Navigating the Job Cuts: Breakdown of Germany's Industrial Job Losses
Significant job reductions reported in German industries, totalling 100,000 positions over the past year - Major German industries shed approximately 100,000 positions within a year.
The German industry has been hit hard by a storm of job cuts, with over 100,000 losses in a single year. The automotive sector took the brunt of the impact, according to an analysis by EY, as reported by the German Press Agency. A staggering 45,400 jobs were shed in this sector alone.
As the first quarter of the year closed, the German industry employed 5.46 million workers - a drop of 1.8 percent or 101,000 compared to the same period a year ago. Since the pre-pandemic year of 2019, the number of employees has fallen by 217,000 - a significant 3.8 percent decrease. In contrast, the industry peaked in 2018 with around 5.7 million jobs.
Jan Brorhilker, Managing Partner at EY, highlights the intense pressure companies are under. "Global economic adversaries, escalating competition from markets like China, stagnating demand in Europe, and the US market question mark all collide," he explains, adding that companies are also grappling with high energy and personnel costs.
The expected axe to fall doesn't stop at 70,000 more industrial jobs, according to Brorhilker, with companies in sectors like machinery and automotive initiating cost-saving measures. "We'll likely hear more grim news before things improve," he warns.
In the automotive sector, battling a sales slump, Chinese competition, and the shift towards electric vehicles, around six percent of jobs were lost in a year. By the end of March, employment had dipped to approximately 734,000 people. Job losses were also substantial in the metal and textile industries, with over four percent declines each. However, the chemical and pharmaceutical industries at least maintained a slight growth (-0.3 percent).
Critics argue that the dwindling of German industry heralds deindustrialization. Yet, in contrast to the long-term perspective, employment in the industry has expanded: by the end of 2024, it was 3.5 percent or 185,000 people higher than in 2014, as per the Federal Statistical Office.
Brorhilker remains optimistic, saying, "The death of Germany's industrial sector has often been predicted - only to be proven wrong each time due to its resilience. However, conditions need improvement - from reduced costs and decreased bureaucracy to strengthening domestic demand to lessen dependence on exports." The federal government's billion-euro investment package could provide the impetus needed.
The Association of the Automotive Industry (VDA) also views politics as a crucial player in this crisis. Hildegard Müller, VDA President, asserted, "Competitiveness and location attractiveness should guide the new federal government's actions. Without them, investments will be scarce, and the creation of future jobs will be limited."
- Job losses in the German industry
- Automotive sector
- China
- Frankfurt am Main
- German Press Agency
- Coronavirus
- Federal Statistical Office
- Costs
- Germany
- Europe
- U.S. market
- Industrial Location
- Investment package
- Competitiveness
Key Factors Behind German Industry Job Losses:
- Heightened Competition: Rising competition from China, specifically in the electric vehicle market, results in more affordable and desirable models by global manufacturers, such as Volkswagen and Mercedes-Benz.
- Global Economic and Political Upheavals: The German automotive sector is susceptible to the impacts of geopolitical tensions and trade policies, such as U.S. tariffs on European markets, which have negatively affected business growth.
- Economic Downturn and High Costs: Struggling sales markets, stagnant demand in Europe, and high costs for energy and personnel result in increased pressure on companies to reduce costs, often through layoffs.
- Structural Changes and Insolvencies: The automotive supplier industry is experiencing insolvencies, leading to plant closures and job losses, particularly at large and medium-sized companies.
Potential Countermeasures to Address the Job Loss Trend:
- Diversification and Restructuring: Companies such as Thyssenkrupp are aiming to create independent business units, potentially stabilizing employment in specific sectors by focusing on strategic areas like green technology.
- Expansionary Fiscal Policies: The German government is planning expansionary fiscal policies to stimulate economic growth and potentially mitigate job losses.
- Industry Support and Innovation: Investing in electric vehicle technology and supporting struggling companies can help German manufacturers regain competitiveness.
- Urgent Action from Industry Associations: Industry bodies like the German Automotive Association (VDA) are pushing for policies and conditions that foster a favorable business environment.
- The intense pressure faced by companies in various sectors, including the automotive industry, can be attributed to heightened competition from markets like China, global economic and political upheavals, an economic downturn, and high costs for energy and personnel.
- To address the trend of job losses in the German industry, potential countermeasures include diversification and restructuring, expansionary fiscal policies, industry support and innovation, and urgent action from industry associations.
