At the end of the year, the German labor market once again proved to be robust.

As the Federal Employment Agency (BA) announced on Tuesday, the number of unemployed rose in December as usual this month: by 20,000 to 2.454 million.

Adjusted for the usual seasonal fluctuations, however, unemployment fell: by 13,000.

The unemployment rate rose by 0.1 percentage points to 5.4 percent.

Britta Beeger

Editor in business and responsible for "The Lounge".

  • Follow I follow

On average over the year, the number of unemployed fell by 195,000 to 2.418 million in 2022, despite the energy crisis and high inflation.

Underemployment, which also includes people who are in a labor market policy measure or who are unable to work for a short time, decreased significantly.

According to the BA, the declines are based on the favorable development in the previous year and in the first half of 2022. From the middle of the year, the registration of Ukrainian refugees then led to an increase in unemployment and underemployment.

“Last year, the consequences of the Russian war against Ukraine – price increases, uncertainties, but also refugee migration – certainly left their mark on the German labor market.

In view of the extent of the burden, however, these are moderate,” said Andrea Nahles, Chairwoman of the Federal Employment Agency.

The demand for new employees decreases

The effects of the war against Ukraine on the German labor market can currently be seen, among other things, in the fact that the demand for new staff has dropped noticeably.

However, it remains at a high level.

In December, 781,000 vacancies were reported to the BA.

In addition, companies are again registering short-time work for more employees: in December for around 91,000 employees.

Since Ukrainian refugees are increasingly taking part in integration courses, seasonally adjusted underemployment also increased in December.

Leading indicators suggest that the labor market will remain stable in the coming months.

No major upheavals or major job cuts are to be expected.

The labor market barometer of the Institute for Labor Market and Vocational Research increased again slightly in December.

It reflects the expectations of all German employment agencies for the next three months.

They therefore expect a slight increase in unemployment, but also an increase in employment.

"After the prospects on the labor market had steadily weakened since the spring, things are now slowly picking up again," said Enzo Weber, head of the IAB research department for forecasts and macroeconomic analyses.

However, the trend in Europe is going in a different direction.

"In many European countries, war and the energy crisis are pushing labor market prospects into the red," Weber said.

There was already good news from the German labor market on Monday: According to provisional calculations by the Federal Statistical Office, the number of people in work climbed to 45.6 million on average in 2022, more than at any time since reunification.

More than 90 percent of the increase in employment can be traced back to the service sector.

Public service providers such as day-care centres, schools and hospitals, but also the hotel and catering industry and retail are recording particularly significant increases.