Inflation, delivery problems, war: When Germans are asked about the economic situation, they are currently more pessimistic than ever. Should Russia stop supplying gas at all, it would almost certainly lead to an economic slump. But maybe it won’t be so bad after all. In any case, the actual situation is currently much better than the mood, as new data shows: German companies were absent from April to June nearly two million workers – Never that many before.
“Despite the considerable risk of recession, the number of vacancies has continued to rise sharply,” reports Alexander Kubis from the Institute for Labor Market and Occupational Research (IAB). From January to March, German companies had been looking for more staff than ever before. In the second quarter, they now reported almost 200,000 more vacancies. And this despite the fact that the inflation rate continued to rise – and Russia invaded Ukraine. “We were surprised that the number of vacancies continued to rise,” says researcher Kubis. “The risks seem to have little effect.”
The shortage can be seen in almost all sectors. Many companies would like workers they can’t get. There has been a shortage of staff in construction, industry and the health sector for some time – and this is still the case. However, while up to now there has been talk of a lack of sometimes highly specialized skilled workers, less qualified people are now also being sought. Restaurants or airports have some catching up to do because they cut jobs during the Corona crisis or did not replace employees who are leaving due to age. Now they are struggling to find suitable people.
“The pace of demographic decline is rapid”
A number shows how big the change is: companies are currently reporting 800,000 more vacancies than a year ago. That means an increase of no less than 66 percent. One important reason for this is that the baby boomers are retiring – and far too few employees are following suit. “The pace of demographic decline is rapid,” says IAB scientist Kubis. “Companies still have no experience of how to deal with it.”
There are usually a lot of vacancies when the economy is doing very well. Now something new can be seen: The companies have replacement needs because there are fewer possible employees available every year. The labor market is thus decoupling itself to some extent from the economy. This means that workers are becoming scarcer and companies are fighting harder for them – even if they are worried about the future.
Nevertheless, there can of course be shocks that lead to higher unemployment. If, for example, inflation rises even higher, Germans could consume less – if the federal government does not sufficiently compensate for the additional expenditure caused by inflation. If, for example, the Chinese zero-Covid strategy exacerbates the delivery problems, German companies will be able to produce less and possibly cut jobs. The biggest risk is that Russia will shut down gas supplies altogether, which would hit the industry hard.
However, none of this has to happen. And if none of the risks fully materializes, the German economy is likely to grow by around two percent this year – not exactly little. Hardly anyone would then have to worry about their job.
The pensions of the baby boomers are taking their toll
Even if there is an economic slump like in the Corona crisis, one can assume one thing: As soon as this recession is over, the lack of staff should be an issue on the labor market again – probably the central one. Because the pension of the baby boomers takes its toll. Due to demographics, the potential workforce in Germany will decrease from 2020 to 2035 by seven million, predicts the IAB. And by 2060 it will shrink by another nine million. That means a huge shortage of staff.
Scientists can think of a number of things to do about it. For example, creating early health care so that older employees can work longer than they have been doing up to now. Or enable female employees to work more hours. For this it would have to specify better childcare offers. Or women no longer usually have to be responsible alone when older family members need help. Or men take care of the household and children more.
Economists consider something else that is politically controversial to be indispensable: more immigration. In order to reduce the labor gap, 400,000 more people would have to come to Germany every year than leave the country. This year, by fleeing Ukraine, they might even 600,000 more people immigrate. However, it is unclear how many of them want to stay, which depends on the course of the war. Leaving aside the Ukrainians, the forecasts are meager: According to them, only 140,000 net immigrants per year can be expected in the next few years.
Researcher Kubis sees another task: to make the Germans fit for new jobs in the ecological and digital restructuring of the economy, “through much more training and further education”. Otherwise, the shortage of staff threatens to get worse.