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How geopolitical tensions affect the job market in Germany: then and now
First Covid, now rising inflation triggered by the war in Ukraine and the energy crisis: for more than two years, the geopolitical situation has presented companies with major challenges. Disrupted supply chains, as well as shortages of raw materials and staff, are becoming increasingly noticeable.
The much-cited skills shortage is thereby turning into a general labour shortage, which is currently reaching a new high. Particularly affected are service providers and manufacturers of food, data processing equipment and metal products. (Tagesschau, 02.08.2022)
Is any of this new for the labour market in Germany?
History shows that crises have always existed, but since the end of the Second World War we Germans have, at least by international comparison, mostly been spared. Hardly anyone today remembers the oil price crises of the 1970s, when a Sunday driving ban was introduced and both inflation and the unemployment rate shot up. (Hans-Böckler-Stiftung, n.d.)
The dotcom bubble of the early 2000s also hit not only financial investors and countless small investors. The German labour market was directly affected as well. While IT specialists were still considered a bottleneck target group at the end of 1999, many software developers searched in vain for new employment at the beginning of 2000. (Zöttl, 2021)
In 2010, the economic and financial crisis then swept across the entire EU. Unlike in earlier crises, however, the German labour market held firm this time: the unemployment rate did not rise. (Bundeszentrale für politische Bildung, 2020)
Ten years later, in early 2020, the coronavirus pandemic brought large parts of private and economic life to a standstill. While the labour market had appeared unaffected in 2010, the lockdowns now had an effect on it again, albeit far less severe than generally feared. Yes, there was massive uncertainty among employees and employers alike, and the number of job advertisements posted fell by more than 20% compared with January 2019. In addition, 318,735 companies registered for short-time work (Kurzarbeit). (Statista, 2022) Yet by May 2021 the job market had already returned to its pre-crisis level, and only five months later it recorded growth of 40% compared with that level. (Hering, A., 30.08.2022)
2022: an upturn or a challenge for the German labour market?
The coronavirus situation improved and German companies experienced a marked upturn, for which they needed more skilled workers than ever before. And just as everyone was getting used to the idea that things were looking up again, the next crisis hit us on top of another corona winter that should not be underestimated: a war in the middle of Europe, gas shortages, rising energy prices, renewed disruption to supply chains and, as a result, inflation.
The effects on the German labour market
Whether and how current events are influencing the labour market worldwide is being studied by Dr Annika Hering at the Indeed Hiring Lab. As an economist, she examines how the labour market has developed since the start of the pandemic, taking current events into account. In an interview with the online blog Saatkorn.com, she explains that since the beginning of the year Germany has been experiencing a veritable "job boom", reflected on the job portal Indeed in a 50% increase in job postings. Her data also show that it is no longer just a matter of a skills shortage, but of a general labour shortage. (Saatkorn.com, 2022)
Because: the occupational groups in which staff are urgently needed keep expanding, despite current events.
Although the geopolitical situation presents both private households and the economy with massive challenges, the labour market has so far remained stable according to Dr Hering. The Hiring Lab's surveys show that demand for workers is still very high, but growth in published vacancies has slowed. (Hering, A., 07 2022)
What Dr Hering reported in July 2022 had not changed by September either. This can be seen, for example, in the three highly sought-after occupational groups of software development, medical technology and civil engineering. (See Figure 1) What the Hiring Lab finds in its research, we experience as headhunters in our day-to-day business. Companies are increasingly delaying the posting of new job advertisements or are planning to fill currently open positions at a later date.
Even so: headhunters in greater demand than ever
Even though the number of newly posted job advertisements is stagnating a little at the moment, HR experts are still in desperate demand (See Figure 2). Fewer job advertisements relevant to this occupational group are being posted too, but overall demand for well-qualified specialists remains high and is still above pre-crisis levels.
Our forecast
The current geopolitical situation may have an effect on the German labour market in the short term. In the long term, however, nothing will change.
Due to demographic change, in the coming years numerous well-trained specialists and executives from the so-called baby boomer generation will retire, and for the first time they will no longer be replaced by a sufficient number of apprentices or graduates coming through. The gap in skilled workers will therefore widen every year.
Companies will thus have to contend even more with massive bottlenecks in the labour market. The situation will worsen dramatically, especially in IT and in medical care and nursing.
Sources:
Bundeszentrale für politische Bildung. (28. 11 2020). https://www.bpb.de. Retrieved from https://www.bpb.de/kurz-knapp/zahlen-und-fakten/soziale-situation-in-deutschland/61685/erwerbstaetigkeit/
Hans-Böckler-Stiftung. (n.d.). https://www.gewerkschaftsgeschichte.de. Retrieved 14. 09 2022 from https://www.gewerkschaftsgeschichte.de: https://www.gewerkschaftsgeschichte.de/stagflation-der-1970er-jahre.html
Hering, A. (30.08.2022). https://www.hiringlab.org. Retrieved from https://data.indeed.com/#/
Hering, A. (07 2022). https://www.hiringlab.org. Retrieved from https://www.hiringlab.org/de/blog/2022/07/28/arbeitsmarkt-juli-2022/
Institut für Arbeitsmarkt- und Berufsforschung. (11 2009). https://doku.iab.de/kurzber/2009/kb1109.pdf. Retrieved from https://doku.iab.de/kurzber/2009/kb1109.pdf
Saatkorn.com. (2022). https://www.saatkorn.com. Retrieved from https://www.saatkorn.com/welche-auswirkungen-hat-der-ukraine-krieg-auf-den-arbeitsmarkt/
Zöttl, I. (06. 09 2021). https://www.capital.de. Retrieved from https://www.capital.de/wirtschaft-politik/wie-die-dotcom-blase-im-jahr-2000-platzte-und-die-new-economy-mit-sich-riss
