The job centers in Germany are somewhat more optimistic about employment again. The Ifo Institute, on the other hand, warns of more layoffs. Picture Alliance
The labor market is entering a delicate phase. Many companies are still looking for employees due to the shortage of skilled workers. But the persistent economic weakness is leaving its mark.
According to an Ifo survey of companies, layoffs are becoming more likely. The ifo employment barometer fell. In contrast, a survey of job centers showed better prospects for new jobs. The IAB labor market barometer rose.
We explain how this fits together. It will be exciting on Wednesday. The Federal Agency will then publish the new unemployment data in January.
The job market in Germany is on the brink. On the one hand, employment is increasing from record to record, and many companies are urgently looking for staff. On the other hand, the weakness of the German economy that has been going on for months is leaving more and more traces. The paradoxical situation is also shown by the two most important surveys on the labor market that were published on Monday.
According to a survey by the Ifo Institute among companies, the willingness to hire staff is decreasing. There was also a risk of more layoffs. The Ifo employment barometer fell. In contrast, the experts at the Federal Employment Agency’s job centers are even more confident that employment will continue to rise. The IAB labor market barometer rose. It will be all the more exciting on Wednesday when the Federal Employment Agency presents the new unemployment figures for January.
Ifo employment barometer is falling – “layoffs are becoming more likely”
The Ifo employment barometer fell to 95.5 points in January, after 96.5 points in December. “The difficult economic situation is now also reflected in personnel planning,” said Ifo researcher Klaus Wohlrabe: “Companies are rather reluctant to hire new people. The first layoffs are becoming more likely.”
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The development in the industry is interesting. On balance, industrial companies plan to continue to reduce their workforce. However, the industry barometer rose from minus 13.5 to minus 13.0. This could mean that the industry, which is plagued by worries, has bottomed out.
The trend in retail is more negative. “In retail, more and more companies are thinking about layoffs because customers are not coming,” says Ifo. When it comes to service providers, the bottom line is that companies want to hire additional staff. However, willingness to hire declined. “This applies in particular to IT service providers and the consulting industry.” The barometer has also fallen further in the construction industry.
The Ifo barometer is based on a comprehensive, regular survey of companies.
IAB employment barometer rises: more jobs
The IAB labor market barometer rose for the second time in a row in January, after previously falling since spring 2023. It is based on a survey by the Institute for Labor Market and Occupational Research (IAB) among all job centers. The barometer climbed by 0.2 points to 100.3 points. It is therefore above the neutral value of 100 points and signals growing employment.
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The labor market barometer consists of forecasts from the job centers regarding employment and the number of unemployed. Both components improved in January. After an increase of 0.2 points, the employment component is clearly in the plus at 103.1 points. “The employment agencies expect that employment development will pick up again after a lull,” said IAB researcher Enzo Weber. The outlook for unemployment improved by 0.2 points to 97.4 points, but remains negative. “The job opportunities of the unemployed must be increased again, otherwise there is a risk of further consolidation,” demanded Weber.
This is behind the divided outlook
The surveys only contradict each other at first glance. The labor market in Germany is characterized by something special: both employment and unemployment are increasing. This is because more people are currently entering the job market. On the one hand, these are immigrants and refugees, especially from Ukraine, who are allowed to work in Germany. But the gradual increase in the retirement age and more flexibility through home office are also increasing the labor supply. Employment is increasing because companies are still looking for many skilled workers.
At the same time, the number of unemployed is also increasing. Because more refugees are allowed to work, they are also more likely to appear in unemployment statistics. At the same time, due to the growing problems of many companies, the risk of becoming unemployed and then finding a new job less quickly is also increasing.
Employment in Germany was at a record level of 46.2 million people at the end of the year. On average, around 45.9 million people had work in Germany in 2023. That was around 300,000 more than the previous year. At the same time it rose Number of unemployed in December by 31,000 to 2.64 million people. That was 187,000 more unemployed than a year before. And companies have still reported over 700,000 vacancies to job centers. In surveys, companies even say that they cannot fill well over 1.5 million open positions with suitable candidates.
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