(Bloomberg) -- At a made-to-order homebuilder in northwest Germany, processing more than 250 invoices a week used to swallow the equivalent of four working days. After introducing artificial intelligence last year, the task takes half as long.
For boss Gerrit Terfehr, the appeal isn't replacing staff. It's coping with labor shortages that represent the most significant threat facing Europe's largest economy in the decades ahead. "We're looking to use AI everywhere to help with gaps and take work off our employees," Terfehr said. "The team's been very welcoming of the technology because they saw immediately that it works."
After years of stagnation, Bloomberg Economics reckons AI could add 0.2-0.7 percentage points annually to German economic expansion over the next decade, equating to as much as €323 billion ($368 billion) of output during that time.
"AI looks like an obvious answer to Germany's growth woes," BE economist Ana Andrade said. "With 30% of jobs exposed to the technology — or 60% if advanced capabilities are considered — there's substantial scope for a turnaround in productivity. But the payoff isn't guaranteed."
AI is shaping up as the best hope to overcome a demographic shock that could erase a quarter of Germany's 51 million-strong working-age population by 2070 as baby boomers retire, birth rates languish and immigration fails to make up the difference.
The boost could at least cover the 0.3 percentage-point hit from a dwindling labor pool and potentially eclipse the boost from the government's multi-billion-euro drive to rebuild infrastructure and rearm.
The approach is decidedly less futuristic than in China, whose response to its own population's aging is to fill factories with AI-powered humanoid robots. But the impact of Germany's applications to help stretched workers do more could prove just as profound, justifying some of the vast spending on the data centers that underpin the technology as well as the fervor among investors that's pushed global stocks to record levels earlier this month.
One firm enjoying the benefits is Arte Clean in North Rhine-Westphalia, which provides home services for medical treatments such as injections. A worker used to need 15-20 hours a week to draw up routes for patient visits based on staff timetables, availability and traffic. An AI tool costing €250 a month saves about a third of that, and gets better with time.
"We've seen the AI-model improve a lot," said Karsten Kalinowski, the company's boss. "It really learns at great speed."
Lacking trainees to replace staff retiring, Arte Clean is banking on AI to help take on more patients. A pilot project with software maker MediFox Dan GmbH will document visits via an app that generates reports and organizes data like vital signs using voice input.
Manually producing such reports currently requires a fifth of a worker's day. Kalinowski thinks the tool could help him add as much as €12,000 of revenue a month, which would represent a return of almost 5,000% on the cost of the tool.
Germany's AI-adoption is soaring, with a Bundesbank survey showing more than two-thirds of firms will use the technology this year, up from 44% in 2025. BE's calculations are based on a framework by Nobel prize winner Daron Acemoglu using in-house estimates of how exposed the labor market is to AI and what productivity gains can be expected.
Already a success in enhancing the country's industrial prowess, a separate poll by tech lobby Bitkom found 31% of companies think AI will help ease shortages of skilled personnel.
In such cases, there are several benefits: automating certain tasks can relieve strained staff, foreigners can be integrated more easily and employees can get help acquiring new skills. Struggling sectors like construction and healthcare have the most to gain.
Others can too, though. Deutsche Telekom AG is using AI to expand the German fiber network, scheduling appointments with clients and check whether trenches for cables have been dug to a sufficient depth. Scientists in Dresden, meanwhile, are exploring ways to detect potential medical problems by analyzing variations in patients' skin color.
The issue of AI has become so important to policymakers that the European Central Bank is dedicating two sessions to the subject during its annual retreat this week in Portugal.
To be sure, even if the potential output gains are big enough to make up for Germany's demographic drag, they won't automatically solve all staffing issues. The benefits could also be realized in sectors where worker shortages are less pronounced, like manufacturing.
What's more, many of the manual positions that make up the bulk of work in sectors struggling to find personnel can't be replaced directly by AI since it's currently unable to care for the elderly or lay bricks on a building site.
"At this stage, companies can't use the technology as a substitute for a skilled employee," said Christoph Krause, who helps small and medium-sized enterprises implement AI.
It's also unclear how much it's driving efficiency. The Bundesbank found companies split on whether AI had boosted productivity.
At Terfehr's homebuilder, the rewards are clear. Workers can now use an AI-powered app to dictate material orders and progress updates in Russian, Arabic and other languages, replacing chaotic WhatsApp threads with records that automatically upload to the cloud and are linked by GPS to specific construction sites.
Such advancements are offering a lifeline to Germany's stagnant economic growth.
"If an employee tells me they want another pro-version of AI, I immediately tell them 'yes,'" Terfehr said.
--With assistance from Martin Ademmer (Economist) and Ana Andrade (Economist).