Employment In Germany Hits Record High
The number of people in work in Germany has now reached a record high, with figures showing unemployment levels across the country are currently at the lowest seen in 37 years. The number of people out of work fell for the sixth month in row in December at 5.5%, with the total unemployment figure falling by an estimated 29,000 – which is almost double what was expected.
Despite Germany’s ageing population, it’s reported that close to 600,000 more people were employed during the last year when compared to figures from 2016. It’s thought that a significant factor in the growth has been the rise of immigration, along with growth in the service, manufacturing and construction industries. The service sector, which accounts for 70% of Germany’s workforce, has seen the highest growth in the last year.
Even more promisingly, the number of tax payers has seen a significant increase and the number of workers on low incomes has fallen. It’s hoped the this employment boost in Europe’s largest economy will soon push up wages along with inflation. Germany has been benefiting from strong growth recently; with strong domestic spending and global trade. Additionally, confidence in German businesses has continued to grow.
“People are not afraid to spend money because unemployment is so low and that boosts domestic demand,” said Jens Kramer, an economist at NordLB in Hanover. “It’s something of a miracle that wage growth was so moderate after we effectively had full employment for two years in Germany. We should eventually see pressure for higher wages this year.”
The pressure for wage increases is already underway. Talks between employers and industrial union IG Metall are currently in talks to increase wages and give employees the option to work 28 hours a week, however they are struggling to make progress and the initial deadline has already passed without a deal being reached. “The collective bargaining talks are gridlocked,” said the union, who are now considering warning strike action.
Germany hopes that the weak pay growth currently seen will soon be end, as it has now urged for the European Central Bank to set an end date for the stimulus measure it imposed during the financial crisis.
Bundesbank President Jens Weidmann said “We expect that the increased capacity utilization and regionally appearing bottlenecks in some labor markets will lead to somewhat higher wage pressure” With unemployment falling throughout the Eurozone, and the EU seeing the strongest growth for a decade, Germany is optimistic that wages should improve in the near future.