Market labor dynamics
Nuremberg — Andrea Nahles, head of the Federal Employment Agency, cautioned of a "tin-can economy," while the German Trade Union Confederation (DGB) expressed concerns over an "uncertain labor market." Barbara Berger, the Labor Minister, warned that many industrial jobs are "on the line." The labor market's outlook is somber.
Slim Deficit
Unemployment figures from the federal agency offer little cause for optimism. Nahles reported a minimal decrease of merely 12,000 unemployed in May compared to April, with an unemployment rate of 6.2%. She anticipates "further, gradual increases in unemployment figures for the summer."
All involved parties acknowledge the need for political impetus to revive the economy and, in turn, stimulate the labor market. But how? Rainer Dulger, employers' president, refuses to endorse modifications to the minimum wage as a means to stimulate consumption. Instead, he advocates for lower social security contributions.
Contributions Unlikely to Drop
The prospect of contributions to unemployment insurance decreasing appears fanciful. Nahles is already strained to maintain them steady given financial constraints and an approaching budget deficit at her agency. "I can rule out such increases for 2025 and 2026," she stated. Next week, she will discuss her plan to bridge the looming billion-dollar deficit in her agency's budget in the House of Representatives' Budget Committee.
The DGB insists on more training to soften the transition in industry. Workers in roles no longer required should be retrained for alternative ones, stated Anja Piel, a DGB board member. "We currently need more qualifications, not fewer," she emphasized.
Nahles: "Part-Time Problem"
Unlike Federal Chancellor Friedrich Merz (CDU), the former SPD chairwoman Nahles does not believe that Germany's fundamentals lie in underwork. The employment rate is high, yet there remains a high rate of overtime hours. "The real problem is the excessive part-time employment," she commented.
Germany, statistically, has a high employment rate for women. However, it lags significantly behind other European countries in the number of hours worked by women, with only the Netherlands performing worse. Potential benefits are evident if women could increase their part-time hours to near-full-time positions.
Because: One of the main growth constraints remains the shortage of skilled personnel in numerous professions. In 163 out of 1,200 assessed professions, there were difficulties filling open positions, according to a study by the federal agency. This means that 20 fewer professions face such issues than in the previous year, yet almost as many as in 2018. Thus, skilled workers are scarce in every eighth profession.
Fewer Vacancies
"The decrease in shortage professions is not shocking given the ongoing weak economic situation," stated Nahles. Last year, care and health professions, as well as construction and crafts, were particularly affected, in addition to professional drivers and educators. In total, 634,000 open jobs were reported to the federal agency in May—67,000 fewer than the previous year.
In the current year, there is the threat of a shortage of skilled workers in training. By May, the employment agencies had reported 441,000 training positions, 28,000 fewer than the previous year. Conversely, 375,000 applicants had registered, 11,000 more than the previous year. In May, 191,000 of them were still without a position.
In strengthening apprenticeship and training programs, leveraging skilled immigration, implementing labor market policies addressing part-time employment concerns, and modernizing administration, Germany can boost its labor market and tackle skills shortages effectively. These strategies can help navigate economic stagnation, demographic shifts, and sector-specific labor demands while maintaining wage growth and employment stability.
Financial revitalization essential for business growth
Given the concerns over an uncertain labor market, slim deficit, and shortage of skilled personnel in numerous professions, Nahles emphasized that financial revitalization is crucial for business growth. She highlighted that the real problem lies in excessive part-time employment and the need for more qualifications to soften the transition in industry.
