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WORKING IN GERMANY

Unemployment rises in Germany as job vacancies remain at ‘high level’

The number of unemployed people in Germany rose to 2.696 million in August, said Employment Agency head Andrea Nahles at a presentation of labour market figures on Thursday. But the labour situation isn't all doom and gloom.

Published: 31 August 2023 16:43 CEST
Coworking in Germany
Employees have a chat at a coworking space in Oldenburg, Lower Saxony. Photo: picture alliance/dpa | Hauke-Christian Dittrich

That was 79,000 more than in July and 148,000 more than a year ago. 

“The summer break and the weak economy are leaving their mark on the labour market,” Nahles said.

But Nahles also emphasised that “compared to the poor economic situation, the labour market is still in a good position.”

READ ALSO: Bürgergeld: Germany’s unemployment benefit to rise by 12 percent

The unemployment rate for August increased by 0.1 percentage points, bringing it to 5.8 percent. Compared to the same month last year, the rate rose by 0.2 points.

It is not unusual for unemployment to rise in the summer. Companies are less likely to hire new staff during the holiday months, and new contracts usually start only in autumn. Nevertheless, the increase this year is relatively large, said Nahles. 

Seasonally adjusted, that marks a rise of 18,000 open positions. Under-employment has also gone up: the statistic includes people who, for example, are undergoing further training.

Nahles also pointed out that the labour market barometer of the Institute for Employment Research (IAB) showed uncertainty and a gloomy mood. 

Nevertheless, she said that people shouldn’t lose sight of the fact that the labour market is in “solid basic condition”. In a historical context, unemployment is still low.

German Labour Minister Hubertus Heil (SPD) announced that the labour market had held its ground in August despite the difficult environment. 

More need for students and trainees

The decline in applications on the Ausbildung (training) market, which had been observed since 2017, has “fortunately come to a halt”, Heil added.

“We are seeing a stabilisation,” Nahles also said in Nuremberg, where she presented the statistics.

The training market was still in motion in August, Nahles said. By the balance sheet date on September 30th, the number of unfilled training places and applicants without a job will likely be significantly reduced. 

There are currently work placement campaigns underway, said Nahles, pointing out that experience had shown that many young people could still be matched with jobs.

In August, 771,000 job vacancies were registered with the BA, 116,000 less than a year ago. The reported demand for new employees continues to be moderate, but the number of reported vacancies is still at a “comparatively high level,” she added.

READ ALSO: Why Germany’s skilled worker shortage is greater than ever

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EXPLAINED: How do you close down a freelance business in Germany?

Leaving the country? Got a steady job offer you can’t say no to? Winding down your self-employment activities in Germany still requires taking a few bureaucratic steps.

Published: 15 May 2024 09:07 CEST
Updated: 15 May 2024 10:57 CEST
EXPLAINED: How do you close down a freelance business in Germany?

Striking out on your own as self-employed is one of the scariest – and potentially most rewarding things – you can do. In Germany, it also comes with its own set of rules around tax and social insurance.

But there are times when – for whatever reason – it may be time to move on.

Whether it’s because you have an exciting new opportunity or things haven’t quite worked out the way you hoped due to economic pressures – winding down self-employment the right way is crucial to avoid gaps in your health and social insurance coverage in Germany.

The steps you have to take are also a bit different depending on if you are new self-employed (Freiberufler) or have a trade licence (Gewerbe) – with some steps not being necessary for new self-employed.

Trade licences are automatically cancelled if the licenced person dies or the company ceases to have financial assets.

Resigning the trade licence or declaring it dormant

New self-employed people like writers or speakers don’t need to go through this step, as they don’t need a trade licence.

Those who have a trade licence will need to contact their competent local authority and resign it, or declare it dormant (withdrawing the licence). If you’re only winding down temporarily, declaring your trade licence dormant instead of de-registering completely may save you a few headaches later.

You may have to do this in person at your local trade office – or Gewerbeamt – depending on whether your local authority allows online de-registration or not. You’ll need to bring your official ID, trade licence, confirmation of registration and possibly an extract from the trade register. Fees are dependent on your local authority and can range from being free to €25.

You can declare the date you intend to resign the licence – which can be in the future. To ensure no gaps in your social insurance protections, including health insurance, set this date for the day before whatever comes next. For example, if you’re starting a new job on January 1st set the date for your trade licence to expire as December 31st.

The trade office will typically notify your local tax office, so you won’t need to do this yourself.

Notifying your tax office

If you’ve had to resign your trade licence, you can skip this step as your trade office will do it for you. If you’re a Freiberufler without a trade licence you need to resign, you’ll have to notify your local Finanzamt, or tax office, yourself.

Luckily, this is a pretty easy step.

First, you need to decide whether you’re ceasing operations completely or wanting to continue them part-time. If you’re ceasing completely, you’ll end up surrendering your self-employed tax number.

You don’t have to do this though. If you think you may still carry on some self-employed business as a side gig, you can inform the tax office that you intend to do so and keep your number.

At that point, the tax office should treat you as a Kleinunternehmer – or a small business making less than €22,000 a year. Having this status means that you will not need to pre-pay taxes or charge VAT on your invoices for freelance side projects.

If you derive any income from your side gig in the future though, you’ll still have to file a tax return.

READ ALSO: Can I have a freelance side gig as an employee in Germany?

Notifying your health insurance

While different private plans in Germany may have different notification requirements, if you have public health insurance in Germany, you should notify them that you’re winding up your self-employed business. Specifically, advise them exactly what date you’re wrapping up.

Again, this should be right before you start your new job or leave the country, to ensure no gaps in your coverage.

If ending your self-employment in Germany, take care to ensure that there’s no gaps in your health insurance coverage, by giving the right date for when you’re ceasing activity. You don’t want to be caught without coverage. Photo by Stephen Andrews on Unsplash

If you are in an artistic profession and thus pay pension, health, and nursing insurance through the Artist Social Insurance Fund (KSK), you should also advise them as well. If you’re leaving self-employment completely, you can typically give notice to KSK as to when it’s ending.

If you’re not, and intend to still make money freelancing as a side gig, they should know this as well. In this event, you’ll no longer pay health or care insurance through KSK, as this is covered through your main job.

You may need to continue to pay pension contributions through KSK based on the amount of money you still make from self-employed activities — depending on how much of them you continue.

KSK: How creative freelancers can pay less for German health insurance

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