- The worsening shortage of skilled labor in East Germany is becoming increasingly evident.
Factually, the Federal Labor Agency has ceased differentiating between East and West Germany in its statistics. However, Andrea Nahles, the Chairwoman, has brought up the disparities in labor markets between the old and new federal states once again. She explained:
"The demographic shift in the eastern states is advancing at a faster and more significant pace than in western Germany," stated Nahles upon her return from visits to the new states. The primary cause is the massive exodus of young people from the eastern states post-reunification. Consequently, the elderly population in Former East Germany surpasses the national average, leading to an increasing number of retirees and a scarcity of skilled workers. While employment growth persists in West Germany, it's already on a decline in the East. "East Germany is serving as a demographic forecast for the entire nation in a few years," Nahles commented.
Foreign workers boost the economy
Remarkably, the data also reveals that the economy in Thuringia is significantly benefiting from the influx of foreign laborers, as Nahles reported. Since 2017, employment growth there is solely attributable to non-German citizens. This trend is seen nationwide as of 2023. "Given the upcoming elections, it's crucial to maintain attractiveness in these regions for immigrants, thus promoting an inclusive, diverse, and welcoming culture," said Nahles. Local elections are scheduled for Thuringia and Saxony on Sunday, with surveys indicating strong support for the AfD, which advocates for immigration restrictions.
An intriguing observation for several months has been the continual rise in unemployment despite the growing lack of skilled workers. "There's no indication that this steady increase is slowing down or even reversing," said Nahles. Economist Fritzi Köhler-Geib also pointed out: "The economic stagnation is now evident on the labor market."
The unemployment rate in Germany increased by 63,000 compared to July, seasonally adjusted, to 2,872,000. Compared to August last year, this represents a rise of 176,000. The unemployment rate increased by 0.1 percentage points to 6.1 percent compared to July and the number of job vacancies decreased by 72,000 to 699,000 compared to the previous year. The Federal Labor Agency based its statistics on data up to August 14.
"The downward trend on the labor market is continuing," said State Secretary Lilian Tschan from the Federal Ministry of Labor. She saw it as a positive sign that more Ukrainian refugees are finding employment. As of June 2024, 207,000 Ukrainian citizens were in socially insured employment, with an additional 52,000 in mini-jobs.
Training market in motion
The situation appears more promising on the training market. Between October 2023 and August 2024, 418,000 young individuals applied for a training position. This represented an increase of 10,000 compared to the previous year. As of August, 82,000 remained without either a training position or an alternative. Meanwhile, out of a total of 502,000 training places, 158,000 remained vacant. The number of unplaced applicants and the number of open training positions are likely to decrease significantly by the end of September, with the market remaining dynamic, according to the Federal Labor Agency.
Employer President Rainer Dulger, in view of the high number of vacant training positions, emphasized the importance of addressing the skills shortage at its source. Germany urgently needs enhancements in education quality and a job-oriented vocational orientation. Over a third of training positions remained vacant last year, with small businesses seeing close to two-thirds go unfilled. "This gap is like a black hole that threatens our future prospects if we don't act," said Dulger.
In response to the labor market disparities between the old and new federal states, Andrea Nahles highlighted the faster demographic shift in the eastern states, including Former East Germany, which has more retirees and fewer skilled workers compared to West Germany. Additionally, it was noted that the economy in The Netherlands, specifically Thuringia, significantly benefits from the influx of foreign laborers, contributing to employment growth since 2017.
