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Labor shortage and increasing unemployment

On one side, Germany needs more people to fill the labor shortage; on the other hand, companies are laying off people. What is the reason for this?

Industries that are laying off.

• Manufacturing (Automobile, Chemical, etc.): Assembly line workers, machine operators, and others are being laid off. This is due to automation, weak global demand, competition from Chinese companies, and high energy costs.
• Retail: Cashiers and sales associates are being laid off due to the growth of e-commerce and technologies like self-checkout systems, which are reducing the need for staff in physical stores.
• Finance and Banking: Bank tellers and customer service staff are being laid off. The main reason is the shift in how people want to experience banking, which is digital. Hence, the need for physical branches and in-person services is decreasing.

Experts believe the layoffs in the IT sector are temporary because of the weak economy, tariffs, and political uncertainty. Another major reason is the entry of Chinese companies in high-tech businesses.

Earlier, China was focused on cheap and low-tech manufacturing, while Germany was the leader in high-tech engineering products. However, Chinese companies have entered the high-tech domain. They are innovating faster than Germany and offering cheaper and better solutions.

One of the major reasons for China's industrial advancement is the state subsidy, cheap energy, and the availability of qualified labor. On the other hand, German industry is struggling with high energy prices, labor shortages, and a complex and tiresome bureaucracy.

According to the Construction Companies Association, in highway construction, up to 85% of the time is spent on planning processes — only 15% on the construction itself. There have been several protests against the bureaucracy with no concrete results.

Many experts believe that an influx of money will not help Germany. Here is what they say.

Germany is suffocating because of bureaucracy and inefficient structures. We need faster approval procedures and clear responsibilities! But a new debt fund does not solve any of these problems.

Industries that have labor shortages but can't find a qualified individual.

• Healthcare: Germany is facing a serious shortage of healthcare personnel, such as nurses, doctors, and elderly care workers. However, there aren’t enough trained professionals to meet this demand.
• Skilled Trades: Other professions where Germany faces a labor shortage are electricians, plumbers, construction workers, etc. The recent approval of 500 billion € for infrastructure projects will only increase this labor shortage.
• Tax advisors: Currently, it's common for tax advisors to refuse new clients because they have too many existing clients.
• Teachers and childcare educators: If you have kids, you must be familiar with the difficulty of finding a Kita and the Kitas' struggle with staff shortages. The teacher shortage in Germany is due to insufficient qualified staff, low wages, and stressful conditions.

As you can see, the sectors that are laying off people are different from the ones that are facing a labor shortage.

We believe this situation is an opportunity to grow and create start-ups that solve these problems. It's a good time to learn new skills and explore different professions.

We understand it's tough to change your field and start from scratch, but it can also be a rewarding experience.

If you are in this transition and want to share your experience with others, reply to this email and let us know.

Changing world order

Thank you all for your messages. Summarizing a 700-page book in a newsletter is tough. So, we'll need some time to share our learnings from the book so that they make sense and do justice to what the author conveyed.

We ask for your patience, and we'll share the information in bits and bites in our next newsletters.

We highly recommend that you read this book*. The information in the newsletter can only scratch the surface of the author's wisdom.

Change in German population since 1970

As the chart above shows, the total number of immigrants in Germany has been rising consistently since 1970. At the same time, the total number of German citizens is declining.

The current birth rate in Germany is 8.2 per 1000 inhabitants, and the death rate is 12.1 per 1000 inhabitants. This means the German population will continue to decline.

The declining and aging population is a serious problem for the German economy and its function. According to DW, Germany needs around 288,000 foreign workers annually to fill the labor shortage.

Community Shoutouts! 📣

• If you are fascinated by AI and want to learn more, Nvidia offers many free courses to educate people. The complete catalog of the courses is available here.
• Are you afraid that AI will replace you? Here is what Nvidia's CEO has to say about it. AI will empower users to solve even more ambitious problems. He advises everyone to start asking yourself how you can use AI to improve your work. This is similar to the previous generation who asked themselves how they can use computers to improve their work.
• Tax software (Wundertax*, SteuerGo*) is a better and cheaper option for 70% of people with one income source, i.e., from their job. Consult a tax advisor for complex tax returns, like income from outside Germany, rental income, etc. We have partnered with an English-speaking tax advisor who specializes in handling such cases. You can request a free quote here.
• There are many online courses to learn German. We find the German courses from SmarterGerman* to be one of the best. The author has decades of experience teaching German and has created easy-to-remember patterns to help you with the grammar, the famous "der, die, das" disorder, and more. You can try the course for free here*.
• Do you think you are overpaying rent, struggling to get the security deposit back, being unfairly terminated, being bullied at work, etc.? Book a free initial call with the lawyer we have partnered with to evaluate your situation.

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