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The Financial Times: The German labor market is showing signs of strain with the number of unemployed rising significantly in October, marking the highest increase in over a year. As the country’s economy grapples with stagnation and increased borrowing costs, more companies are beginning to cut jobs. The unemployment rate edged up from 5.7% to 5.8%, the highest since June 2021, hinting at a broader weakening of the labor market across Europe.
The Institute for Employment Research in Nuremberg noted the beginnings of the impact from last year’s energy price surge, with major companies like Deutsche Bank, BASF, and Lanxess announcing job cuts. The arrival of Ukrainian refugees has also contributed to a 0.4 percentage point rise in the unemployment rate. Although there is still a labor shortage, with 43% of companies indicating difficulties in hiring, the number of job vacancies has decreased.
The German economy is anticipated to contract by 0.4% this year, with calls for more skilled immigration to counteract the labor shortfall. Nonetheless, unemployment rates in both Germany and the broader eurozone are expected to increase further next year, particularly as the construction sector faces a downturn due to higher interest rates and decreased building activity. Despite these challenges, the German labor market is comparatively stable given the circumstances.
The entire article can be read at the link https://www.ft.com/content/c7db72b3-c89a-4806-a681-c957b1928dee
