Despite the crisis, people in Germany are keeping their jobs, but the crisis is now also having an impact on the labor market. This is the main message that can be gleaned from the labor market figures presented by Andrea Nahles in Nuremberg on Wednesday. This October, the usual seasonal recovery on the labor market will be “subdued,” said the head of the Federal Employment Agency. The agency counted 2.44 million unemployed in October, which was 43,000 fewer than in September. However, adjusted for seasonal effects, the number of unemployed rose slightly by 8,000 to a total of 5.3 percent.
“This time it’s not because of the registration of the Ukrainians, but because of the consequences of economic development,” says Nahles. How can the ongoing stability on the labor market be explained – and where are the risks looming?
What (still) supports the job market
The energy crisis is causing problems for companies and consumers, but people are still in the mood to buy, says Oliver Holtemöller, labor market expert and Vice President of the Leibniz Institute for Economic Research in Halle (IWH). “People have some catching up to do after the relaxation of the Corona requirements, there are savings that are now being spent.” This is particularly noticeable where there were the most restrictions at the peak of the pandemic, in gastronomy and retail. According to Holtemöller, the industries have hired many people. The desire to treat yourself again makes it easier for companies to charge higher prices and thus pass on their higher costs, for example through higher gas bills. In addition, companies have become more cautious about layoffs. Because once skilled workers are gone, it often becomes extremely difficult to recruit new ones. The general shortage of skilled workers has the effect of a kind of job security.
when it gets serious
That doesn’t mean that the job market can always continue to be stable. “There would be a clear impact on employment if there was a gas shortage,” says Holtemöller. If the gas in Germany had to be rationed because there is not enough to supply private households, facilities such as hospitals and schools as well as industrial companies. According to the law, the following applies in principle: Warm apartments and critical infrastructure such as retirement homes have priority, and companies would have to do without natural gas first. That would mean shutting down production and possibly laying people off. Unless these are compensated for by short-time work, as in the corona pandemic. Russia’s state-owned company Gazprom stopped supplying gas to Germany at the end of August. The German gas storage facilities could still be filled, but it is uncertain whether this will be enough for the whole winter. “That now depends on the weather,” says Holtemöller.
Why inflation helps
In inflation, companies can not only charge higher prices and thus offset their higher bills. The price increase also means that real wages fall, meaning that work becomes cheaper for companies – at least as long as higher wage agreements or other wage increases do not compensate for this. “The real wage losses are helping, that’s supporting employment at the moment,” says IWH Vice President Holtemöller. He refers to the collective bargaining agreement in the chemical industry, which was “moderate”. In mid-October, the union and employers agreed that all employees would receive special payments totaling 3,000 euros. In addition, salary increases of 3.25 percent each will take effect in January 2023 and 2024. These permanent increases are well below the current price increase of a good ten percent.
The East would fall softer than the West
In East Germany, the protests against the consequences of the energy crisis are particularly well attended, with extremists trying to monopolize them. But East Germany, says Holtemöller, has not been harder hit by the energy crisis than the West, quite the opposite. “West Germany would be hit even harder if the energy crisis worsened.” The background: In East Germany, proportionally more people work in the public sector, i.e. crisis-proof, and fewer people in the manufacturing sector – which is hit particularly hard by rising energy prices. “East German companies also don’t export any more to Russia than West German companies,” says Holtemöller. This means that jobs would be more at risk in western Germany than in eastern Germany.