Whether it’s inflation, a ban on Russian gas or lockdowns in China, there are always new dangers for jobs in Germany. But two months after the attack on Ukraine, something astonishing can be observed: Unemployment actually fell in April – as it had in March. Many companies are hiring, and many applicants are even offered higher salaries. And that despite all the risks.
In Germany there are currently 45.2 million employees and self-employed – for the first time again more than before the outbreak of the corona pandemic in 2020. In April only 2.3 million citizens were still looking for a job, 50,000 fewer than in the previous month. “With the spring revival and the easing of the corona measures, the recovery on the labor market is continuing,” says Detlef Scheele, head of the Federal Employment Agency. In view of all the dangers, some will ask: How can this be?
“The labor market is currently dominated by the fact that companies are recovering from the pandemic,” analyzes Dominik Groll from the Institute for the World Economy (IfW). Restaurants, beauticians, cinemas, cafés, bars, hotels or fitness studios: Corona hit all service providers with many contacts to people particularly hard. Now their customers are coming back. And that’s why they’re hiring again. In the worst times of the pandemic, one million fewer Germans had jobs than before. Yes, there are many positions to be filled.
“The war in Ukraine is slowing down the increase in employment, but it is not stopping it,” says Dominik Groll from the Kiel IfW Institute. Of course, the Russian raid has consequences. The new uncertainties of the first surface war in Europe for decades make companies hesitate to invest. As far as industry is concerned, the Munich Ifo Institute’s employment barometer fell in March and April. Sectors such as the chemical industry, which consume a lot of energy, are particularly reluctant to make adjustments. They are just as concerned about the high prices as they are about the risk of Russian gas not being available at all.
Short-time work could compensate for business slumps caused by China’s corona policy
But the overall picture is more positive. “The high level of uncertainty in the economy caused by the attack on Ukraine does not seem to have a lasting effect on personnel planning,” reports Klaus Wohlrabe from the Ifo Institute. The Ifo job barometer for the whole economy went again in April up. Service providers in particular want to hire. And they are responsible for three times as many jobs like the industry. “Employment in Germany will continue to rise,” Wohlrabe expects.
And the Chinese government’s strict zero-Covid policy, which threatens to multiply Germany’s delivery problems? It could dampen the economy and prompt companies to restructure their supply chains. However, the companies should not lay off staff for this reason, but should compensate for any business slumps caused by short-time work.
Because in addition to the Corona recovery, there is a second powerful trend that is having a positive effect on employees: Germany is aging and shrinking – and that is why employees are more in demand than ever. The number of workers will decrease in the coming years. This will only be avoided if 400,000 more migrants come into the country than leave again each year. But such a move is unlikely.
The German economy has long since been affected by the loss of skilled workers. When companies were recently asked again in an EU study what hinders their activities, one in three stated: lack of staff. Whether service provider, construction or industry. This is a historic high.
The Germans are still sitting on additional savings of 200 billion euros
Some companies are looking almost desperately. And not just for IT people. In April, 850,000 job vacancies were reported to the Federal Employment Agency, a good 200,000 more than a year ago. On the Stepstone job platform, 70 to 80 percent more jobs for craftswomen, nurses and logisticians are being advertised than a year ago. And then the demand was already strong. An analysis for the personnel service provider Hays shows that companies are currently looking for jobs due to inflation more controllers and accountantsto keep costs under control. And they’re scrambling to recruit people for their HR departments. So HR to find answers – to the staff shortage.
Demand affects salaries. According to a survey, 40 percent of companies want to increase their number of employees. In order to find suitable people, they also pay more for it. Most companies expect salaries to increase by an average of almost five percent this year. However, the survey by ifo and the recruitment agency Randstad dates from before the Ukraine war. Hasn’t much changed since then?
Yes, for example, inflation is more stubborn than hoped. “High prices dampen the purchasing power of consumers,” says labor market economist Dominik Groll. Some people have to hold back when shopping. The trade is currently not hiring any staff. However, resentment points out that the well-earning Germans saved a lot of additional money when restaurants and shops were closed during the Corona crisis. They could spend some of the additional savings of 200 billion euros.
An embargo or halt to the supply of Russian gas could keep energy prices high for a long time
The greatest danger for the job market at the moment is that the Russian war of aggression in Ukraine is escalating in a way that was not foreseen, which is costing many jobs in Germany. Or that Russian gas is no longer flowing – due to a Western embargo or a supply freeze by President Vladimir Putin. The heating season is almost over and the gas storage tanks are full again. “But next winter there will probably be bottlenecks.”
Some industrial companies will probably have to stop their production for the time being. If this stays that way for the time being, the companies may not lay off employees, but resort to short-time work. What worries Groll most is that such a gas outage can keep energy prices high for a long time. That the Germans are therefore reducing their other expenses and the companies are asking for fewer staff.
This could also affect sectors that you don’t immediately think of. Like the construction industry. During the pandemic, when many other things did not work, many Germans beautified their property or built one. “With drastically high prices, many citizens would probably save in areas such as construction and trades, where they already spent money during the pandemic.”