CASE STUDY OF SUPPLY AND DEMAND IN THE LABOUR MARKET

Economists generally like to see supply and demand determine prices. When there is a shortage of an item then the price is supposed to rise. At higher prices the supply increases and the demand falls, this eliminates the shortage. 

For some reason this simple logic was altogether absent from a Washington Post article that was headlined "Germany struggles with skilled labour shortage, shrinking population." Surprisingly there wasn't any mentions about increasing wages. Instead it talks about efforts to bring in foreign workers. 

The below link will provide you further information about the topic. 

Reference - http://articles.washingtonpost.com/2013-05-06/world/39056406_1_labor-shortage-munich-chamber-skilled-labor

Apparently Germany might be suffering from the same problem that is often the subject of news stories in the United States : "Managers who don't know how to raise wages". The media have frequently reported on businesses who complain that they cannot find qualified workers. Since there are very few occupations where real wages have  been rising in the last five years, it seems that few people who run businesses understand how labor markets work

Written by : Brandon Yap