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Germany – Economy to cool, employment growth to decelerate

13 December 2018

The German economy will cool in 2019, slowing down the rise in employment, according to the ifo Institute’s Economic Forecast for Winter 2018.

The forecast calls for economic growth in Germany to decline from 1.5% this year to 1.1% next year, before accelerating to 1.6% in 2020 due to a higher number of working days that year. The new figures are down from estimates in the Autumn forecast, which called for 1.9% growth in both this year and 2019 and 1.7% for 2020.

“The weakness triggered by the automotive industry will continue until 2019,” said ifo's Head of Business Cycle Research and Economic Forecasting Timo Wollmershaeuser. “A wide range of uncertainties are also curbing the global economy, and especially Brexit, Italy and US trade policy to name but a few.”

This will slow down the rise in employment, according to ifo. The organization expects the number of persons in employment to increase from 44.8 million this year to 45.2 million next year and 45.5 million in 2020. Over the same period, the number of unemployed will fall from 2.3 million to 2.2 million and 2.1 million respectively. This corresponds to an unemployment rate of 5.2% in 2018, 4.9% in 2019 and 4.7% in 2020.

Meanwhile, Bitkom, the German association for IT, telecommunications and new media, separately reported the shortage of skilled IT workers is coming to a head with a record-high 82,000 vacancies in Germany, a 49% increase from 2017.

Bitkom’s representative survey of more than 855 managing directors and HR managers in companies of all industries found 82% report a current shortage of IT specialists, up from 67% in the prior-year survey and 55% in the 2015 survey. Moreover, companies expect the number of vacant posts will continue to increase — six out of 10 expect the skills shortage to worsen in the future.

On average, it takes five months to fill an open IT job, according to Bitkom.

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