What awaits the German labor market in 2024? Unfortunately, the current economic downturn in Germany is expected to persist until the first half of 2024, and many major companies are already warning of upcoming layoffs.
High inflation, fluctuations in energy prices, and geopolitical instability continue to pose challenges for German companies, and many do not anticipate an immediate recovery. Meanwhile, a shortage of specialists and skilled workers in Germany is expected to persist throughout the next year.
A positive development is expected in the visa process for foreign workers next year.
German Labor Market Outlook in 2024
Among German companies that typically hire many foreign workers are international technology and manufacturing companies such as Siemens and BMW. International fashion giants like Adidas or Puma also attract a significant number of foreign talents. All these companies are located in the southern state of Bavaria: the headquarters of Siemens and BMW are in Munich, while Puma and Adidas are headquartered in Herzogenaurach, near Nuremberg.
In Berlin, in recent years, an increasing number of foreign workers have found employment among rapidly growing startups in the city. However, this trend seems to have slowed down in recent months.
"According to founders I talk to, startups of all sizes and funding stages will be cautious with spending until 2024 as capital is still relatively hard to come by, and they are unlikely to hire many people, if any at all", said Miriam Partington, a correspondent at sifted.eu in DACH.
Partington cites recent layoffs at Spotify and Delivery Hero as examples of the current trend among startups – laying off employees rather than hiring new ones. However, she noted that in a recent survey conducted by sifted, 20% of companies stated they plan to increase their workforce in the next six months.
In addition to startups, the overall economy of Germany is experiencing slow growth this year, prompting many companies to approach hiring with caution in 2024.
According to Reuters, the German Economic Institute (IW) based in Cologne published the results of a survey of over 2,200 companies, indicating that more companies expressed negative expectations for the upcoming year than positive ones. Regarding job creation, 20% of companies stated they expect an increase in staff, while 35% anticipate reductions.
Costly energy impacts chemical and pharmaceutical giants
Since the start of the conflict between Russia and Ukraine, the rise in energy prices has significantly affected Germany's economy.
According to DPA agency, electricity prices for large consumers in Germany are nearly four times higher than in the United States and almost twice as high as in France. This has particularly impacted manufacturers of chemical and pharmaceutical products, but the price hike in these industries has had repercussions on Germany's economy as a whole.
This year, energy prices have decreased compared to peak values observed during the gas crisis in 2022, and pharmaceutical sales have performed slightly better than expected. However, companies seem to be hedging their bets, with many stating that they do not expect the situation to improve until 2025.
This means that some companies are scaling back their operations. According to a report by Handelsblatt, administrative and office positions are being cut more frequently than jobs directly related to production.
Workers remain highly needed in Germany
It's important to note that German manufacturers are experiencing a massive shortage of qualified workers.
In fact, foreign workers with specific skills may find it easier to secure employment in Germany next year, as efforts to attract and retain qualified workers have recently come into effect. Professions related to climate technologies are particularly in demand, such as workers installing solar panels or heat pumps, as well as those working in energy grids.
Moreover, there are still many vacancies in the IT sector globally, appealing to software engineers and other STEM positions. For young workers or those looking to retrain, professions related to the transition to sustainable energy and technologies appear to be the most promising.
Employment experts also advise job seekers to keep an eye on vacancies in small and medium-sized businesses in Germany, as well as in large corporations.
Furthermore, Germany continues to have demand for laborers and skilled workers in many other industries. For example, there is a shortage of construction workers and craftsmen, as well as train drivers, teachers, social workers, nurses, and caregivers.
To alleviate the shortage of qualified workers and help companies attract more foreign specialists, a law on the immigration of skilled workers was passed in November of this year.
A new visa for job seekers is expected to be introduced in March 2024, and other visa and blue card requirements have already been or will be relaxed soon. The goal is to simplify the visa process for foreign workers currently living in Germany or planning to move.
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The introduction of a new visa for job seekers is expected in March 2024, aiming to simplify the visa process for foreign workers.
Despite the ongoing economic challenges, there is still a demand for laborers and skilled workers in various industries in Germany, such as construction workers, craftsmen, and caregivers.
