The number of industrial employees increased slightly in 2023. But it is still below the pre-Corona level – and recently the trend has been downwards. The DIHK warns of the biggest economic crisis in 20 years.
Despite the slump in orders and production, German industry increased its workforce last year. Manufacturing companies had an annual average of almost 5.6 million employees. That was 62,000 or 1.1 percent more than in 2022, as the Federal Statistical Office announced today. Only companies with at least 50 employees are included in the statistics.
But recently the trend has been downwards: in December the number of employees fell by 21,000 or 0.4 percent compared to the previous month. This could continue given the recent news from the industry. Recently, heavyweights in the industry have announced mass layoffs one after the other.
For example, the chemical company BASF, the automotive suppliers Bosch, ZF Friedrichshafen and Continental, Volkswagen and Bayer are planning to cut jobs. The main reasons cited are the changing external conditions and declining competitiveness.
“Bad mood gets worse”
The German Chamber of Commerce and Industry (DIHK) warned today of the biggest economic crisis in over 20 years. This year, the DIHK expects the German economy to shrink again. After surveying more than 27,000 companies from all sectors and regions, the association expects a decline of 0.5 percent. In 2023, gross domestic product fell by 0.3 percent.
“The bad mood among companies is becoming more entrenched,” says the DIHK. If the association’s forecast comes true, it would only be the second time in post-war history that the German economy would shrink in two consecutive years. This was only the case in 2002 and 2003.
The EU Commission today lowered the economic forecast for the entire European Union in view of the weak growth in the continent’s largest economy. For Germany, it now only expects a slight increase in gross domestic product of 0.3 percent, and for the European Union as a whole an increase of 0.9 percent.
Energy price shock continues to have an impact
The scientific director of the Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans Böckler Foundation, Sebastian Dullien, pointed out that employment in the manufacturing sector is currently still noticeably below the pre-Corona level of 2018/2019. “The years in which German industry was a job and growth engine for the German economy are over for the time being.” In particular, the energy price shock after the Russian war of aggression on Ukraine continues to have an impact.
For months, the export-dependent industry has been plagued by high interest rates, expensive energy, geopolitical risks and a weak global economy. As a result, production in the chemical industry last year was weaker than it has been since 1995. Overall, new industrial orders fell by 5.9 percent last year.
“No noticeable increase in employment in the manufacturing sector is expected this year,” said the scientific director of the Institute for Macroeconomics and Economic Research (IMK), Sebastian Dullien. “In fact, there is even a risk that jobs will be cut in view of the ongoing production and general economic weakness.”
“Challenge for everyone” in Europe
According to the EU Commission’s assessment, Germany must face up to its structural problems. Even if the economic outlook improves in 2025, these problems should not be ignored, warned EU Economic Commissioner Paolo Gentiloni.
The economic weakness also affects other countries. “This is a challenge for all of us,” said the Italian. Structural problems such as the aging of society and the shortage of skilled workers also affect other countries in the euro zone. However, Germany’s strong export orientation poses a special challenge – especially in view of attempts to reduce dependence on individual trading partners such as China.