Executive Search in Germany – 2019 Outlook
Germany Strong but Wary of President Trump
This last year German has profited from a stable to weak Euro and good international markets. Once more, Germany has had tremendous exports that fuel the economic well-being of the country.
With the sustained upswing, even the usually pessimistic Germans are starting to loosen their pocketbooks and domestic demand for products is up.
At the beginning of the year, Germany had no functioning government. After long and apparently painful negotiations, the conservative CDU finally managed to forge a coalition agreement with the more left-leaning SPD for a new edition of the “grand coalition”, with which Germany had been governed for years. Angela Merkel remained Chancellor.
The year was marked by trade uncertainties. Germany, being such an export-oriented nation, is heavily dependent on free trade. As a consequence, the attacks on free trade by Donald Trump have caused German businesses to tread a bit more carefully.
Threats of automotive tariffs for imports into the US would hit Germany hard. On the other hand, Mr. Trump seems to have realized that the EU has potential counter-measures that could in turn be painful for the US. Currently there seems to be a bit of a stale-mate on the issue
Nonetheless, should this issue appear again in 2019, which it certainly will, it will again affect the German economy.
Unemployment continues at historic lows, leading to a significant dearth in qualified personnel in Germany. This is now causing the government to think about liberalizing immigration laws, so that more qualified workers can come into Germany more easily. I would be expecting movement on that front in the course of 2019.
Tax breaks on the table
Germany is also considering (surprise, surprise) some modest tax breaks both on the corporate tax side as well as for personal taxes. While there is the usual back and forth about this issue, I would expect some slight tax reform to come about in 2019 which would then go into effect in 2020 barring unforeseen economic dips.
The recruiting market remains buoyant and growing. The lack of qualified people plus the demographics of Germany ensure a strong recruitment market.
With many experienced people going into retirement in the next 5-10 years, amplified by many companies offering early retirement but not enough young people joining the labor force, the war for talent in Germany is exacerbated.
We expect a good recruitment year, even though overall growth of the market is forecast to slow a bit from last year.