German labour market: Gradually, it’s getting tight

The June figures for the German labour market reveal an overwhelmingly positive picture, although there are indications that clouds may be lurking on the horizon. However, for the time being, the current employment figures are reason to be more than cheerful. The number of persons in employment is around 650,000 higher than in comparison with the previous year. This equates to growth in employment of approximately 1.5%. At +730,000 (approx. +2.3%), there was even greater growth in the number of persons in employment obliged to pay social insurance contributions. This reveals that the good demand for jobs is currently also allowing many people to transition from more causal employment to more normal working contracts.

At the same time, the unemployment ratio fell to a new low. There are currently 2.47 million unemployed people in Germany, around 140,000 fewer than in the previous year. The fact that this rose slightly in June on a seasonally-adjusted basis against the previous month is more to be seen as a technical reaction to the strong declines in spring and not as the first sign of worsening framework conditions.

Nevertheless, the most-recent figures also reveal that it is becoming ever more difficult for companies to cover their staffing needs. The number of vacant posts has been rising rapidly for some time now. It has now reached a record level of 700,000. Companies are currently only able to cover around one in five available jobs from the pool of unemployed people. For the remaining vacant positions, companies turn to newcomers to the German labour market. These can be people returning from temporary periods of inactivity or – above all – immigrants to Germany. However, around one in three jobs remain currently vacant on account of a lack of suitable applicants. If there had not been mass immigration in the past few years, above all from neighbouring European countries, the German “employment miracle” would have hit its limits much earlier.

Looking to the future, this means that Germany will need to launch a qualifications drive in order to further scale back an unemployment ratio which is still relatively high and provide even more people with the opportunity to work. In addition, a targeted immigration policy will also be required so as to also be able to cover the huge need for skilled workers in future. After all, the lack of workers, skilled or otherwise, has already become the biggest worry for German companies.

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