Germany’s Vibrant Labour Market

The overall situation

Of all the countries in the EU, Germany currently has one of the lowest levels of unemployment. According to OECD, Germany’s average rate of unemployment in 2015 was 4.6 percent, a figure that compares very favourably with the world’s other leading economies. Indeed, both domestic and foreign media are already using the word Jobwunder to describe the exceptional performance of Germany’s labour market. At present, there are excellent job prospects in a number of sectors in Germany.

Germany’s Vibrant Labour Market

Particularly welcome is the fact that young people are also able to find apprenticeships and jobs. Unemployment among people between the ages of 15 and 24 currently stands at 7.3 percent in Germany. This is one of the lowest rates among the 28 EU member states, where average unemployment for the under-24s was 20.4 percent in 2015. Experts identify Germany’s dual system of vocational training and education – which combines an on-the-job apprenticeship with a course of study at a vocational school – as a crucial factor in Germany’s job market. This means that new recruits join a company at an early age, and that employers can help ensure their apprentices successfully complete their training. Likewise, graduates of universities and the more practically oriented universities of applied sciences also have excellent chances of quickly finding a good job.

Regional differences

Despite the positive situation overall, there are certain regional differences in the German job market. For instance, employment prospects are good in certain areas of southern Germany, in the states of Baden-Württemberg and Bavaria. Here, unemployment rates are comparatively low.

Differences according to qualifications

Differences according to qualifications

Aside from regional economic differences, employment prospects also depend on an applicant’s precise qualifications. Graduates of universities or universities of applied sciences have a relatively easy time finding employment. As a rule, the same applies to job applicants with a vocational qualification, such as an apprenticeship. For those without a vocational qualification, the prospects are substantially worse. In other words, the employment prospects for immigrants to Germany are excellent, particularly if they are well-qualified and have a basic command of the German language.

The reasons for the revival of Germany’s labour market

Germany has achieved a remarkable turnaround. Back in 2005, unemployment stood at 11.3 percent, among the highest in the EU. Since then, the situation has continuously improved, even throughout the severe economic and financial crisis of 2008 onwards. Experts agree that there are two main reasons for this: first, government reforms to increase flexibility on the labour market; and second, the impact of Demographic change, which means a dwindling supply of skilled workers to replace those entering retirement.

Future prospects

Future prospects

Will the situation on the German labour market remain equally favourable in the coming years? Given the ups and downs of the economy and other global developments, it is, of course, hazardous to make any firm predictions here. Apart from short-term fluctuations, however, experts agree that Germany’s labour market is essentially governed by two factors. Both indicate that the demand for skilled labour will remain high in Germany and that there will continue to be very good opportunities for skilled workers from abroad.

Factor 1: Demographic change

Of all the countries in Europe, Germany is one of the most strongly affected by Demographic change. The German birth rate plunged towards the mid-1970s and has remained around the 1.4 mark ever since – well below the replacement rate of 2.1 required to maintain stable population levels. At the same time, life expectancy has continued to rise, thus raising the number of older people in the German population. This trend has already started to impact on the labour market, where a fall in the supply of freshly trained skilled workers is now leading to shortages in qualified labour. In the future, this contraction and aging of the working population will become increasingly acute. Given that qualified labour is crucial to the success of the German economy, skilled workers will remain in big demand for years to come.

The strength of German industry

Factor 2: The strength of German industry

Although Germany is not immune to economic developments in the rest of Europe and elsewhere, its highly competitive industry can include itself among the winners of globalization. Moreover, there is every indication that German industry will retain this strong position in the future. After all, German companies supply innovative and competitive products, particularly in the global markets of the future, such as infrastructure, environmental protection, and conservation of resources. Yet it is only by recruiting skilled workers and well-trained graduates that German companies will be able to maintain their competitive edge.

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