Germany’s labor market keeps a good pace of jobless decline so far
Germany’s labor market suffered significantly during the pandemic, but despite pessimistic forecasts, it managed to recover quite quickly to 2019 levels. At the same time, analysts are in no hurry to make optimistic plans, as new problems – supply problems and shortages of energy resources – may reduce the dynamics of development.
Despite such reports, this month the market managed to maintain a high rate of recovery. During the month the number of unemployed decreased by 53 thousand people to 2.3 million. As a percentage, this figure represents 5% of Germany’s population. According to official statistics from the employment agency, the proportion of unemployed people has fallen to levels seen in the country before the outbreak of the pandemic coronavirus. For example, during the year the number of unemployed fell by 462,000.
However, experts do not know how long such dynamics will persist, especially since some employees can be attributed to the seasonal activity that is observed in spring and summer. However, trends may change soon, and rising inflation will exacerbate the situation. Other issues, including energy shortages, are also having a negative impact on the market.
The analyst of the German Economic Institute notes that the embargo on gas may significantly change the development vector of the sector. Taking into account this factor the experts forecast two variants of market recovery.
According to the first scenario, gas supplies will not be blocked, the second scenario assumes the complete cancellation of imports from the sanctioned supplier, which will lead to an increase in the number of unemployed people by about 550 thousand people. Such figures are predicted by 2023, and by this time the share of unemployed citizens of Germany will be at the level of 5-6%.
So far, no crisis is in sight on the market. The pandemic was mitigated by the introduction of part-time work, which was the best solution during and after the lockdown. In addition, the easing of restrictions had a positive effect, which contributed to the recovery of the hotel business and the retail sector. Such a move made it possible to move 80,000 people to full-time work in February of this year. However, there is still a high percentage of citizens who are employed on a temporary basis.
An important issue remains the refugees, of which there are more than 400 thousand people in the country. They often face difficulties in finding a job, including due to a lack of knowledge of the language. In addition, experts predict that by 2031 the population of retirement age will exceed the working age by 5 million people. This will complicate the task of paying pensions and covering the costs of providing for the elderly population.