The research institute of the Federal Employment Agency expects record employment in Germany despite the shaky economy. The number of people in employment will rise by 375,000 to 45.945 million this year, the Institute for Employment Research (IAB) predicted on Friday in its spring forecast.

At the same time, it assumes that gross domestic product will stagnate after growing by 2022.1 percent in 8. "In view of the increased shortage of labour, many companies are trying to keep their employees even in phases of economic weakness," said IAB expert Enzo Weber. "Both the number of people in employment and those subject to social insurance contributions are reaching new highs."

Number of unemployed climbs

The number of unemployed, on the other hand, is likely to rise, by 108,000 to 2.526 million – "among other things due to the registration of Ukrainian refugees in the basic security," as Weber said. "Even after the end of integration courses, many of these people initially end up in unemployment." The unemployment rate will rise from 5.3 to 5.5 percent.

According to the IAB, more employment is likely to be created in most sectors. Most of the additional jobs are predicted for public services, education and health. "Only in the area of financial and insurance services do we expect a slight decline in 2023 due to consolidation measures and advancing digitalization," said Weber.

Industries damaged by Corona are recovering

The acute shortage of personnel in the corona-affected sectors, such as gastronomy and trade, is likely to ease over time and reach its pre-crisis level by the end of the year. "But the underlying labor shortage will get worse as baby boomers retire," Weber said. Without any compensation, such as migration and increasing labour force participation, the workforce potential would decline by almost seven million by 2035 compared to 2021 for purely demographic reasons.

Therefore, more must be done, such as keeping older people longer in the job or strengthening the professional development of women. "We should promote immigration with an open migration policy and improve the integration of immigrants in Germany," said Weber. In the case of labour shortages, productivity increases are also important, above all through investments in the qualification of employees and in technology such as intelligent digitisation.