- The weak economy continues to weigh on the labour market
A summer slowdown on the job market is not unusual, but this year, the number of unemployed people in July is rising significantly. According to the monthly report of the Federal Employment Agency (BA), the economic momentum of the German economy has currently flattened again. Given the weak economy, the labor market continues to develop unfavorably. "The weak economic development is burdening the labor market. At the beginning of the summer break, unemployment and underemployment have increased more than usual," said board member Daniel Terzenbach in Nuremberg.
2.809 million people were unemployed
Here are the numbers: 2.809 million people were jobless in July, an increase of 82,000 from June. The rate stood at 6.0 percent, up 0.2 points from June. Compared to the same month last year, the number of unemployed people increased by 192,000. The Federal Employment Agency used information available up to July 15.
At the same time, the number of open job positions registered with the Federal Employment Agency also decreased. 703,000 open positions were recorded, 69,000 fewer than a year ago.
Training market still in motion
The Federal Employment Agency sees movement in the training market. 121,000 job seekers still hadn't found a training place or an alternative training option in July. On the other hand, there were 204,000 open training positions with companies. The numbers are likely to decrease further over the summer months. However, Terzenbach pointed out regional differences: For example, there are particularly many open training positions in Bavaria, Baden-Württemberg, and Thuringia, resulting in a particularly large supply. In some other regions, however, there are more job seekers than positions.
The interests, inclinations, and competencies of young people must also match the offers. Terzenbach encouraged job seekers without a training place: "It's still possible until October." Given the demographic development, it's not affordable to lose people in the training market.
Short-time work announcements increase
According to current data from the Federal Employment Agency, 58,000 people were registered for short-time work due to the economy from July 1 to 25 - a good third more than in the previous month. Whether the short-time work is actually taken up remains unclear. With the registration, companies merely report the expected work stoppage.
Impact on BA finances
The increase in unemployment numbers also affects the finances of the Federal Employment Agency. "Because the cyclical recovery assumed in the budget plan has not yet materialized, the financial result will be worse than planned. We have to acknowledge that now," said Terzenbach. They expect a balanced budget "with a red or black zero." In the first half of 2024, the Federal Employment Agency spent 10.9 billion euros on unemployment benefits - with an annual budget of 20 billion euros.
Companies are likely to remain cautious
The outlook for the labor market remains bleak. According to the Ifo Institute, the institute's employment barometer has decreased again. Companies are cautious about their personnel planning. The Munich-based economic researchers survey around 9,500 industrial, construction, trade, and service companies monthly about their personnel plans for the next three months.
"Due to the stagnating economic development, the willingness to hire new employees is decreasing," said Ifo survey director Klaus Wohlrabe in a statement. "Where orders are lacking, no additional staff is needed."
Given the rising unemployment numbers, the German government might need to implement additional job creation initiatives in areas like Bavaria, Baden-Württemberg, and Thuringia, where there are numerous open training positions but a high demand for workers. Despite the increase in short-time work announcements, Germany, a key economic powerhouse like Germany, faces challenges in revitalizing its job market.
