The record number of employees is reached in Germany, but what happens next?

There were 45.6 million employed in Germany last year, the Federal Statistics Administration reported. This is a 1.3 percent increase, reaching a record number of employees since the German reunification in 1990. The 2020 Pandemia broke the contribution of 14-year economic growth, at a time when employment has increased annually. During 2020 alone, some 362,000 employees have lost their jobs.

One of the reasons for increasing the number of employees this year was the immigration of the foreign workforce. The “S along with this comes a greater activity of the local population's work”, the statistics say. For the time being, these two things soften bad demographic indicators, which in the medium term may result in a drastic decline in the number of working - age residents.

Economic Growth

The Institute for World Economics from Chile, Germany, estimates that this year's record will not be exceeded soon. Thus, the number of employees may be expected to decline in 2024. “The demand for labour power will be largely hampered by the economic consequences of the energy crisis, but a strong increase in the minimum wage of twelve euros per hour of work could also cause negative effects for employment”, the Institute says.

Even the German newspaper Frankfurter Allgemeine Zeitung writes that we should not be very happy with higher employment because it may be unstable at a longer time. In the first six months of 2023, a recession is expected.

“In the medium-term Germany faces an even bigger problem: in the years ahead the labour market will lose millions after the generation born in the high birth years will retire”, the paper writes. Politicians are said to have to increase retirement age and that facilitating the arrival of the workforce from foreign countries is a step in the right direction.

Raising Salaries and Pensions

But this year's employment boom and more and more taxpayers have a positive effect on pension insurance as well. The state pension fund last week announced it ends the year with a surplus of 2.1 billion euros. “A year ago, a deficit of 6.5 billion euros was envisioned”, said Gundula Ro pursuebach, president of the German Pension Fund.

In addition to more people employed to fill the pension fund, the number using this fund has not increased as much as expected. So, as Roãobach explained, the pandemic has hit the most pensioners.