Public utility companies and skilled-worker shortages: About 10 years of apparent deadlock and how to escape it
In 2013, the German BBH group, a consultancy for communal and middle-class businesses, identified a shortage of skilled employees as one of the main challenges for public utility companies (PUC). Back then, BBH discussed that one-third of PUCs employees would retire by 2023 and discussed how young professionals are drawn toward the private sector and are thus lost to public companies.
Nine years later, in 2022, Rödl & Partner (also a consultancy firm) described the very same issues as if nothing had changed since 2013. Apparently, 46% of PUCs experience a shortage of skilled employees. Considering that this problem was identified a decade ago and is still one without a solution in sight, it seems about time to increase the field’s awareness by discussing the topic further. This article informs stakeholders about the insights of the German PUC networks and possible steps to escape this deadlock.
Why public energy distributors are vital stakeholders in the energy transition
In Germany, energy is distributed through the networks of municipal public utility companies (PUCs; German: Stadtwerke). While smaller Stadtwerke buy the lawfully determined energy mix from producers, mainly via the European Energy Exchange in Leipzig (DE), the larger cities’ Stadtwerke only provide the network for energy coming directly from various producers.
Why do German PUCs experience a shortage of (skilled) workers?
As priorly discussed, many German PUCs don’t have the knowledge or capacity to effectively deal with new sustainability demands, which may be due to a shortage of skilled employees. A variety of factors produce these issues. Among them are:
- The aging workforce.
- The unattractiveness of the public sector compared to the private sector for young professionals.
- Diversified responsibilities through the energy transition.
Aging employee populations. For instance, 83% of PUCs expect 10–25% of their employees to retire in the coming 10 years. In some cases, even 25–50% of employees are expected to leave. According to Energate magazine, this is partly the result of the increased cost–competitiveness due to market liberalization: Fading positions are not filled with young professionals to reduce costs. Accordingly, the average employee age is steadily rising in German PUCs.
Public versus private companies. For many young professionals, the public sector simply doesn’t offer competitive career perspectives. Besides the limited outlook of professional development, the substantially better salary of the private sector is attractive to many. That is, professionals can expect a 5–15% higher salary in the private energy sector compared to the PUC sector, and the difference becomes more staggering in higher positions.
New demands of the energy transition. Moreover, the energy transition towards more sustainable, green energy and heating solutions sets new knowledge and skill demands. Problematically, the issue has been ignored by many PUCs and the political structures that could respond to these trends. According to the Fraunhofer Institute, the required dynamic skillsets are often absent in German PUCs.
Change of responsibilities. More specifically, many solutions to efficiency issues require a digitalization of the sector. The overall trend toward smart cities that connect and cater to citizens requires up-to-date technicians and IT specialists. Therefore, the responsibilities of PUCs diversified in the past years from maintaining a reliable energy network to providing sustainable, reliable, and needs-focused networks. These needs comprise the widespread desire for affordable, green energy and the need for information such as private photovoltaic investments, alternative heating solutions, and more. These needed solutions require skills that were only of peripheral importance for PUCs and are currently underrepresented.
What can PUCs do to escape this deadlock?
Change of employment structure. While more skilled employees will be needed in the future, many office positions will become unnecessary due to improvements in digitalization and automatization. PUCs should adapt their employment structure accordingly. Hence, human resource managers must realize that maintaining is not sufficient anymore; active management of employment structures is crucial.
Increasing internal attractiveness to young professionals. By offering flexible employment options and working schedules, becoming more salary-competitive, focusing on employee health, and promoting desirable company values and environments, PUCs may make staying in the public sector more attractive to young professionals, says Rödl & Partner. Being close to their customers and able to steer the local energy transition, PUCs could create a sustainability-focused image desirable among skilled employees.
Increasing external efforts. Moreover, Rödl & Partner emphasize the importance of strengthening external relationships through cooperations with partner universities, social media marketing to reach younger audiences, and improving public relationships with other stakeholders and customers. PUCs should provide internal study and qualification programs to offer professionals further skill development.
Take-away and outlook
With the energy transition, European PUCs face substantial new challenges. However, knowledge networks providing guidance are emerging, helping PUCs recognize them and find practical solutions.
The QLab is one of those experts. We recently concluded a consultancy project with a German PUC. We’ll publish the results soon on the QLab website and LinkedIn. Follow us to see them first!
In the following articles, we will dive deeper into issues related to the potential of public utility companies. Please share this article and subscribe to never miss the latest QLab insights!
Finn Faust, Webdesign & Research at QLab Think Tank GmbH
QLab Think Tank — Design Thinking & InnovationSprints
