German Industry's 100,000 Job Cuts Amid Stiff Economic Challenges
Mass layoffs in German industries: Over 100,000 jobs lost within a year - Major layoffs sweep through German industries, leading to the elimination of approximately 100,000 jobs within a year.
It's a tough time for German industry as they've slashed more than 100,000 jobs in a year. The automotive sector took the hardest hit, losing 45,400 jobs alone, according to an EY analysis obtained by the German Press Agency.
In the first quarter of the year, the industry employeds 5.46 million people—a 1.8% drop or 101,000 fewer workers compared to last year. Compared to pre-COVID 2019, the workforce has seen a decrease of 217,000, amounting to a 3.8% drop. It's worth noting that in 2018, there were around 5.7 million industrial jobs.
Industrial companies are feeling the heat, says EY Managing Partner Jan Brorhilker. He points to aggressive competition from China, uncertain sales markets, stagnant European demand, and looming questions about the US market, compounded by high costs for energy and personnel as the prime reasons for the pressure.
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The bleak outlook for jobs doesn't seem to be changing anytime soon, with Brorhilker expecting at least 70,000 more industrial job losses by year's end. Sectors hit hardest are machinery and automotive, seeing a 6% and 4.4% decrease in employment respectively. The metal and textile industries have also experienced substantial job losses (over four percent each). However, the chemical and pharmaceutical industries have relatively remained unaffected, with a mere 0.3% dip in employees.
The specter of Germany's industrial decline, coined "deindustrialization" by critics, has been a long-standing debate. Yet, long-term employment data from the Federal Statistical Office reveals a 3.5% or 185,000 increase in industrial employment since 2014.
Brorhilker contends that Germany's industrial strength has shown resilience despite numerous predictions of its impending doom. Nevertheless, improvements in conditions are crucial for survival. Lower costs, less bureaucracy, and a stronger domestic demand are essential to reduce reliance on exports. The government's billion-euro investment package could potentially give the economy a much-needed boost.
The Association of the Automotive Industry (VDA) is urging politics to take action. VDA President Hildegard Müller stresses that competitiveness and location attractiveness should guide the new federal government's policies, as the industry's competitiveness has dwindled in recent years. A thriving industry, she emphasizes, depends on competitive and attractive locations to attract future investments and jobs.
Related Insights:
- The transition to electric vehicles (EVs) and clean energy requires substantial investment and restructuring, leading companies to cut jobs to adapt.
- Global economic conditions, including high inflation and supply chain disruptions, have affected the profitability of industries, necessitating cost-cutting measures.
- Intense competition from emerging markets and new energy vehicle technologies is forcing companies to restructure and reduce costs to remain competitive.
- Volkswagen, Stellantis, and Nissan have announced job cuts and restructuring plans to adapt to the changing landscape.
- Other industries, such as Vodafone Germany and ThyssenKrupp AG, have implemented layoffs to achieve significant cost savings.
- The German manufacturing PMI has shown signs of slowing down, with job cuts persisting but at a slower rate than in previous months.
- Global trade tensions and tariffs have disrupted the global automotive industry, affecting supply chains and profitability.
- Given the economic challenges and the transition to electric vehicles, companies in Germany's industry sector are compelled to restructure, leading to significant job cuts, particularly in the automotive and machinery sectors.
- As the governmentacknowledges the need for a stronger domestic market and less bureaucracy to boost the economy, they've introduced a billion-euro investment package and urge the new federal government to prioritize policies that foster competitiveness and location attractiveness within the industry.
