BERLIN (Reuters) - Germany will increase incentives for firms offering vocational training by 700 million euros ($830 million) as the COVID-19 pandemic undermines efforts to reduce shortages of skilled labour in Europe's largest economy, officials said on Wednesday.
Even before the coronavirus crisis hit in 2020, workers and trainees faced huge reskilling challenges due to the digitalisation of business models, automation of production steps and electrification in the automobile industry.
The pandemic has increased the risk of skill bottlenecks and mismatch unemployment because virus-hit firms are scaling back vocational training positions and trainees are having problems applying for an apprenticeship during lockdown.
In addition, the coronavirus is reshaping Europe's labour markets more fundamentally and spurring workers to seek new career paths as old jobs disappear or remain beset with uncertainty about any return to normal.
Labour Minister Hubertus Heil from the centre-left Social Democrats said he put forward a package of measures worth some 700 million euros, including the doubling of a premium to 4,000 euros for small- and medium-sized companies which do not reduce the number of vocational training positions.
If a company decides to offer even more vocational training positions compared to an average of the previous three years, the government will raise the bonus to 6,000 euros.
"We can't afford a situation where there is no vocational training during the crisis and we lament the lack of skilled workers after the crisis," Heil told Deutschlandfunk radio.
Cabinet is expected to pass the package later on Wednesday.
The government will also lift the company size limit in the scheme to include firms with employees of up to 499, sharply up from the previous threshold of up to 249 workers.
The government hopes that the increased incentives can help counter an expected plunge in vocational training this year.
From October 2020 until February 2021, the number of people looking for vocational training was roughly 40,000 below the level recorded during the same period in the previous year, according to figures from the Federal Labour Office.
At the same time, firms offered 37,000 fewer open positions in vocational training schemes during that time.
($1 = 0.8403 euros)
(Reporting by Holger Hansen und Michael Nienaber; Editing by Madeline Chambers and Edmund Blair)