🦜 PerchPulse - The Germany Market Update December 2022 🦜

A warm welcome to the December issue of PerchPeek’s Germany Market Monthly update!

Here’s where you’ll find the hottest updates around employee relocation and international talent strategy, insights from our experts on housing and cost-of-living news affecting your staff, the latest trends in global mobility, and tips and tricks on ways to support your teams.

A fly-by summary

●     ‘Chancenkarte’ immigration reform approved: how this can help you hire international talent

●     How to help your international employees claim child benefit, which will see the biggest rise in history in 2023

●     Home-finding trends in 2022: rents up by 7.3% in two years, demand for rental properties up by 48% in a year, and Berlin’s population to hit 4 million by 2040

●     Cost of living changes for 2023: the €49 train ticket and other travel cost updates, the gas price cap and more

●     PerchPeek’s 2022 in numbers: From rental market stats to our biggest destinations, here’s what we’ve learned in 2022, and how this could help you support your team!

Talent strategy: Proposal to introduce new German ‘Chancenkarte

Germany is grappling with a major worker shortage across various sectors, with an estimated half a million vacant positions and 56% of companies reporting that they’re short-staffed.

To help plug this gap, the government is working on immigration reform to make it easier to obtain skilled workers from abroad, including a proposal to introduce a new ‘Chancenkarte’, or ‘Opportunity Card’. This plan has now been approved and a formal bill will be outlined in 2023.

The Chancenkarte would allow non-EU citizens to move to Germany for an extended time (predicted to be a year) without needing to secure a work permit, or even a job, first.

The scheme would be on a points-based system looking at five key criteria for each person: their qualifications, work experience, German language skills, age, and German connections. Those with three out of the five would be considered as eligible.

We see this as a significant development for People teams in a couple of ways:

●     With the introduction of the Chancenkarte there’ll be more options for bringing talent to Germany from abroad, catering better for people’s individual circumstances and making the process quicker and easier overall.

●     If the German immigration process is made easier, skilled workers from outside the EU will be more inclined to make the move to Germany. Therefore when it comes to filling open roles, you’re likely to find the pool of suitable applicants is already higher!

Cost of living: Biggest child benefits rise in history - How to help your international employees claim

Times have been tough lately, especially for those with lots of little mouths to feed! So, it’ll come as welcome news to parents in Germany that child benefits will be rising considerably in the new year. The 14% rise is the biggest child benefits hike in the federal republic’s history.

What’s Kindergeld and who’s eligible?

All parents in Germany are entitled to child benefit payments (Kindergeld), regardless of their income. Parents receive a fixed monthly payment for each child, from birth up to the age of 18. Families on low incomes can then apply for an additional child allowance (Kinderzuschlag).

What’s changing?

From 1st January, all parents will receive €250 per month per child (up 14% from the current €219 for a family’s first two children). This will now be a fixed amount regardless of whether it’s the first, second, third etc. child in the family, whereas before it worked on a sliding scale.

How your employees can claim

Employees relocating from other countries may be unsure how to claim, so you should direct them to the Federal Employment Agency site. They’ll apply here (non-EU citizens will need their residence permit), then the payments will land directly in their bank account on a monthly basis.

It’s also worth noting for your employees with children that December’s Kindergeld payments will be arriving in parents’ accounts earlier than usual, to give a helping hand for the holidays!

Home-finding: 2022 trends - rents up by 7%; demand for rental properties up by 48% in just one year

As we wrap up the year, we wanted to share the key Insights we’ve picked up on the challenges of the German rental market in 2022:

●     As Der Spiegel reported at the end of November, rents increased by 7.3% between 2019 and 2021. This represents the highest increase in twenty years and correlates with the trends our relocation experts have been observing in the German market. It means that average income earners, particularly families, are being priced out of city centres.

●     There has been a large influx of immigrants to Germany this year - in part due to the war in Ukraine - and it’s estimated that Berlin’s population, currently 3.6 million, will reach 4 million by 2040. The effect of increased demand for homes versus supply means rents will increase further, making home-searching even more challenging for relocating staff.

●     While there’s been talk of the rental cost bubble bursting, Der Spiegel predicts that on the contrary, rent prices will increase due to the lack of supply. This has always been tight but has worsened as fewer new homes are being built. As people are struggling to find homes to purchase, there’s more pressure on the rental market. In fact, Immoscout saw the demand for rental properties increase by 48% in Q2 compared to last year.

●     To end on a more positive note, this year our experts have been noticing an attitude shift towards non-German speakers in the home-hunting process. While many landlords and agents have often been reluctant to deal with non-German speakers, making finding a home very difficult for some relocators, we’re now finding this is less and less the case. Which, in a country becoming ever more multicultural, feels like a very good thing!

Cost of living: Public transport prices, gas bill cap and other key updates affecting your employees in 2023

It’s been a difficult time for everyone towards the end of 2022, with soaring inflation causing the cost of living to rise. As our clocks tick over to the new year, we’ll see changes to a number of everyday costs. While many are set to increase, there are a few positive points on the horizon!

Here’s our roundup of the main changes that’ll have an impact on your teams:

●     The €49 train ticket (allowing train travel to anywhere in the country for €49 per month) is still coming but it’s unconfirmed when; latest reports suggest it’ll be spring 2023

●     Berlin’s €29 monthly public transport ticket has been extended until the end of March

●     Public transport tickets in Hamburg, from transport association HVV, will rise by 3.2% from 1st January

●     A gas bill cap (Gaspreisbremse) for households will come into effect in March; plus, these capped rates will be retroactively applied to gas bills for January and February

●     And of course, child benefits (Kindergeld) are to rise to €250, as mentioned above!

These are the confirmed changes, but it’s harder to predict how the cost of living will fluctuate later in 2023 as a result of macro trends. Make sure to keep on top of such developments and review compensation packages regularly to keep them in line with current living costs, so your teams feel supported through these challenging price increases.

Talent strategy: PerchPeek’s international talent learnings from our 2022 experience in numbers

This year we’ve seen a lot of developments in international talent strategy. Diving into the data, here’s what we’ve learned from the many moves we’ve managed in 2022:

●     With the rise of tech-based solutions and flexible budget options, HR teams can use relocation to access talent at all levels, no longer just executives. In 2022 we’ve helped over 2,250 people start their relocation journey to 28 countries around the world.

●     Germany has a massive draw and equally massive demand for international talent - it is our biggest relocation destination in terms of mover volume. Of our movers to Germany, 53% relocated to Berlin and 31% to Munich.

●     The German rental market remains extremely competitive. It really varies based on a mover’s budget and other needs, but on average it’s taken 70-100 enquiries and 5-10 viewings to secure a rental property. Perseverance and resilience on the part of the mover are key, and HR can support by offering employees flexibility and patience.

●     With a tricky rental market and complex processes to follow, movers have a lot of questions and are super grateful for relocation advice. In our app, our relocation experts exchange an average of 500 instant messages with each mover!

●     Relocation support can be a crucial factor in employees deciding to take a job, and we love to see the value it delivers for every mover. We’re so proud to be rated 4.9 out of 5 stars on Trustpilot from over 300 reviews - we can’t wait to build on this in 2023!

We hope you enjoyed this month’s update, and wish you a happy and restful holiday season.

If you ever have any feedback, comments or questions about what's happening in your location, feel free to reach out via the form below!

Thanks for reading, and see you in the new year!

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