GERMANY
Some of the slowdown in labour market activity appears supply-driven as well as demand driven, though the extent to which is difficult to ascertain.
- A German IFO survey of 9000 German companies out today showed 43.1% of firms reporting a shortage of qualified workers in July, up from 42.2% in April 2023 (albeit lower than the all-time high of 49.7% in July 2022).
- Services firms are particularly hard-hit, per IFO 2/3 of transport, architecture, and engineering firms report skilled worker shortages.
- The share of manufacturing firms saying the same is lower at 34.6%, with some areas (IT equipment 43.1%, machinery/equipment makers 40.9%) affected in varying ways. And for construction and trade, under 1/3 report skill shortages.
- The tickup in skill shortages, particularly in the services sector, could help underpin overall wage growth amid competition for workers. More generally though it appears to be an impediment to employment gains and overall economic growth.
Source: IFO
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