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Contradictions in the Labour Market?

Learn more about the causes of the current job losses on the labour market. Which sectors are particularly affected and what effects could follow? Read more in the new issue of SCHUMANN Insights.
Blog Post, Schumann Insights, Videos
29.02.2024, Prof. Dr. Matthias Schumann

Challenges for the Jobs Market

The current situation in the employment market shows a worrying trend. Large company groups have announced massive job cuts and the automotive industry, including its suppliers, as well as the chemical industry are particularly affected. Even companies such as the domestic appliance manufacturer Miele and SAP in the IT area are cutting jobs, although such companies normally suffer from a difficulty in finding suitably qualified staff. Structural changes in the global economy are having an effect.

Pay Negotiations and Strikes

At the same time, various industries are currently involved in salary and wage negotiations accompanied by strikes. The transport sector is particularly affected, with industrial action by train and airline workers as well as in the service area, with demands from the ground personnel. In the health and care home sectors as well as in the public administration, calls for large pay increases are also being heard.

Lack of Workers in Particular Sectors

In contrast to this, some sectors such as the building industry, hotels and restaurants and retail are experiencing a shortage of specialist staff. This begs the question as to how this will affect the economy and whether a re-orientation of the workforce will take place.

A proportion of the lack of staff can be attributed to demographic developments, which have led to a reduction in availability of domestic workers. Automation is one possible solution, but this will not be enough on its own. Immigration will be necessary in order to maintain economic performance in the longer term.

The Challenges of Cutting Jobs and of Pay Increases

The reduction of jobs in some industries is problematic because specific specialist knowledge is not easily transferable to other fields. This leads to early retirement schemes and retraining measures, which result in an additional burden for the social system. Pay increases lead to higher salaries, but if the additional money is only used for essential consumption, this will not provide any economic impulse.

Risks and Measures

Pay increases also cause increased costs for companies and can trigger a negative pay-price spiral with a dampening effect on the economy. Differences in costs globally can be detrimental to competitiveness. Measures such as a reduction in company taxes and investment incentives could help, as could targeted support for adaptation processes.

Looking into the Future

A strategic approach is necessary to stabilize the economy and support the labour market. Technological progress can help, but in the short term pay increases should not lead to an improvement in standards of living. Cooperation between the government, companies and employees will be decisive in meeting these challenges and achieving positive changes in the longer term.

About the Author
Prof. Dr. Matthias Schumann

Since 1991, Prof. Dr. Matthias Schumann has held a professorship in Business Administration and Information Systems (Chair of Application Systems and E-Business) at the University of Göttingen. He also heads the joint computing center of the Faculty of Economics and the Faculty of Social Sciences. He is a shareholder of Prof. Schumann GmbH.

Prof. Schumann's research interests include information systems at financial service providers and systems for credit management, as well as issues related to knowledge and education management. Prof. Schumann has a wide range of experience in consulting companies, extensive lecturing activities and more than 350 publications.

University of Göttingen

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