors...German industries build on their lead in many traditional industries, including the car industry.
    - raverbashing 9y ago
      Fairchild, not Fairfield
adamhepner 9y ago
As a freelancer in Germany, I can add to that: it's not only that companies are stingy with employees. From what I had observed, a growing number of software engineers found out how tax calculations work, and decide to go freelance by the numbers. In my current team of less than 10 software developers, 2 has just recently decided to take the plunge. This comes however with increased risk, as the contracts are usually limited to 6 months, and because of "Scheinselbstständigkeit" (appearing to be employed, even though you are contracted out to your own company, or DBA) companies are prohibitted from prolonging those contracts, unless they want to pay horrendous penalties. All is good and great, I understand why those laws were put into place (mostly to protect unskilled workers, like drivers or manufacturing line workers from being forced to sign more beneficial - to the company - contracts instead of work agreements), but the software engineers, with the employment gap will in most cases easily find a replacement job somewhere near, yet the companies necessarily undergo a brain drain, and the know how gets leaked out. Just imagine, you need a couple of weeks to be able to actually productively add features to the product, then take a bit time off, some workshop, a ton of meetings, and basically your 6 months are off, and unless your client is willing to take the risk, your starting your offboarding - just mabye transferring all that you had learned in the meantime to somebody else.
- MrBuddyCasino 9y ago
  Exactly. Thanks SPD for passing another well-intentioned-but-stupid law that hampers our competitiveness.
  - pluma 9y ago
    I'm not a CDU[1] voter by far but the Schröder government really screwed this one up by trying to "modernize" labor laws. When I started out freelancing I thought consulting agencies were actually viable so I applied to various projects posted by them. Every single time I ended up turning them down because the contracts they'd send me would effectively mean I'd no longer be able to seek clients myself out of the fear of violating the non-compete clause (unless I'd always ask every client "have you recently signed a contract with this consulting agency") yet I'd have no guarantee of actually winning the contract, they'd take a massive cut of my hourly rate, they'd force me to accept payment deadlines of up to three months (my normal limit was 14 days) but I'd effectively get none of the benefits of a regular employee other than having them as a mediator (assuming they'd ever not side with the client). Being a software developer I was able to reject those offers and instead seek out clients myself. But for many people in less fortunate skillsets this is the kind of crap they have to put up with, especially with companies offloading more and more of their workforce into these agencies to make it easier to hire & fire people as needed. Because they're not regular employees and union contracts and salary laws don't apply, many of them earn well below minimum wage (if they can find contracts at all) and need welfare to "top up" to the same level as someone without a job at all. A lot of the laws at the time needed fixing but this was a blatant attempt to reduce the unemployment stats without actually helping people. I'd say because it actively obscures the issue without solving it it has actually things worse for the people affected. [1]: The two major parties in Germany are the left-of-center SPD and the conservative centrist/right party CDU. The current chancellor, Merkel, is a member of the CDU and the government consists of a coalition between the CDU and SPD. The government that passed the labor and welfare reforms consisted of a coalition between the SPD and the Greens, with the chancellor Schröder being a member of the SPD. Many had voted for the SPD at the time hoping for a more left-leaning government, which eventually resulted in a mass exodus of SPD members forming their own minor party which eventually joined the far left party "Die Linke" (the left).
rb2k_ 9y ago
I'm German and I work in Silicon Valley and we get plenty of visitors from the German legislature. One of them always tends to ask me about what it would "to get people like me to come back to Germany". I usually just tell them my approximate salary and ask them if I could earn even half of that as an Engineer in Germany. Usually I don't get an answer. Other things I often hear: - "They probably monitor how often you go to the arcade!" (usually followed about how they were in the opposition in the former East) - "So who usually tells you what to do?" (they don't get self organizing teams or lack of hierarchies) - "So how many hours a week do you usually work?" (they vastly over-estimate that) - "This is all nice, but they just want to stay at work longer!" (after I told them my usual hours) They are all reasonably nice people, but it's somewhat demotivating to see who actually runs Germany and how little they understand about other parts of the world. Maybe the visits help.

