Unemployment Continues to Rise in Germany Amid Energy Shortages, High Inflation

By Bryan Jung
Bryan Jung
Bryan Jung
Bryan S. Jung is a native and resident of New York City with a background in politics and the legal industry. He graduated from Binghamton University.
August 31, 2022 Updated: August 31, 2022

Unemployment in Germany for August rose but just below earlier predictions, according to the Federal Labor Office on Aug. 31.

The German government said that the number of people out of work increased by 28,000 in August, bringing total unemployment numbers up to 2.497 million, as the Central European nation is dealing with critical energy shortages and high inflation.

Analysts had projected a 28,500 gain in joblessness.

The labor office blamed the summer break and the registration of newly arrived Ukrainian refugees, among other foreign groups in Germany, for the rising unemployment figures.

Hundreds of thousands of refugees have fled to Germany since the beginning of the Ukraine crisis.

The rate of increase in unemployment, however, is lower in comparison to the previous two months, when it hit 45,000 in July and 132,000 in June.

“Despite the economic and political uncertainties, the labor market is robust. Unemployment and underemployment increased again more strongly in August than is usual for the time of year. However, this is still due to the registration of Ukrainian refugees,” said Federal Labor Agency chief Andrea Nahles in a statement.

The seasonally adjusted unemployment rate, meanwhile, edged up to 5.5 percent, above the expected 5.4 percent.

“Despite the economic and political uncertainties, the labor market is robust,” Nahles said.

She said that despite the rise in unemployment, a demand for workers has risen in Germany since the lifting of pandemic-related restrictions.

There are 887,000 registered job vacancies in Germany at this time. But many refugees have uncertain employment prospects due to issues with proper job qualifications or the qualified language skills.

Many are still awaiting access to housing and financial support from the German government and local authorities.

A European Union directive granted Ukrainian refugees protection status in the EU for up to three years, with full access to health insurance and the labor market.

Germany has accepted the second largest number of Ukrainian refugees in the EU after Poland.

Germany has so far registered almost a million Ukrainians refugees fleeing the fighting in their home nation, according to the latest data provided by the United Nations Refugee Agency, but the actual number of those currently residing in Germany remains unclear.

Unlike earlier waves of refugees in recent years, the large majority of Ukrainian refugees are women, many who are traveling with children, according to reports.

The EU is currently facing severe food and energy shortages in the lead up to winter, which is causing inflation to rise as governments attempt to secure alternatives to oil, coal, gas, and other resources it previously imported from Russia.

Nations across the bloc have been taking emergency measures to reduce energy consumption, as the Russians cut the flow of natural gas to Europe in retaliation for a series of sanctions by Brussels and Washington over the war in Ukraine.

Europe’s largest economy is among the most vulnerable countries to the slackening of Russian energy shipments, with inflation reaching 7.5 percent in July—the worst statistics since the 1973 oil crisis.

The once close trading relations between the two nations have been in tatters since the Russia-Ukraine conflict began in late February.

Germany had been reliant on Russian natural gas ever since it pushed for a “green energy” policy under its former chancellor Angela Merkel.

Nuclear and coal burning power plants throughout the country were gradually shut down upon orders from the government in Berlin.

The German government recently gave permission for coal-fired powerplants to reopen to make up for the lack of natural gas and it has also taken measures to fill gas storage facilities in order avoid shortages this winter.

German civilians are increasingly facing energy rationing, high prices, and fears of a cold winter, while the nation’s oil and gas dependent industrial sectors are suffering from the lack of natural gas from their eastern neighbor.

Many Germans have been unable to pay their bills, feeling the strain in domestic supplies and power bills looking to increase an average of 480 euros per year.

Last month, the German food bank organization, Tafel Deutschland, said that its food banks would not be able to cope with the record influx of people seeking food services.

Many economists are predicting that Germany will slip into recession, even if the country somehow avoids energy shortages this winter.

A survey this month by S&P Global indicated that job growth in Germany already is slowing amid increasing concerns over the economic outlook.

Bryan Jung
Bryan S. Jung is a native and resident of New York City with a background in politics and the legal industry. He graduated from Binghamton University.