Hit by the Economic Storm: Germany's Industry Sheds Tens of Thousands of Jobs
Industrially-based jobs in Germany dwindle by 100,000 within a year.
The brutal economic climate has battered German industry, resulting in a staggering loss of over 100,000 jobs within a year. A deep dive by auditing and consulting firm EY reveals that the automotive industry bore the brunt of the blow, with about 45,400 jobs eliminated alone.
When we take a look at the first quarter of the year, the industry employed 5.46 million individuals—1.8 percent or 101,000 fewer than a year prior, according to the study based on data from the Federal Statistical Office. This number represented a 217,000 drop when compared to 2019, a decrease of 3.8 percent. In 2018, the industry boasted around 5.7 million employees.
Jan Brorhilker, Managing Partner at EY, warns that the industry is wrestling with numerous challenges: "Plentiful competitors from China are driving down prices, vital sales markets are wavering, demand across Europe remains stagnant at a low level, and the entire U.S. market looms uncertain. Simultaneously, companies are grappling with astronomical costs – for instance, energy and personnel expenses."
The Job Cuts Show No Sign of Letting Up
Industrial turnover experienced a minor slide at the beginning of the year after a plunge in 2024. A respite from the job cuts isn't apparent yet, as Brorhilker predicts an additional 70,000 industrial jobs to disappear by year's end. The automotive and machinery industries are at the forefront of these cuts, with companies rolling out cost-saving initiatives. "We'll continue to hear grim news before things start to improve," Brorhilker remarks.
In the automotive industry, wrestling with a sales slump, Chinese competition, and the transition to electric vehicles, more than six percent of jobs were eviscerated within a year. By March, employment figures fell to around 734,000 people, dropping significantly by 4.2 percent in the metal industry and 4.1 percent in the textile sector. Meanwhile, the chemical and pharmaceutical sectors largely remained unaffected (-0.3 percent).
The Controversy over Deindustrialization
Critics argue that the crisis signals the beginning of deindustrialization, but long-term employment figures in the industry have actually grown: By the end of 2024, employment increased by 3.5 percent or 185,000 individuals compared to 2014, according to the Federal Statistical Office.
A Call to Action for Politicians
Brorhilker emphasizes that the German industrial sector has continually defied predictions of its demise. However, changes should be implemented to improve conditions: "Lower costs, reduced bureaucracy, and increased domestic demand are essential makeovers that can wean the economy off its dependence on exports. The federal government's billion-euro investment package can pave the way," he says.
The Association of the Automotive Industry (VDA) echoes this sentiment, urging politicians to prioritize competitiveness and location attractiveness. VDA President Hildegard Müller underscores the urgency, stating, "It's crucial for the new federal government: The current situation demands action, as Germany's competitiveness has eroded over the years. Prosperity and future job opportunities depend on location-friendly policies."
- In light of the ongoing job cuts in the industry, the community and employment policies must be revised to provide support for affected workers.
- As the finance sector adapts to the economic challenges facing the industry, it is crucial for businesses to seek strategies for cost reduction and increased efficiency, while policies aimed at promoting industry growth should be prioritized in politics.
- The general-news media should keep the public informed about the industry's struggles, as well as any proposed solutions from governments and businesses, while highlighting the importance of the industry to the overall economy.