by ar0 9y ago

isolli 9y ago

Dean Baker often complains about this, most recently here [0] > Apparently German employers don't understand basic economics. Their ignorance is jeopardizing the whole economy, according to the DIHK Chambers of Industry and Commerce. [0] http://cepr.net/blogs/beat-the-press/reuters-says-german-employers-don-t-understand-labor-markets-don-t-raise-wages-in-spite-of-labor-shortage http://cepr.net/blogs/beat-the-press/reuters-says-german-emp...

carlmr 9y ago

As someone working in Germany, yes, this is a serious problem. I don't think German managers don't understand economics, but instead they pay journalists to write about skills shortages to get cheaper immigrants here. The drive to cheap instead of good is what's holding a lot of us back though. Engineers are still seen as a cost instead of something which can (and does) earn money. But bad (and cheap) engineers cost money.

ealexhudson 9y ago

The "supply and demand will equilibriate" position only works in an entirely elastic scenario. It rarely works out that cleanly. London is a good example; wages are already extremely high in tech - to the point that many companies cannot hire. But supply is still not there, for a bunch of different reasons - e.g. people unwilling to continue/make a new life in the UK due to Brexit. Wages would have to rise _even further_ to offset that, way beyond the point it makes economic sense for a company to do that. You can have very high prices and still insufficient supply. The prices are supposed to attract supply; but e.g. when a country is not seen as being welcoming to immigrants (or, in fact, has legal restrictions in place) the only flex is in people training/retraining, which is a many-years response to an immediate problem.

chopin 9y ago
If you are making north of 100k, a two hours commute (each way) is not attractive. I would deem this a more limiting factor and is one reason I'd never would move to a company in Munich (I am living in Germany).
- furqs 9y ago
  There's no way to have a 2 hour commute in Munich unless you live in Salzburg, Austria. The problem with Munich is the lack of good tech companies here.
  - wink 9y ago
    If you think there are no good tech companies in Munich, what's then left in Germany? :P I do agree the more hip ones are in Berlin, and maybe Hamburg - but I'd still say your statement is unfair, if not taken in the context of lack of "good tech companies" in Germany overall.
  - chopin 9y ago
    My personal limit is more 45 min. Within that radius I'd have to find a home which is comparable to my current one. I don't think any employer would pay that much more to afford it.
roel_v 9y ago
What are those 'extremely high salaries in tech' you speak of, outside of a select few Canary Wharf positions? UK salaries in tech are abysmal from what I see - and just last year I heard a UK 'entrepreneur' brag about how cheap engineers are in the UK at a software business conference. Also keeping in mind CoL - who wants to take a London job when it means 2 hour commutes one way in order to have some disposable income left?

endymi0n 9y ago

Absolutely spot-on. Companies here usually hire the best people for their budget, not for their bottom-line. The positive side of this comes to my mind too however, which is also a very German trait. There ARE a lot of very successful digital companies in their niches (even global players) - just right now Adjust, Remerge, Sociomantic and others come to my mind. However, German companies often times for a lot of cultural reasons stop growing at some point and lacking the ambition for total world domination, explaining the lack of showing up at the very top of the list, as measured by the OP. I do observe a lot of the tradition of the German Mittelstand continuing in the mindset of current start-ups. Through the usually frugal, social and grounded approach that Germans are taking, you rather get a lot of successful medium sized companies, rather than a few A players. What you need for those is usually a single, ultra-ambitioned founder investing decades of their life. The American make-or-break mentality and winner-takes-it-all attitude is much better at producing those - but also at the cost of leaving lots of smaller companies and lesser skilled people behind.

