Fewer German Companies Face Labour Shortages

By Maria Martinez

BERLIN (Reuters) – Fewer German companies are struggling to fill vacancies due to labour shortages than a year ago, the DIHK Chamber of Commerce and Industry said on Thursday, indicating a resilient labour market that is beginning to feel the impact of economic weakness.

Germany, like many industrialised nations, is encountering significant labour shortages, particularly in skilled high-growth sectors.

According to a DIHK survey of 23,000 companies, the proportion of firms facing hiring difficulties dropped to 43%, down from 50% the previous year.

In November, Germany’s unemployment rate rose to 2.86 million. The Federal Employment Agency (BA) predicts this figure could surpass three million for the first time in a decade by early 2025.

In response, Labour Minister Hubertus Heil aims to extend the short-time work allowance from 12 to 24 months per draft regulation seen by Reuters.

Although the labour market is beginning to feel economic strain, unemployment is expected to edge up to 6.0% from 5.7% in 2023, based on government forecasts. However, the shortage of skilled workers remains significant, leading to a mismatch where companies seek qualifications not available in the current workforce, as highlighted by the DIHK report.

Approximately 1.5 million jobs are unfilled across the economy, down from 1.8 million the previous year, according to DIHK data. Companies are becoming increasingly conservative in personnel planning, reflecting in a separate survey from the Ifo Institute, which showed a rising number of businesses looking to reduce their workforce.

INDUSTRIAL SLOWDOWN

Reviving Europe’s largest economy will be a key issue in the snap national election set for February 23. Manufacturing, in particular, is witnessing the consequences of the economic crisis on personnel strategies, with all industrial sectors contemplating job cuts, especially in the metal industry and automotive sector.

The DIHK survey showed that the percentage of companies unable to fill vacancies in the industrial sector decreased to 43% from 54% last year.

“High energy costs, economic policy uncertainties that impact investment decisions, and intense international competition pose great challenges for companies,” stated Achim Dercks, DIHK’s Deputy Chief Executive. He noted that this situation has dampened personnel demand and reduced labour shortages.

In construction, 53% of companies are experiencing difficulties in hiring, with civil engineering even higher at 61%. Additionally, over 40% of service sector firms also report challenges in filling vacancies.