Executive Search in Germany– 2017 Outlook

Germany Heads into 2017 With Trepidation

Germany has been doing well economically this past year. Employment is at record highs and labor shortages, particularly for skilled labor, are prevalent. Although the actual growth in the economy has not been spectacular, it has been sufficient to fuel a general sense of well-being among the populace.

Politically, Germany has been very stable with no significant changes in 2016.  In 2017, elections will be held however. Currently the consensus seems to be that Angela Merkel will probably receive a further term. Her support has dwindled somewhat though, particularly with the refugee crisis. Election results should be interesting in terms of what coalitions might come out of it.

The rise of the right wing AfD party which scared many earlier in the year has been stopped somewhat. This was not so much due to a change of heart of the electorate as it was that the AfD itself had internal disputes resulting in some major defections. This weakened the party and, while they still exist, their presence does not seem as strong as it did earlier in the year.

Trump a source of uncertainty

Germany is looking to the developments in the USA with some trepidation. Trump has indicated that he wants to reduce imports and has proclaimed an “America first” policy. For an export nation such as Germany this does not portend well. The hope is that Trump will not actually deliver on his election promises and will be more pragmatic as a president than he was in his presidential campaign.

The refugee crisis which dominated news in 2015 dwindled in 2016. This was not so much due to a reversal of policy in Germany as it was due to the southern neighbors of Germany closing their borders, thereby stopping the flood of people coming in. Internally there is resistance to Merkel’s “open door” policy, particularly from the sister party, the CSU.

Due to the many refugees that came into Germany, the housing situation has become significantly more strained. As it is, house prices have been climbing steadily these last years. A combination of very low interest rates (for instance 2% for a 15-year, fixed-rate mortgage and some places even under 1%) together with the traditional German worry about inflation have boosted investments into housing, driving prices up. Additionally, the demand continues to outstrip new build. The building industry is booming with a consequent dearth in labor.

Auto industry back in stride

Other industries are doing well too. Despite the problems and scandals the automotive industry is doing very well. Here, too, there is a lack of skilled labor.

Germany has an aging population. As a consequence, companies are happy to employ people who are over 50 or even over 55 years old, something which was much more difficult just a few years ago.

Recruitment in Germany is currently difficult. Candidates can pick and choose who they want to work with. Companies looking for people have to make an extra effort to attract interesting people.

The outlook for Germany is positive in general with leading economists predicting further slow growth. Germany remains an attractive place to do business with a prosperous populace. It also remains the economic powerhouse of Europe.