Dhe German economy is treading water – and that is also leaving its mark on the labor market. So far, however, there has been no sign of a slump, as can be seen from the new figures published by the Federal Employment Agency (BA) on Tuesday.
Accordingly, the number of unemployed rose in July: by 62,000 to 2.617 million. However, the plus is within a range that is quite usual at the beginning of the summer break. For comparison: On average for the three years before the Corona crisis, unemployment increased by 51,000 in July.
At the monthly press conference in Nuremberg, the head of the authority, Andrea Nahles, who has been in office for exactly a year, pointed out that the German economy had not grown for three quarters. “Against the background, the job market is holding up well,” she said. The German economy slipped into recession in the winter half-year, and the Federal Statistical Office has just reported stagnation for the second quarter.
But even if the situation is stable overall: The weak economy means that the dynamics on the labor market are noticeably weakening. This also affects unemployment. This was significantly higher in July than a year ago – by 147,000. If you exclude the refugees from Ukraine, there is an increase of 124,000. According to the BA, the risk of becoming unemployed due to the loss of employment is still low, but is increasing somewhat. However, the chances of the unemployed finding employment are slim and continue to decline. This also increases unemployment.
“The high level of employment stabilizes consumption”
A look at the various sectors of the economy shows that in the manufacturing sector, which is suffering particularly badly from the high energy costs, almost 11 percent more employees registered as unemployed in July than a year ago. It was almost 14 percent from the construction industry and almost 9 percent from the hospitality industry. However, the demographic development and the enormous need for skilled workers meant that many companies kept their employees, Nahles stated. As a result, phases of economic weakness are not directly reflected in the labor market, at least in the short and medium term. “But if this lasts longer now, we’ll probably notice that, too,” she said.
Jörg Zeuner, chief economist at Union Investment, takes a similar view. The companies have apparently learned from the post-pandemic period and are making great efforts to retain their skilled workers, he said. “This is also very good news from an overall economic point of view. The high level of employment among the population stabilizes consumption, so the risk of an economic crash remains limited.” Short-time work has even declined slightly recently, as the statistics show.
Companies are currently showing restraint, especially when it comes to new hires. As a result, the seasonally adjusted number of employed persons residing in Germany fell slightly for the second month in a row. As the Federal Statistical Office announced on Tuesday, it fell by 1000 people in June compared to the previous month and thus amounted to 45.7 million. Compared to the previous year, the number of people in employment is now 0.7 percent or 305,000 people higher. The long-term upward trend is thus continuing – but at a slower pace. At the beginning of the year, the increase compared to the previous year was even higher.
“Growth is noticeably losing momentum”: This is how BA boss Nahles also classified the development of employment subject to social security contributions, which in May – more recent data are not yet available – climbed slightly to 34.7 million. The number is thus also higher than in the previous year, but here too the gap is gradually narrowing. According to Nahles, declines are particularly evident in areas that are close to the economy, such as trade, temporary work and parts of the manufacturing industry. In many service sectors, on the other hand, employment subject to social security contributions continues to grow. A regular survey by Munich’s Ifo Institute recently showed that only service providers are likely to be hired again. In industry, on the other hand, layoffs are increasingly being considered, especially in the chemical and metal industries.
The training market remains a problem child – also in view of the great need for skilled workers. At the start of the new training year on Tuesday, Nahles emphasized that the number of applicants had not continued to fall. In July, however, 228,000 of the training places that companies had reported to the employment agencies were still unfilled. According to the BA, there are particular difficulties in filling training positions in sales, metal and construction trades and, for example, in bakers. “The training situation is getting worse and worse for companies,” said the general manager of the German Chamber of Industry and Commerce (DIHK), Martin Wansleben. “Just a few years ago, young people had to queue with companies to find an apprenticeship position.” Nowadays, it is the companies that have to woo the young people.
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