German employment hit new record in 2023

The German workforce swelled to 45.9 million in 2023, the largest it has been since the country's reunification in 1990, according to provisional figures published by the Federal Statistical Office (Destatis). The previous record, set in 2022, was exceeded by 0.7 per cent, Xinhua news agency quoted Destatis as saying.

Back in 2020, the Covid-19 pandemic had ended a continuous 14-year rise in the number of people in employment in Germany.

"The immigration of foreign labor was one of the reasons for the increase in employment in 2023," Destatis said.

The number of people in employment with a German passport also increased.

"These two contributions have offset the dampening effects of demographic change on the labour market, which is expected to lead to a significant decline in the working-age population in the medium term," Destatis added.

Service sectors recorded above-average increases in employment.

However, employment in the manufacturing industry, excluding construction, only rose by 0.3 per cent.

Despite the growing workforce, leading economic institutes expect Germany's economy to contract slightly in the next two years.

The Organization for Economic Cooperation and Development (OECD) has forecast growth of 0.6 per cent and 1.2 per cent for 2024 and 2025, respectively.

Europe's largest economy also suffers from a massive shortage of skilled workers in many professions, making it economically dependent on immigration.

The German government has therefore reformed the country's immigration laws, making it easier for qualified people to stay.

Nevertheless, the trend of rising employment levels may not be sustained.

"We expect that employment will soon reach its peak and then trend downward" over the remainder of the forecast period 2024 and 2025, the Kiel Institute for the World Economy (IfW Kiel) said in mid-December 2023.

"The potential labor force will begin to shrink in the near future due to aging and despite robust levels of immigration," IfW Kiel said.

"The economic recovery in the next two years will counteract this to some extent."