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Germany – Labour market remains stagnant as Eurozone recovers

30 October 2013

The end of the Eurozone recession may be boosting employment hopes in some member states, but German recruiters are not really seeing the continent's largest economy reaping the benefits, reports Market News International (MNI).

As a result of Germany's demographic challenges and near-full employment there isn't much left to squeeze out of the labour market, even if demand for workers is increasing. Talk of a national minimum wage and fears of further political efforts to curtail the use of temporary recruitment are also weighing on sentiment, recruiters have told MNI.

Dieter Traub, Head of the temporary recruitment firm Orizon, said: "The recruiting opportunities are the principle limiting factor, and not necessarily client demand."

While supply is limited, Mr Traub says demand from employers for contract workers has in fact risen year-on-year, as the depressing effect on demand from wage deals agreed last year - bringing the salaries of temporary workers in line with full-time employees - have begun to run their course.

This contrasts with many other Eurozone countries, where higher unemployment rates are offering more opportunities for companies to take on workers as their economies recover. Recruitment firms including Manpower and USG People have cited improvements in the outlook for hiring in their third quarter results.

Despite the high unemployment among its neighbours, German firms have struggled to attract high-skilled labour from abroad to fill the growing gap at home, where an ageing population is reducing the availability of qualified workers.

Frank Schrader, Head of Business Development and Marketing at recruitment firm Piening, thinks that Germany's labour market is more restrained by its past successes and demographic challenges. "The overall labour market is rather conservative, because you have close to full employment in the regions we operate in.”

Mr Schrader says demand for temporary hiring is also declining in some areas, especially in the auto and machinery sectors. Germany's economic recovery has aided premium auto brands, but lower-end carmakers and suppliers are still more constrained.

More broadly, Mr Schrader noted that a fresh round of wage deals with unions to raise minimum wages in the temporary hiring sector, as well as talk of a minimum wage, are somewhat clouding the outlook, especially in the eastern states.

"I think clients are going to be cautious for the time being," Schrader said, though he expects a pick-up towards the end of the first quarter. "I'm confident that, after perhaps a small gap, we will see a recovery again."

Where the fear of an economic calamity may have topped the concerns of companies in past years, Mr Schrader says the demographic challenges facing Germany's labour market are now much higher on the agenda. Companies might have a bias towards hiring, but finding the right person is increasingly difficult.

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