German industry in crisis: Rising labor costs threaten the future!

German industry in crisis: Rising labor costs threaten the future!

German industry is in serious trouble. How Mercury reports, labor costs in this country will be a full 22 percent above the European average in 2024. Another critical point is that wages in Germany were even 15 percent higher compared to companies in other Eurozone countries. This means that the competitiveness of German companies suffers significantly.

However, productivity in Germany cannot compensate for these additional costs. That's how it lasts Zittau newspaper found that Germany's industry has been in recession since mid-2018, which is only being exacerbated by steadily rising unit labor costs. Since then, unit labor costs have increased by 18 percent, while gross value added has only increased by three percent.

Skilled labor shortage and energy costs

Another point that comes up again and again is the shortage of skilled workers. This not only drives up wages, but also non-wage labor costs, which are likely to continue to rise in the coming years. The Institute of the German Economy reports that energy-intensive sectors such as steel and chemicals in particular are increasingly shifting their production abroad in order to save costs. High energy prices and the burdens caused by the energy transition amount to an unacceptable situation and are putting a strain on the already struggling German industry.

DIHK President Peter Adrian warned urgently of the dangers of creeping deindustrialization if the government did not act immediately. This includes the call to reform social systems and reduce non-wage labor costs in order to ensure competitiveness. At a time when the industry is in competition with countries like China, this could make the difference between success and failure.

trouble spots and structural problems

The current situation is further complicated by several trouble spots. The corona pandemic, disrupted supply chains and the Ukraine conflict are contributing to uncertainty in the industry. In addition, there are structural problems such as demographic change and a dilapidated infrastructure that are inhibiting economic growth.

The combination of high labor costs, a persistent shortage of skilled workers and rising energy costs creates a mixed situation that urgently requires politics and business to find solutions together. The future is uncertain, and many companies are finding it increasingly difficult to compete internationally while wage and energy costs continue to rise rapidly.