Germany's economic stagnation challenges labor market

BERLIN

Germany's economic recession and the onset of winter are having a negative impact on the labor market.

Germany's Federal Employment Agency (BA) published data for December on unemployment figures.

Accordingly, the number of unemployed people in the country, not seasonally adjusted, increased by 33,000 people in December compared to the prior month, reaching 2.8 million.


Compared to December 2023, the number of unemployed people increased by 170,000.

The number of seasonally adjusted unemployed people in the country also increased by 10,000 in December compared to November and reached 2.87 million. The expectation in the markets for the number of unemployed was that it would increase by 15,000 in October.

The non-seasonally adjusted unemployment rate also increased by 0.1% in December to 6%.

Andrea Nahles, president of the Federal Employment Agency, said: “The winter break in the labor market starts in December. As usual, unemployment and underemployment increased in December.”

Nahles pointed out that the economic downturn that continued last year left deeper scars on the labor market.

Average unemployment for last year rose by 178,000 to 2.8 million. The average unemployment rate in the country rose from 5.7% in 2023 to 6% last year.

In December, the number of registered job vacancies was around 654,000, a decrease of approximately 59,000, compared to the same period the previous year.

Due to the stagnant economic outlook in Germany, the number of unemployed is expected to continue to rise this year and exceed the 3 million mark for the first time in 10 years in the coming months.

Meanwhile, despite the economic downturn, total employment in Germany rose to 46.1 million last year, the highest figure since the unification of East and West Germany in 1990.

On the other hand, the country's economy contracted by 0.3% in 2023 compared to the previous year due to unusually high levels of inflation affecting purchasing power, high energy prices, falling investments, weak foreign demand and high interest rates.

Germany was thus the only country among the G7 countries to shrink.

The German Central Bank (Bundesbank) expects the economy to shrink by 0.2% in 2024 due to threats from trade protectionism, geopolitical conflicts and structural change.

*Writing by Mucahithan Avcioglu in Istanbul