Labour shortage hampers production in metal and electrical engineering industry

The manufacturing industry in the Netherlands is being increasingly hampered by the shortage on the labour market. Since the middle of 2006, manufacturers in the metal, electrical engineering and transport equipment sector have been reporting that the shortage of workers has impeded production growth. Their order books are well stocked, but the available supply of labour means they cannot meet demand.

Companies affected by labour shortage

Metal and electrical sector mainly affected

Within the manufacturing industry, the metal, electrical engineering and transport equipment sector is suffering most from the labour shortage. At the beginning of 2007, 10 percent of manufacturing companies reported that production growth is being hampered by a shortage of workers. In the other sectors of manufacturing this percentage fluctuated between 0 and 3, according to Statistics Netherlands’ business sentiment survey.

Production and opinions on order books, metal, electrical engineering and transport equipment sector

More and more orders

Since the middle of 2006, order books of companies in the metal, electrical engineering and transport equipment sector have been getting fuller and fuller. Over 12 percent more manufacturers reported a large number than a small number of orders. Production in this sector of manufacturing grew twice as fast as in other sectors of manufacturing in December 2006: by nearly 11 percent compared with nearly 6 percent for manufacturing as a whole.

The strong increase in the demand for products from the metal, electrical engineering and transport equipment sector, such as consumer electronics, machines and means of transport, has pushed up the demand for labour in this sector. This demand cannot be met however. A net 10 percent of companies expect to recruit more staff in the spring of 2007.

Age composition of employed labour force, metal, electrical engineering and transport equipment sector

Shift towards older age groups

The labour force is growing at a slower rate this decade than in the 1990s. At the same time it has on the whole become older. The shift towards older age groups is even more marked in the metal, electrical engineering and transport equipment sector. Between 1996 and 2005, the share of 15-34 year-olds fell from half to one third. The share of over 45s rose from just over one quarter to more than a third.

Roberto Wekker