June 2018 Recruiting in Germany Bulletin

Listed Under: News & Bulletins

What they are saying in the news and key commentators:


The Ifo Business Climate Index is a survey based on about 7,000 responses from firms in manufacturing construction, wholesaling, and retailing.

It is widely used as an early indicator for economic development in Germany. The Ifo Index is at a current level of 102.20, unchanged from 102.20 last month. There has been little movement in the past months indicating stagnation but at a very high level.

Data released recently showed that German growth halved in the first quarter of the year due to seemingly weaker trade and less state spending, though analysts said they saw it as a temporary blip.

Germany's economy grew by a lower 0.3% in the first three months, which is the slowest rate since the third quarter of 2016.

There are increasing signs that Germany may be reaching its limits.

There seem to be genuine shortages of skilled workers across nearly all key markets especially manufacturing, construction and as always IT, with factories operating at nearly full capacity, and bottlenecks in supply chains threaten to slow the country’s economy.

The economy is reaping the benefits of its own efficiency, gains in productivity and labour-law reforms introduced in the 90s — but also from a currency regime that keeps the euro undervalued for Germany, bolstering its exports and enabling it to accumulate the largest current account surplus in the world. However, Germany appears to be coming a victim of its own success and economists are urging companies and the government to take action now to secure growth.

Still, given the full order books, companies are likely to make up for a relatively weak period in the coming months and boost overall economic growth which should come in at around 0.7 per cent in the second quarter.

Robust government and private consumption and fixed investment will support the economy in the next quarters.

Downside risks stem from a strong euro, rising protectionism in the U.S., and a possible escalation of geopolitical and trade tensions for example between the EU, the USA and China and the Iran issue. To stem this development the German government has become increasingly active with its biggest trade ally China in the effort to boost future trade in case it needs to compensate elsewhere.

Germany's unemployment rate dropped in June coming in at 4.2% down from 5.3% at the same time in 2017.  Germany now has the third lowest unemployment rate within the EU.

A surprisingly large number of migrants have found work as the German economy prospers, new statistics show. Far from being a drag on the German economy, refugees who fled conflict have been a positive force.

It has also been reported that more migrants could get jobs if procedures for acknowledging their diplomas and other qualifications achieved in their home countries were to be streamlined. This is an age-old problem in German caused in the main by bureaucracy and very old-fashioned regulations.

Studies have also found that non-EU migrants continue to make up a disproportionate number of welfare recipients, especially long-term unemployed.

The German Government

The efforts of the new German government will be to continue without any new borrowing for the rest of the legislative period. In 2018 Germany’s debt will again be low and certainly no higher than 60% of GDP.

Inflation rose to 2% at the beginning of June due to rising fuel and food costs.

Angela Merkel reiterated her support for the nuclear deal with Iran in line with the other EU countries. Iran is meeting its commitments under the provisions of the agreement, according to the information provided by the International Atomic Energy Agency.

The German government has stated it is not right to withdraw from the agreement, as the USA has done, although the deal is not ideal and Iran’s ballistic missile programme and its actions in Syria and in other conflicts in the Middle East represent a threat to peace within the region and even beyond.

The Chancellor described digitalisation as the most ambitious project for Germany, but also for Europe’s competitiveness.

Germany is lagging way behind in several technological issues like broadband for example with many parts of the country especially rural areas suffering from ineffective communication, greatly affecting small businesses. The government is attempting to address this very big issue.

The Federal Government has rejected the tariffs imposed by the U.S. on steel and aluminium although this represents less than 2% of total trade to the USA. To counter this Angela Merkel is turning to China, Germanys biggest trade partner to explore new business avenues. Two weeks ago, Frau Merkel was in China with a big trade delegation in the effort to drum up business.

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Compiled from various news sources and publications. This document provides very basic and general information and should not be read as legal advice or a legal document in any way. The facts quoted are derived from various sources, and we cannot confirm/guarantee accuracy.