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Jobs in Germany: Four out of 10 new employees hired on a limited contract

If you start a new job in Germany, there's a high chance you'll get a contract with an expiry date. Now labour market researchers have also evaluated what kind of firms are more likely to offer fixed-term contracts.

Jobs in Germany: Four out of 10 new employees hired on a limited contract
Nearly 40 percent of new starts in Germany are given a limited contract. Photo: DPA

There were a total of 3.87 million new employees subject to social insurance contributions in Germany in 2018.  And of those, 38 percent were given fixed-term contracts (befristete Arbeitsverträge), according to a study by the Institute for Employment Research (IAB) based in Nuremberg. 

Fixed-term employment contracts are popular with employers in Germany. They can be used to cover a temporary demand for labour, but they are more often used as extended probationary periods.

According to the research, 85 percent of fixed-term contracts offered in Germany are based on the firm's long-term needs, while only a tenth of hires are for temporary needs (such as for cover for parental leave).

So, for example, an employer is likely to offer a temporary contract of a year and then decide if they want to extend the contract or terminate it.

READ ALSO: Here's where employees earn the most (and least) in Germany

As they do not offer stability like a permanent contract, they are less attractive to employees which can make it more difficult for HR departments to recruit.

As the graph below shows, 60 percent of new starts in 2018 were offered an unlimited or permanent contract. A total of about 24 percent were offered a limited or fixed-term contract lasting between eight to 18 months.

Temporary contracts lasting six months were offered to about seven percent of new workers, while around six percent were given a fixed-term contract lasting more than 18 months.

Looking for a job in Germany? Check out our listings for English language jobs HERE

Graph translated by Statista for The Local.

The number of temporary contracts offered to new-starts last year has gone down slightly compared to the fixed-term employment rate in 2017 which was 41 percent. However, the change is insignificant, and is not reflected in other figures, said researchers.

According to the IAB Establishment Panel, a total of around 3.21 million employees in Germany had a fixed-term employment contract in 2018. This corresponds to a share of all employees (excluding trainees) of around 8.3 percent. 

The discrepancy between the proportion of fixed-term new hires and the overall number of fixed-term employees overall reflects that limited employment agreements are either converted into permanent contracts – or are not extended after the expiry date of the contracts.

READ ALSO: 'Language is a huge barrier': What it's like for internationals working in Germany

Which companies offer fixed-term contracts?

The study states that larger companies in particular are taking advantage of fixed-term contracts.

Meanwhile, smaller firms with fewer than 10 employees, for whom the provisions of the Dismissal Protection Act do not apply, make less frequent use of this option.

The study is based on data from the IAB job survey, for which more than 10,000 companies are regularly surveyed.

What else should I know about fixed-term contracts?

If an employee is hired on a fixed-term contract without objective reasons (for example if it is not to cover parental leave), then it can last a maximum of two years and the extension of the contract is permissible by a maximum of three times, according to German law.

However, fixed-term employment will soon be subject to stricter regulation. The coalition, made up of the Christian Democrats and Social Democrats, has agreed to make the maximum limited contract 18 months, and only allow one extension of term.

There are also a host of other rules (and upcoming changes) that employers must follow so that they adhere to the fixed-term-contract (befristeter Vertrag) and part-time and fixed-term contract Law (teilzeit-und-befristungsgesetz).

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WORKING IN GERMANY

Which Bavaria-based companies regularly hire English speakers?

Bavaria is no doubt a beautiful state with a strong economy, but can be a hard place for non-German speakers to integrate. The Local takes a look at job opportunities in Germany’s southeastern 'Free State.'

Which Bavaria-based companies regularly hire English speakers?

Munich ranks third in German cities with the highest total GDP, behind Berlin and Hamburg, but in terms of GDP per capita, it’s higher than both of them.

It also consistently ranks high, often highest, in terms of average household income.

As of 2023, nine of the 40 companies listed on DAX, Germany’s stock index, were based in Bavaria. Seven of those are based specifically in Munich.

While Frankfurt is commonly known to be Germany’s business capital, Munich can claim the title of Germany’s insurance capital, which is saying something, as Germany is home to some of the largest insurance firms in the world, like Allianz.

Beyond the state’s capital city, a number of international companies are based elsewhere in Bavaria, particularly in the Franken region, near Nuremberg.

Which companies actively hire English speakers?

Bavaria, and Munich in particular, is home to a number of companies at the forefront of international business. But the state is known for its traditional, sometimes conservative, culture, which affects its business culture as well.

Whereas companies embracing English as their primary business language are easy to find in Berlin, the practice is less common in the south. That said, there are some notable exceptions. 

Sportswear giants, Adidas and Puma, both have their headquarters near Nuremberg in Herzogenaurach, and regularly recruit English speaking international talent.

“As an international company, our teams reflect the rich diversity of our consumers and communities,” Jon Greenhalgh, Senior Manager Media Relations for Adidas told The Local. “Fostering a culture of inclusion where we value and leverage differences, ensures that we can authentically engage with our employees and truly connect with our consumers.”

He added that around 40 per cent of Adidas’ Germany-based employees are foreign nationals, from over 100 different countries.

Siemens and BMW rank among Bavaria’s top employers, and are also known to hire their fair share of foreigners.

“In Germany, we recently had around 2,000 open positions,” Konstanze Somborn told The Local on behalf of Siemens AG.

He added that Siemens operates in 190 countries. “That is why we value international teams very much…English as a common language is very usual.”

READ ALSO: ‘Which German companies want to hire foreigners?’

Similarly, BMW hires workers from a variety of backgrounds. 

“Every year, we hire lots of internationals and welcome them to the BMW Group,” Dr. Hans-Peter Ketterl, a press spokesman for BMW Group told The Local. 

But not all of these positions are available to non-German speakers.

Ketterl added that BMW’s working language is German in the country, even though, “English is an indispensable entry requirement as the second corporate language in many areas of the company.”

Check job boards and follow best practices

If it’s your first time applying for jobs in Germany, make sure to change your resume to the German format, even for English positions.

While Germany is home to its own job boards, like Xing, LinkedIn is probably the best place to start. In addition to searching for positions based in your preferred location, you can check relevant groups, like Munich Startups, to broaden your horizons.

The English Jobs in Germany website is also a good resource to start with. 

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