Employment up, unemployment down. For years there has been one record report after another from the German labor market. But now the bad news is increasing in view of the weak economic situation. Job reduction programs from large companies such as Bosch and ZF have been dominating the headlines for months. Shortly before Christmas, the agreement from Volkswagen was added, which envisages the loss of no less than 35,000 jobs within six years. But while most of these programs regulate a socially acceptable reduction in employment in the future, the downward trend in the labor market has another segment of the economy has long since begun. Scientists are now sounding the alarm. “The corporations dominate the headlines, but employment in medium-sized companies has long been falling,” warns Enzo Weber from the state institute for labor market and career research (IAB) in Nuremberg to the F.A.Z. Employment subject to social security contributions in Germany has hardly been possible in the past 20 years sustained high altitude. The number of dependent employees rose by around 7.5 million to almost 35 million people during this period. However, the construction came to a standstill later this year. And as Weber has now pointed out in a specialist article, the development has already tipped in the other direction. It is becoming clear that employment developed noticeably poorly in the third quarter of 2024 – “another 76,000 people below what could have been expected due to the weak economic development,” it says. Critical situation in the industry, especially small and micro-enterprises A comparison of the data for May 2023 and May 2024 shows that those affected are affected. During this period, employment in units with more than a hundred employees grew by 1.2 percent. In contrast, the value fell by 0.3 percent in companies with fewer than a hundred employees. If you look specifically at those in the manufacturing sector, employment actually fell by 2.0 percent. Weber considers this value to be worrying within twelve months. This reflects the critical situation in the industry, and in its wake also in temporary employment. The Datev medium-sized business index, which the F.A.Z. had previously reported that sales of small and medium-sized companies fell by 4.7 percent in November compared to the same month last year. The Munich Ifo Institute also warned before Christmas that companies’ personnel planning would become more restrictive. The Ifo employment barometer fell to 92.4 points in December, after 93.3 points in November. “Fewer and fewer companies are adding staff,” said Ifo researcher Klaus Wohlrabe, commenting on the trend. “The proportion of companies that want to cut jobs is increasing.” The economic crisis is leaving its mark on personnel planning, particularly in industry. Almost all industries are considering job cuts. The metal industry as well as car manufacturers and their suppliers are hardest hit. Retailers are also planning to reduce positions rather than fill them. The negative dynamics of the past few months are continuing among service providers. Insolvencies are on the rise. The drop in employment is also related to the increasing number of business closures. The number of bankruptcies has risen significantly this year. According to preliminary estimates from the Creditreform credit rating agency, around 22,400 corporate insolvencies are expected in 2024, which would be a whopping quarter more than in the previous year. But in addition to the loss of existing jobs, IAB research director Weber has identified another reason for the development: “Dein-industrialization is primarily happening through lack of renewal. There have never been so few new start-ups in the industry,” says Weber, referring to the slow start-up activity.More on the topicAccording to the KfW start-up monitor 2024, start-up activity has recently lacked the overall economic drive. In uncertain times, start-ups grow primarily for part-time jobs, but not full-time jobs. For Enzo Weber, this results in a political mandate for action: “Economic policy must reduce uncertainty and promote the development of new companies and business models.”
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