German Industry Battles crisis, Losing Over 100,000 Jobs in a Year
Annual job losses in German industry amount to 100,000 positions in a year
The German industry is grappling with a significant job loss, shedding more than 100,000 positions within a year. The hardest hit sector? None other than automotive, with EY reporting a net loss of around 45,400 jobs.
These figures come from a study that EY conducted, using data from the Federal Statistical Office. At the end of Q1, the German industry employed about 5.46 million people - a 1.8% or 101,000 decrease compared to last year. And if we look back to the pre-pandemic year of 2019, the employee count has dwindled by a hefty 217,000, marking a 3.8% decrease.
Jan Brorhilker, Managing Partner at EY, points out that industry companies are facing immense pressure. "Aggressive competitors, stagnating demand in Europe, and uncertainty over the entire U.S market, coupled with high costs for energy and personnel, are putting tremendous strain on businesses," he says.
Remaining Resilient... For Now
The ongoing economic crisis doesn't seem to be ending the job losses any time soon. Brorhilker predicts another 70,000 losses by the year's end. Tough times lie ahead, especially for companies in the machinery and automotive industries, where numerous cost-cutting measures have been initiated.
The automotive sector is dealing with a triple whammy—a sales slump, increased competition from China, and the shift to electric vehicles. By the end of Q1, employment in this industry declined by nearly 6%. The metal and textile industries also saw significant job losses, shedding over 4% each. However, chemical and pharmaceutical companies managed to avoid major layoffs, with only a 0.3% drop in employment.
Deindustrialization, Anyone? Not Yet
Despite the job losses, overall employment in the German industry is higher than a decade ago. By the end of 2024, employment was up by 3.5% or 185,000 people compared to 2014.
So, What's Next?
Brorhilker believes that the resilience of Germany's industrial sector is remarkable, despite repeated predictions of deindustrialization. But he stresses that improvements are needed to support growth: lower costs, less bureaucracy, and strategies to increase domestic demand. The federal government's billion-euro investment package could provide the needed impetus.
The Association of the Automotive Industry (VDA) echoes these sentiments. VDA President, Hildegard Müller, insists that competitiveness and location attractiveness must be prioritized by the new federal government to secure investment and future job creation.
The community might consider implementing policies, such as employment policy, to support businesses struggling in the industry, as they face intense pressure due to various factors, including high energy costs, tough competition, and uncertainty in the U.S market. Moreover, financial assistance, possibly from the federal government's investment package, could aid German businesses in reducing costs and fostering growth.
