Slashing 170,000 Jobs: A Tough Year for German Industry
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A significant reduction of 100,000 workforce positions in German industrial sector observed within a year. - Major layoffs in German industries sweep through workforce, resulting in loss of 100,000 jobs within a year.
The winds of change have left the German industry reeling, shedding over 170,000 jobs within a year. The automotive sector has taken the heaviest blow, according to an examination by the EY auditing and consulting firm, obtained by the German Press Agency. Approximately 45,400 positions evaporated in this sector alone.
At the end of the first quarter, the industry's workforce clocked in at 5.46 million—1.8 percent or 101,000 fewer than a year ago. The report, derived from data from the Federal Statistical Office, indicates a 3.8 percent drop since the pre-Corona year 2019, totaling 217,000 jobs lost up to now. In 2018, the industry proudly boasted around 5.7 million jobs.
Jan Brorhilker, Managing Partner at EY, points to external pressures on the industry. "Competitors from China have grown aggressive, some markets are teetering, demand in Europe lingers stubbornly low, and uncertainty shrouds the entire US market. Simultaneously, companies are drowning under hefty energy and labor costs."
A Looming 70,000 More Job Losses
The German industry's revenue shrank at the beginning of 2024 after a notable slump in 2020. A complete ceasefire in job cuts has yet to materialize, assures Brorhilker. He estimates that at least 70,000 additional industrial jobs will be eliminated by year's end. Companies within the machinery and automotive sectors have already initiated austerity measures. "Employees bracing for more bad news will bear witness to a gloomy world before things begin to improve."
The automotive industry, grappling with a dwindling sales market, Chinese competition, and the shift to electric vehicles, has seen a 6 percent workforce reduction in just one year. By March, the sector's employees dropped to around 734,000. Employment also took a significant hit in the metal and textile industries, with over 4 percent declines in each. Workforces remained relatively stable in the chemical and pharmaceutical industries (-0.3 percent decline).
A Long-Term Bark that Fails to Bite
The manufacturing sector's ongoing struggles have sparked criticisms of Germany's future industrial prospects. Doubters speak of 'deindustrialization.' However, compared to 2014, industry employment has grown in the long term, according to the Federal Statistical Office. By the end of 2024, it increased 3.5 percent or 185,000 people.
EY manager Brorhilker maintains, "The German industrial sector has repeatedly proven its ability to endure repeated declarations of death." But improvements are necessary: Lower costs, less bureaucracy, and bolstering domestic demand are key to making the economy less dependent on exports. Here, the federal government's billion-euro investment plan may offer a lift.
The Automotive Industry Demands Reforms
The Association of the Automotive Industry (VDA) also places the onus on the government. VDA Chair Hildegard Müller contends that competitiveness and location attractiveness must be the primary goals of the new federal government. "The future of investments and corresponding job creation hinges on these factors," she asserts.
Further Reading:- Recent Warnings of Up to 90,000 Job Losses Due to Tariffs and Global Economic Uncertainty- The Future of German Automotive Industry: Challenges and Opportunities
- Enrichment DataAdditional Context:
Temporary labor schemes have provided a buffer against immediate job losses for some companies. The competition landscape may further tilt as China pushes for faster adoption of EVs and Europe tightens emission standards. The impact of the Russia-Ukraine conflict on energy prices and supply chains remains unclear.
[^1]: Recent Warnings of Up to 90,000 Job Losses Due to Tariffs and Global Economic Uncertainty
[^2]: The Future of German Automotive Industry: Challenges and Opportunities
[^3]: U.S. Steel and Aluminum Tariffs Could Cost Germany Up to 59,000 Jobs by 2020, Report Says
[^4]: Hundreds of Thousands of Jobs at Risk as Greece Exits Bailout - German Ministry Source
- Amidst the job losses, the German government is urged to focus on reforms within the manufacturing industry, as suggested by the Association of the Automotive Industry (VDA).
- The banking-and-insurance sector could play a role in providing financing for vocational training programs, aimed at re-skilling workers impacted by the downturn in the industry.
- A decline in the automotive sector has significantly impacted the general-news, with the government now facing pressure to implement policies that stimulate economic growth and job creation.
- The ongoing industry transformations, including the shift towards electric vehicles and stricter emission standards, have sparked debates in politics about the future of the German manufacturing industry and its role in the country's economy.
