🦜 PerchPulse - The Germany Market Update March 2023 🦜

A warm welcome to the March issue of PerchPeek’s Germany Market Monthly update!

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Here’s where you’ll find the hottest updates around employee relocation and international talent strategy, insights from our experts on housing and cost-of-living news affecting your staff, the latest trends in global mobility, and tips and tricks on ways to support your teams.

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A fly-by summary

●     In light of the severe skilled worker shortage, with nearly 2 million roles open, the government has released a draft law to make it easier to hire workers from abroad

●     Chancellor Olaf Scholz has announced a new policy to ease the work visa process for skilled IT workers from India, in an effort to combat Germany’s worker shortage

●     Rental costs are rising faster than property prices for the first time in many years, but temporary accommodation costs have decreased

●     Cost of living update: Germany’s gas price cap has come into effect, students may apply for a €200 relief payment, and rail strikes are looking likely

●     A first-hand view of the relocation experience from a PerchPeek customer who moved to Cologne - find out what he thought, from finding housing to learning German!

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Talent strategy: New Skilled Workers Immigration Act draft law released to attract foreign workers

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Germany has been struggling with a severe shortage of skilled workers lately. Data shows nearly 2 million unfilled jobs in the last quarter, costing the country a hefty €86 billion per year.

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The Institute for Labour Market and Occupational Research (IAB) has predicted that this trend will continue, and the German labour market could be short of up to 7 million workers by 2035.

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To address employee shortages, and when struggling to recruit from the local talent pool, more and more employers are looking abroad. A new report states that almost 70% of all newly created jobs in Germany in 2022 were filled by foreign workers.

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The government is keen to try and help make acquiring talent from overseas quicker and easier, having released a draft law to make the requirements for non-EU jobseekers less stringent.

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The new Skilled Workers Immigration Act will offer up the following changes:

●     A new Chancenkarte, or Opportunity Card, visa for jobseekers - meaning people can move to Germany without a solid job offer

●     EU Blue Card requirements will be loosened, e.g. minimum salary to be reduced

●     Recognition of non-German qualifications will be improved

●     Those on student visas will have more opportunities to work alongside their studies

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PerchPeek’s advice to People teams:

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●     Stay on top of the latest developments in terms of visa and work permit reform, to be able to bring top talent over to Germany more quickly and efficiently.

●     Offer a comprehensive relocation policy - it’ll be attractive to prospective candidates and will ensure a smoother process, helping them hit the ground running in their new role!

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Talent strategy: Chancellor announces policy to ease work visa process for Indian IT professionals

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One of the latest efforts by the government to combat the current worker shortage is a plan to make it easier for IT workers from India to obtain a German visa and settle in the country.

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In 2022, the German embassy in New Delhi issued visas to around 3,000 skilled workers, most of whom were IT professionals, but the current visa process can take months to be completed.

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Chancellor Olaf Scholz has now announced a new policy to ease the visa process for qualified Indian workers. Under the policy (timeline yet to be announced):

●     The visa process will be simplified and modernised, allowing IT professionals to relocate without an official job offer, and for their families to move with them

●     Lack of German language skills should no longer be a barrier at the application stage

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How can companies benefit?

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This policy poses a great opportunity for People teams to look to fill roles by targeting India’s brightest IT professionals. Those focused on talent acquisition are advised to increase hiring efforts for qualified Indian nationals, and to keep on top of developments in visa processing.

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Depending on how quickly actual visa process reform can be made, it’s worth noting that there’s likely to be competition from other brands in snapping up tech stars! So, having a well thought through and financially sound relocation plan will be essential for attracting the best talent.

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Home-finding: Rental costs rising faster than property prices in Germany

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German rental market update

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Key insights at a glance (source: I Am Expat):

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●     Asking rents rose by an average of 6.3% during the second half of 2022, compared to the same period in 2021, in the eight major cities - Berlin, Hamburg, Munich, Cologne, Frankfurt, Dusseldorf, Leipzig and Stuttgart

●     As of February 2023, rental costs are rising faster than property purchase prices for the first time in many years, driven by a sharp increase in interest rates. As a result, relocating employees may find increased competition (in already competitive) markets for the most desirable properties.

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Minimum rental costs - Q1 2023 (source: PerchPeek):

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For rental cost data on cities other than Berlin and Munich, give PerchPeek a shout here!

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Top tips from PerchPeek’s Germany experts

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While it’s generally expected that temporary accommodation costs will be 50-100% higher than long term rents, in Germany we’re now seeing that these prices are in line with each other.

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Relocating employees (and their employers setting the relocation budget!) should take this into account. We normally recommend planning to stay in temporary accommodation for at least three months, to allow time for sorting out local registration (Anmeldung) and other paperwork.

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Cost of living: Gas price cap is now in effect, and rail strikes are likely

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Though the first signs of spring are starting to appear, the chilly weather means heating bills are still a worry for many - plus it’s looking like rail strikes are on the horizon. To support employees well, it’s important to keep on top of the latest updates and initiatives affecting staff.

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Here’s PerchPeek’s summary of the latest key updates in Germany:

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●     Germany’s gas price cap has come into effect as of 1st March, and is expected to be in place until April 2024. What this means for consumers is that 80% of a household’s gas consumption will be capped, and the relief will be deducted automatically from bills.

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●     Students may apply for a one-off €200 energy bill relief payment, whether studying full- or part-time, after working people received a similar €300 payment in September. Students can apply online (in an unusually modern approach!) at einmalzahlung200.de.

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●     Widespread Deutsche Bahn rail strikes are looking likely, following the breakdown of pay negotiations between DB and the EVG trade union. A second round of negotiations has been scheduled for April, but it’s possible that industrial action may happen sooner.

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Top tips for helping employees manage living costs and deal with transport disruption:

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●     Provide guidance around energy bill tariffs and shopping around for deals on comparison sites such as Check24.de

●     For staff studying part-time, help them apply for energy bill relief where needed

●     Offer support to employees by distributing information about alternative transport routes, and offer flexible and remote working arrangements

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Support your talent: Valuable insights on relocating to Cologne from India, from a PerchPeek mover

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Relocating is not only a big undertaking in terms of the tasks to complete, it’s also of course a massive upheaval in a person’s life, so it’s important to understand their concerns.

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To get a sense of what it feels like for the person moving, we spoke to a PerchPeek mover who relocated from India to the German city of Cologne. Here are a few of his thoughts:

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How did you feel about the prospect of relocating?

I was anxious to say the least! I’d heard about a lot of housing scams in the developed world due to the lack of available housing. I was happy to get a great job and fulfil my dream of moving to Germany but was very worried about finding accommodation.

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How about communicating in German?

My lack of German language skills was a concern. Imagine taking a one-way ticket to a new country where you’re new to the language! It is necessary to be able to speak German - once the language barrier is overcome, you can more easily navigate difficult German bureaucracy.

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What advice would you give to someone relocating to Germany?

Germany is a great country to emigrate to overall. The relocation process is very difficult because of protected borders, especially if you’re from the developing world! However, it’s a very courageous thing to do, opening your mind to so many new experiences and perspectives.

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What employers can take away from these nuggets

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●     At the outset, take time to understand the individual’s requirements and concerns

●     Offer extra support to employees who may struggle in certain housing markets

●     Share guidance on developing German language skills

●     Ask employees for full feedback on their experience, and use this to refine your policy

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We’ll be publishing this interview in full shortly - keep an eye out for it!

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We hope you enjoyed this month’s update!

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If you have any feedback, comments or questions about what's happening in your location, feel free to reach out via the form at the bottom of this page.

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Thanks for reading, and see you next month!

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