Review of the year 2023

Weak economic growth affects labour market development

03 Jan 2024 | Press release no.2

“Looking back at 2023, we can see that the weak economy has certainly left its mark on the labour market. However, the labour market is still performing well considering the extent of the pressures and uncertainties: Economic activity and employment are at an all-time high, and 2023 is also one of the years with the lowest unemployment since the reunification of Germany,” said Andrea Nahles, Chair of the Executive Board of the Federal Employment Agency (BA), today at the monthly press conference in Nuremberg.

Average unemployment rate in 2023:
Change compared with 2022:
Average annual unemployment rate compared with the previous year:
+0.4 percentage points to 5.7 percent

Rise in unemployment and underemployment against the background of weak economic growth

In 2023, unemployment and underemployment rose considerably in terms of the annual average. In this respect, in comparison with the previous year, the number of unemployed persons in Germany rose by 191,000 to 2,609,000 people. 
Underemployment, which also includes persons on state-supported training and employment programmes as well as persons who have a short-term incapacity to work, rose by 264,000 compared to 2022 to reach a total number of 3,449,000 people. 
These increases are to be attributed in particular to weak economic performance, which has made it more difficult for the unemployed to find a new job. The care provided by the job centres to Ukrainian refugees, on the other hand, played only a small role in this increase. 

Recourse to short-time work was at a moderate level compared with previous years

The labour market was supported through the use of short-time work in 2023 as well, although its take-up fell significantly compared with the years 2020 and 2021, which were strongly affected by the COVID-19 pandemic, but also in comparison with 2022. 
The statistics of the Federal Employment Agency estimate that the total annual average number of short-time workers in 2023 (including seasonal short-time workers and transfer short-time workers) to be approximately 220,000, compared to 426,000 in 2022. 
With an average loss of working hours of roughly 31 percent, the use of short-time work is calculated to have secured the jobs of approximately 69,000 employed persons and prevented their (temporary) unemployment. 

Employment subject to social security contributions increases only slightly

According to preliminary data from the Federal Statistical Office, in 2023, the annual average employment (according to the domestic concept) increased by 333,000 people to 45.93 million. 
According to the statistics of the Federal Employment Agency, employment with social security contributions increased by 264,000 from June 2022 to June 2023 to 34.71 million. The increase is thus significantly lower than in the previous year and is due solely to an increase in the employment of foreign nationals. 
Marginal employment also showed an increase in comparison with the previous year. Compared with the same month of the previous year, in June 2023, it increased by 250,000 to 7.61 million employees.

Demand for labour drops

The reported demand for new employees had already weakened noticeably from the second half of 2022 onwards. This trend continued in 2023. Nevertheless, the demand for labour remains high in a long-term comparison. 
With an annual average of 761,000 registered jobs, demand for labour in 2023 was 84,000 lower than in 2022. 
Registrations for new job openings, which are a better indicator of the current willingness of companies to hire, have also declined due to the weak economy. Reaching a total of 1,633,000, 2023 saw 251,000 fewer jobs reported in comparison with 2022.