🦜 PerchPulse - Germany Market Update September 2022 🦜

PerchPulse - Germany Market Update September 2022 

The latest and most relevant info on talent & immigration, business, and cost-of-living in Germany, to help HR leaders stay close to events and support their people strategy.

A big feathery welcome!


Hey there! Welcome to PerchPeek’s September 2022 Germany Market Update! As experts in moving people between locations, we keep as up-to-date as possible on international market trends and factors influencing HR leaders, their teams, and their employees, and we've brought this insight into a monthly newsletter. If you’d like to get this newsletter directly into your inbox every month, simply sign up for it here. We hope you enjoy reading! 

Fly-by summary:

  • On a positive note, the production and export of goods are on the rise.
  • The unemployment rate rises to 5.5% as more Ukrainians flee the war, seeking work in Germany. 
  • German cities are dimming lights and conserving water to curb rising energy costs.
  • German inflation reached its highest level in almost 50 years in August.

Talent & Migration 

Joblessness on the Rise Despite Demand for Workers

Joblessness in Germany rose by nearly 30,000 in August, lifting the unemployment rate to 5.5%.

There is still high demand for workers in Germany despite the rising number of unemployed people. However, the issue with filling jobs may come down to language barriers. According to the UN, more than 900,000 Ukrainians in Germany are seeking safety from the ongoing war. 

And while many qualified Ukrainians are multilingual, knowledge of the German language is not widespread. And many German companies are looking to hire workers who can speak not only German but English as well. 

HR leaders may want to consider offering language support to those looking to relocate to a place where they may be unfamiliar with the local language. From free online courses to immersive lessons, this can be a way for employees to feel more confident and at ease in a new environment. 

A recent S&P Global survey has indicated a slowdown in new job creation amid increasing uncertainty over the economic outlook in Germany and worldwide.

Housing & Cost of Living

Germans Brace for Bitter Winter as Energy Costs Soar

It’s no secret that energy costs are rising as inflation remains high worldwide. High prices and potential power shortages seriously threaten the German economy. In an effort to save both money and energy, the city of Hanover has turned off warm water in all buildings to lower energy consumption by 15%.

Almost half of all German households use natural gas as their primary means of heating. Until recently, Russia accounted for more than half (55%) of the country’s gas imports. Energy prices as a whole were up 105% compared to the same time last year.

These energy price increases can be attributed to the war in Ukraine as it’s been the primary driver behind rising inflation; energy prices were 35.6% higher in August than the same month last year.

As an HR leader, you may not be able to cut energy costs for your employees, but you can at least understand and acknowledge what they may be dealing with outside of work. Valuing people and their situations can mean more than you know and positively impact people’s overall well-being.

German Inflation Reaches New Heights

German inflation reached its highest level in almost 50 years in August, as consumer prices increased by 8.8% on the year, following an 8.5% rise in July.

Government measures meant to stifle inflation, including cheaper public transit tickets and a fuel tax cut, ended on Aug. 31. Without any follow-up measures, analysts predict inflation in Germany (Europe’s largest economy) could reach double digits before the end of the year.

The last time inflation was this high (above 8.5%) in Germany was during the winter of 1973/74, when the first oil crisis led to a problematic inflationary cycle. 

With the cost of living rising across the board – from food and transport to energy and rent – HR leaders may consider offering remote work options for employees if they don’t already. This can be especially helpful for those who are in the middle of relocating. 

Business & Economy

German Business Confidence Drops Again, Despite Slight Economic Growth

Let’s start with some positive news. Gross domestic product (GDP) rose by 0.1% from the 2nd quarter of 2022, returning to the pre-crisis level of the 4th quarter of 2019. Foreign trade is also up overall! The number of companies complaining of material and supply bottlenecks was at its lowest in over a year, at 62%.

German industry continued to recover from the shocks suffered due to the Russian war against Ukraine. The production and export of goods increased. However, demand was weak as the business climate cooled, and retail sales recorded their most significant decline since 1994. Price increases have caused consumer confidence to plummet.

According to a recent survey of nearly 10,000 businesses, service providers view the current situation as “somewhat better,” though the business climate in manufacturing remained unchanged in August.

Producer prices have surged to over 37%, the most significant rise since records began in 1949. The month-on-month rise of 5.3%, was also the highest on record.

As we mentioned above, these record increases in producer prices have been primarily driven by skyrocketing energy prices. 

Conclusion

Despite higher energy costs and the fact that inflation is unlikely to go down anytime soon, the German economy is resilient and continues to come back. HR leaders can help show their support and understanding in times of hardship by communicating often, showing appreciation, and prioritizing work/life balance. 

‍Thanks for reading! See you next month!

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