adventured 9y ago
What would you guess explains the difference between the world domination pursuit in eg the luxury auto market, versus technology companies? Or with a company like Bayer (which just ate Monsanto) and other industrial giants like Siemens?
- UweSchmidt 9y ago
  American companies lead digital innovation, building on a lead that was established way back, with Fairfield Semiconductors...German industries build on their lead in many traditional industries, including the car industry.
  - raverbashing 9y ago
    Fairchild, not Fairfield

adamhepner 9y ago

As a freelancer in Germany, I can add to that: it's not only that companies are stingy with employees. From what I had observed, a growing number of software engineers found out how tax calculations work, and decide to go freelance by the numbers. In my current team of less than 10 software developers, 2 has just recently decided to take the plunge. This comes however with increased risk, as the contracts are usually limited to 6 months, and because of "Scheinselbstständigkeit" (appearing to be employed, even though you are contracted out to your own company, or DBA) companies are prohibitted from prolonging those contracts, unless they want to pay horrendous penalties. All is good and great, I understand why those laws were put into place (mostly to protect unskilled workers, like drivers or manufacturing line workers from being forced to sign more beneficial - to the company - contracts instead of work agreements), but the software engineers, with the employment gap will in most cases easily find a replacement job somewhere near, yet the companies necessarily undergo a brain drain, and the know how gets leaked out. Just imagine, you need a couple of weeks to be able to actually productively add features to the product, then take a bit time off, some workshop, a ton of meetings, and basically your 6 months are off, and unless your client is willing to take the risk, your starting your offboarding - just mabye transferring all that you had learned in the meantime to somebody else.

MrBuddyCasino 9y ago
Exactly. Thanks SPD for passing another well-intentioned-but-stupid law that hampers our competitiveness.
- pluma 9y ago
  I'm not a CDU[1] voter by far but the Schröder government really screwed this one up by trying to "modernize" labor laws. When I started out freelancing I thought consulting agencies were actually viable so I applied to various projects posted by them. Every single time I ended up turning them down because the contracts they'd send me would effectively mean I'd no longer be able to seek clients myself out of the fear of violating the non-compete clause (unless I'd always ask every client "have you recently signed a contract with this consulting agency") yet I'd have no guarantee of actually winning the contract, they'd take a massive cut of my hourly rate, they'd force me to accept payment deadlines of up to three months (my normal limit was 14 days) but I'd effectively get none of the benefits of a regular employee other than having them as a mediator (assuming they'd ever not side with the client). Being a software developer I was able to reject those offers and instead seek out clients myself. But for many people in less fortunate skillsets this is the kind of crap they have to put up with, especially with companies offloading more and more of their workforce into these agencies to make it easier to hire & fire people as needed. Because they're not regular employees and union contracts and salary laws don't apply, many of them earn well below minimum wage (if they can find contracts at all) and need welfare to "top up" to the same level as someone without a job at all. A lot of the laws at the time needed fixing but this was a blatant attempt to reduce the unemployment stats without actually helping people. I'd say because it actively obscures the issue without solving it it has actually things worse for the people affected. [1]: The two major parties in Germany are the left-of-center SPD and the conservative centrist/right party CDU. The current chancellor, Merkel, is a member of the CDU and the government consists of a coalition between the CDU and SPD. The government that passed the labor and welfare reforms consisted of a coalition between the SPD and the Greens, with the chancellor Schröder being a member of the SPD. Many had voted for the SPD at the time hoping for a more left-leaning government, which eventually resulted in a mass exodus of SPD members forming their own minor party which eventually joined the far left party "Die Linke" (the left).

rb2k_ 9y ago

I'm German and I work in Silicon Valley and we get plenty of visitors from the German legislature. One of them always tends to ask me about what it would "to get people like me to come back to Germany". I usually just tell them my approximate salary and ask them if I could earn even half of that as an Engineer in Germany. Usually I don't get an answer. Other things I often hear: - "They probably monitor how often you go to the arcade!" (usually followed about how they were in the opposition in the former East) - "So who usually tells you what to do?" (they don't get self organizing teams or lack of hierarchies) - "So how many hours a week do you usually work?" (they vastly over-estimate that) - "This is all nice, but they just want to stay at work longer!" (after I told them my usual hours) They are all reasonably nice people, but it's somewhat demotivating to see who actually runs Germany and how little they understand about other parts of the world. Maybe the visits help.