The connection between real estate and skilled labor demand – Interview with Michael Schöneich on ISG's latest Wide Angle

Can you briefly outline the question posed in your report, "Rethinking the Skills conundrum"?

The built environment is a stone sign of confidence in the future. Real estate can be used to draw conclusions about potential future jobs. In our opinion, real estate is a significantly underestimated indicator of future skilled labour and workforce needs. Early tracking and analysis of investment in real estate (to be built) could prove to be a catalyst for change in skills development and training. Analysis of this data is a powerful tool. It provides insights into future skill needs in the knowledge economy. It also creates confidence among all stakeholders that investments in training and education are not wasted or misspent. At ISG, we believe it allows us to connect the issues of real estate, future skilled labour needs, and investment in training.

How did this somewhat unusual approach come about? 

Germany - comparable to the United Kingdom - is a successful industrial nation on the path to climate neutrality. The government is focusing on promoting innovation and new technologies. Germany has growth prospects and continues to be an attractive location for companies. This is demonstrated by several recent major investment decisions, especially in key industries. However, there is growing evidence from key industries that labour availability is becoming increasingly important in investment decisions. Therefore, ISG wanted to investigate whether centrally stored data on the built environment could play a part in improving training and skills planning. In doing so, we came to the surprising conclusion that far too little attention is paid to this information in workforce planning and training.

For whom is this information helpful?

This information is helpful in several ways. It can help create better coordination between future talent, parents, teachers and training institutions. The bottom line is that it can change the whole way young people, as well as workers, approach education and training. In addition, entire states benefit when investment decisions are made based on the highly skilled local workforce.

Was there a result that surprised you?  

Yes, more than 70 percent of the young people surveyed have not yet decided what career or direction they will take after graduation. That's a large pool of people that can be positively impacted with greater transparency on the topic of workforce needs. This career indecision may indicate that while young people are aware of their natural interests and talents, they are less certain about how to use them and translate them into a career path. Fostering closer relationships between the supply as well as the demand side of the skills pipeline would therefore benefit everyone. Increased visibility of investment activity through open source data and motivated organizations and individuals would lead to more proactive, early conversations. The bottom line is that it can better match demand and supply in the workforce.

What other results of the analysis were new for you?

The results show that young people give equal weight to their personal interests and their skills when choosing a career. Other important criteria in career choice are enjoyment of work, a good work-life balance, positive effects on society and career opportunities. In addition, some sectors should focus on clearer and more targeted messages. This will increase understanding of these sectors: Perceptions will change and play a role in attracting more skilled workers back to these industries. The construction industry is a great example. For example, when taking a closer look at this industry, 53 percent of youth and 63 percent of parents agreed that construction enables the creation of more sustainable communities. However, there remains a gap in knowledge about the actual range of roles available in the industry. There is also still too little recognition of the construction industry's key role in advancing technology and opportunities for career development.

The ISG study refers to the United Kingdom. Do you have an example that is particularly illustrative of the new findings from the study? 

For example, in Northern England, specifically in the North East region, there is a very large pipeline of industrial properties. Consequently, there is a need to create a corresponding supply of qualifications and labor force to continue attracting investments in the industrial sector. This sector is considered key to the growth plan of the United Kingdom.

Do you think the results are transferable to other countries? 

Absolutely! I have hope that a discussion will start about how we can take investment in jobs and real estate as an indicator for the future. The goal is to move from reactive to proactive workforce planning. Young people need that certainty to plan their careers and ensure that both individuals and companies are not left behind.

Where do you see promising regions for investments in Germany? What are the criteria?

In general, Germany has good growth prospects. The country continues to be an attractive destination for investments, as recent spectacular investment decisions have demonstrated, especially in key industries. Examples from the semiconductor sector include decisions by Wolfspeed for Saarland, Infineon for Dresden, Intel for Magdeburg, and TMSC in Dresden. Examples in the field of electromobility and battery production include investments by VW in Salzgitter, BASF in Schwarzheide, and Tesla in Grünheide. Examples in the machinery and heavy industry segment are Siemens in Erlangen and thyssenkrupp with the production of "green" steel in Duisburg.

Michael, thank you very much for the interview!