🦜PerchPulse - German Market Update July 2022 🦜

A big feathery welcome!!‍

Hello and welcome to PerchPeek’s July 2022 German Market Update! As relocation experts, we keep as up-to-date as possible on international market trends and factors influencing HR leaders, their teams and their employees, and we've brought this insight into a monthly newsletter.

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Fly-by summary:

With over 390 000 vacancies, Germany is going all in on attracting skilled global talent. Their fast-track VISAs will enable businesses to fill those empty posts.
Like many countries, rising energy costs are having a big impact on cost-of-living and inflation.
Housing shortages in key cities are making renting a home extremely difficult - we’ve given an update on latest rental costs.
A 60% cut in natural gas supplies from Russia is threatening some key industries and jobs.

Keep on reading to find out more about where Germany is heading in our July 2022 German market update.

Talent & Migration - More hands on deck!

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As of June 2022, the number of people migrating to Germany was fairly stable year on year (at around 200,000 per annum). But with an aging population, the government is facing a major skills shortage of 390,000 vacancies in some key sectors.

As a result, in combination with January’s minimum wage increase to 12 euros, in the last few months the government has launched new rules which will allow skilled workers from outside countries to fast-track the immigration process in order to take a job in Germany.

This is expected to provide a significant increase in movers to Germany - the German government is predicting they will be doubling immigration to an estimated 400,000 new skilled workers a year!‍

How can companies take advantage of this?

Speedy recruiting: German businesses can use the new VISA options as a very attractive selling point to come and work for them - if approved, the VISA process can take as little as three weeks for these new outside workers. It’s now the fastest of any VISA process in Europe!

The rules also allow for spouses and dependents to join workers in the country.

Check out details of the fast-track procedure for skilled workers.

If Germany can manage to bring in the 400,000 workers they are targeting, this will not only help with their labour shortage, but also bring new businesses to Germany.‍

Ukrainians unemployed in Germany‍

The seasonal unemployment rate in Germany increased to a seven-month high of 5.3% in June, after 3 months at pre-Covid levels of 5%. This was caused by refugees from Ukraine registering with the labour office in search of work. This influx may mean more talent availability for German businesses.‍

Housing & Cost of Living - Inflation hitting people hard.‍

The cost of living varies widely among the 16 German states, but the average across them is still lower than most of the other high-GDP European nations and Western countries. This is due to a very strong economic system, which has greatly aided in the post-Covid recovery, preventing major inflation throughout the pandemic.

However the crisis in Ukraine has massively hit German prices. The inflation rate reached an all-time high for the third month in a row in May 22, at +7.9%. This is mainly caused by the increase in the cost of energy products, but we also see price increases for many other goods, especially food.

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Rental market challenges

PerchPeek’s German relocation team has been working extremely hard to find homes in the current market - Berlin and Munich in particular have always had competitive rental markets, but now it's even worse.

As well as the pre-existing housing shortage, this has been driven by an influx of businesses bringing people into these core cities post-pandemic. In addition, the major influx of Ukrainians into temporary and permanent accommodation has reduced availability. ‍

Getting it right‍

At PerchPeek we recommend putting aside at least 6 weeks for both short and long term accommodation searches, and budgets in the region of the below for permanent accommodation:

Business & Economy - Inflation and gas supply challenges‍

On July 4th, Germany's top union official said entire industries were at risk due to Russia cutting natural gas supplies to the country. According to Yasmin Fahimi, the glass, chemical and natural gas industries are majorly threatened by Russia’s natural gas giant provider Gazprom cutting flows to the country in response to Western sanctions.

In addition to this, it’s been predicted that summer of 2022 would be particularly difficult for the economy, with manufacturing hit by supply bottlenecks and inflation reducing the population’s spending power. The purchasing power of disposable incomes is strongly affected by the high inflation mentioned above, and with inflation the real disposable incomes of families are expected to decline significantly.‍

Conclusion‍

It’s a challenging time for German people and businesses, caused by the challenges with the Ukrainian conflict. With companies and people seeing prices rise, it is super important to stay close to the needs of your employees.

The positive news is that the German government is taking steps to make sure people are still attracted to the country. Through the fast-track VISA, minimum wage improvements, and a historically strong economy, there's hope for brighter days ahead for businesses.

Thanks for reading - see you next month!

Questions About Moving Employees or Want to See PerchPeek in Action?

No matter where your business is located, or how many employees you have to move, the relocation experts at PerchPeek are standing by at all times to answer any and all questions that you may have about moving and taking care of your most important business asset, your team! Feel free to reach out for a call with us or book a demo to see exactly how PerchPeek can work for you and your teams!

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