After several inquiries on how the German labor market has been developing these past months, we decided it was a good time in July to give you a little more comprehensive overview of how German companies have done so far.
Right from the beginning in March 2020, the German government resorted to an instrument it had already successfully tested and implemented during the financial crisis in 2009, which is short-term labor. Companies could reduce the amount of hours per week and pay their employees accordingly less while they were compensated for the difference and could top up their employees’ salaries. Many received 80% of their original salary despite having to work less. The goal was to absorb the potential shock coming from companies letting people go.
And already (or still), companies are looking for employees. In March, the Federal Employment Agency had 626,000 open positions in its inventory and in April 76,000 new ones were added. By the end of the month, the number of open positions reached a total of 702,000. About 17,000 are aimed at computer scientists and other IT professions. That doesn't seem like much, but if you apply the standard rule that companies report only about one in three vacancies to the agency, the total becomes 51,000 vacancies for IT specialists. They are desperately sought even in the deepest crisis.
Due to its business model, the online bank ING has a great need for IT experts because all banking transactions are handled online. There are no branches, the German headquarters of the Dutch financial group is in Frankfurt. Around 700 out of approximately 4,000 employees in Germany and Austria work in IT. Accordingly, ING currently has between 80 and 100 open positions in IT.
Overall, the number of applications at the Bank has not changed compared to pre-Corona times and none of this had any influence on salary demands – they are still high. Being needed has its price and IT experts know their value.
The automotive supplier Brose is also feeling this. Brose has some 26,000 employees worldwide, of which around 8,400 work in Germany. The company grew by producing window regulators. Today, it develops and manufactures mechatronic systems for doors and seats as well as electric motors and drives in cars. In IT and electronics, they want to build up competencies in order to expand their product portfolio for the mobile future.
Brose is working on networked functions such as radar systems that open car doors and monitor the interior under gesture control. The company is looking for software developers for its Bamberg location and has around 50 vacancies for IT and electronics jobs. They have postponed hiring decisions until they can get to know the applicants in person. This is now possible with the relaxation of the Corona rules in Bavaria, but still subject to special precautions.
At the same time, the unemployment rate continued to rise, amounting to 6.1% in May and 6.2% in June 2020. According to the job search engine indeed, the development of job advertisements was -26% at the end of May, compared to 2019. The negative trend has slowed since mid-April and has been more or less stable since then.
In other words, companies are still hiring, but compared to last year it is less. This also means that investment in new employees is not continuing to decline sharply. However, the uncertainty among companies remains high and a significant recovery of the trend yet needs to be seen.
When looking at the development of new job ads one can detect a similar trend. As the number of job advertisements increased sharply at the end of May 2019, the difference to the current corona developments is beginning to diverge further. At the end of May, the development of new job advertisements was -36% compared to the previous year's development.
For jobs in the automotive industry, and especially in mechanical engineering, production and manufacturing, we could witness a medium decline in the development of job ads. Here, too, the trend has been almost stable in recent weeks, but continues to reflect uncertainty on the part of companies.
Whether the number of unemployed people will continue to rise in the coming months depends on whether and when companies start to invest more in new employees and advertise jobs. What matters in the end for each applicant, especially from abroad, to design their individual strategy first, taking into account important factors such as time, windows of opportunity, regions, industries, networks and skills. Do not hesitate to reach out to us if you require our assistance!