October 12, 2016 / 5:01 AM / 10 months ago

Report spurs concern about productivity in German industry - Welt

BERLIN, Oct 12 (Reuters) - A new report showing declining labour productivity has raised concern in a leading trade group about the future competitiveness of the German automotive and mechanical engineering sector, the German newspaper Die Welt reported.

"The development of productivity since 2010 is cause for extreme concern," it quoted Rainer Dulger, president of the German Federation of German Employers' Associations in the Metal and Electrical Engineering Industries, as saying. "Our location (as a manufacturing site) is crumbling."

The newspaper said a new study completed by IW Consult for the trade group showed a drop of 1.7 percent in labour productivity in Germany's largest industrial sector between 2011 and 2015, which amounts to an annual decline of about 0.4 percent, the paper said.

It said the study showed that productivity dropped due to a 4.6 percent rise in hiring in the sector, with some companies hoarding specialised workers to avoid losing them, even if they lacked sufficient orders. Hiring new specialist workers was simply too costly, it quoted companies as saying.

The study also suggested that many companies were hiring more workers in Germany to oversee finishing work that had been sent overseas to an increasingly complex web of foreign subsidiaries and suppliers.

"Statistically that is resulting in a high, relatively unproductive use of labour domestically," the report found.

It was also possible that productivity was down because companies were hiring less well-qualified workers due to a shortage of specialist labour, the report said. (Reporting by Andrea Shalal; editing by Ralph Boulton)

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