Record inflation and the economy will soon shrink: negative news has been pouring in for days. Of the labour market but defies the mood of crisis for the time being. The number of unemployed fell by 62,000 to below 2.5 million in September. “Despite rising prices and concerns about energy shortages, the job market remains stable overall,” says Andrea Nahles, the new head of the Federal Employment Agency (BA).
In autumn, after the summer break, companies traditionally hire more staff than in July and August. They are doing this at the moment, even though economic development is slowing down. If this seasonal effect is factored out, the number of unemployed increased slightly in September. It is currently slightly higher than a year ago. This also has to do with the fact that the refugees from Ukraine, as is always the case with migration, can only gradually be integrated into the labor market. If you exclude people with Ukrainian nationality, the job record is significantly better.
However, economic development is having an impact. According to Nahles, the demand for personnel is clearly decreasing. Skid marks can be seen in the number of those who have work in the Federal Republic. That is more than 45 million people, which is a lot in a long-term comparison. But for the first time in a year and a half, their number did not increase in August, the Federal Statistical Office reported on Friday. In the previous months it had always increased by 20,000 to 30,000.
What are the future prospects? The leading indicator of the Institute for Labor Market and Occupational Research (IAB) recently fell again and is only signaling slightly positive things. “Labor shortage meets energy crisis,” analyzes forecast manager Enzo Weber. “The booming job market is taking a hit”. The signs point to at least a slight increase unemployment.
The trend is not clear. In view of the economic problems, companies are reluctant to hire staff. The Ifo employment barometer fell in September. However, service providers in particular are still looking for new employees, especially in the IT sector as well as lawyers and tax consultants.
What’s next for the next few months? In their autumn forecast, the leading economic institutes predict that the Inflation continues to rise. Many citizens would therefore have to cut spending, which would cause the economy to shrink next year. It sounds as if masses of jobs could be lost.
But on the one hand, the researchers expect only a slight minus 0.4 percent in economic growth recession. For comparison: In the Corona crisis of 2020, the economy collapsed by almost four percent. On the other hand, the institutes are optimistic about the labor market for other reasons. Because the Federal Republic is aging and shrinking, the number of workers is slowly falling. A lack of staff is often noticeable. The researchers believe that the companies are therefore trying to keep their people in a weak phase. “Due to the lack of staff in many sectors, no increased unemployment is to be expected despite the economic crisis,” says Torsten Schmidt from the Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI).
The autumn forecast expects unemployment to fall this year despite the slowdown, from 2.61 million in 2021 to 2.41 million. Next year it will rise only slightly, by 150,000 people to 2.56 million. And then take it off again. “At least most people don’t need to worry about losing their jobs at the moment given the shortage of skilled workers,” says Laura Pagenhardt from the German Institute for Economic Research (DIW).