SHARE
COPY LINK

JOBS

Job market remains resilient despite crisis

The German labour market remains surprisingly resilient to the eurozone debt crisis, with unemployment in Europe's top economy falling to a four-month low adjusted for seasonal effects, data showed on Thursday.

Job market remains resilient despite crisis
Photo: DPA

On the face of it, headline unemployment rose sharply in January, with the jobless rate jumping to 7.4 percent in raw or unadjusted terms from 6.7 percent in December, according to monthly data compiled by the Federal Labour Office.

And the unadjusted jobless total was up by more than 298,000 to 3.138 million, its highest level since March 2011.

But the increase was solely due to seasonal factors, such as the cold winter weather, and the underlying trend was positive, agency chief Frank-Jürgen Weise insisted.

“The unfavourable economic conditions haven’t left much of a mark on the labour market. The latest rise in unemployment is purely due to seasonal factors,” Weise said.

The seasonally-adjusted jobless rate — which irons out seasonal fluctuations — slipped to 6.8 percent from 6.9 percent. Unemployment in Germany has never been lower than 6.8 percent since reunification in 1990 and the rate was stable at that level for most of last year.

In concrete terms, the jobless total fell by 16,000 to 2.916 million — its lowest level in four months — on a seasonally-adjusted basis, much better than analysts’ forecasts for an increase of as many as 10,000.

“The labour market is in fundamentally good shape and is reacting robustly to the difficult economic environment,” Weise said.

Economy Minister Philipp Rösler agreed.

“All the indications are that the economic environment will continue to gradually brighten. The more positive sentiment indicators confirm this,” he said.

“The German economy should have put its current dip in growth behind it by the spring and continue to pick up during the rest of the year,” Rösler said.

Gross domestic product (GDP) shrank by about 0.5 percent at the end of last year, but is widely expected to start growing again in the first quarter of 2013, enabling Germany to skirt a recession, which is technically defined as two consecutive quarters of contraction.

Among a raft of recent forward-looking indicators, the ZEW, Ifo and GfK indices are all pointing upwards.

Commerzbank economist Eckart Tuchtfeld said “the labour market seems to be coping better with the cyclical setback in the second half of last year than recently assumed.”

For IHS Global Insight analyst Timo Klein, it was “remarkable that despite GDP growth apparently being negative once again in late 2012, joblessness returned to a downward tendency in early 2013.”

“Overall, labour market conditions continue to be much healthier in Germany than in most other countries in Europe, and the dampening effect of the eurozone debt crisis that had left its mark during 2012 appears to be petering out now,” Klein said.

Natixis economist Constantin Wirschke said the excellent January data were unlikely to be repeated.

“We expect unemployment to rise slightly in the next couple of months and to stabilise thereafter. For the whole of 2013, we’re predicting that the unemployment rate will hover near the historically low level currently seen in Germany,” he said.

ING Belgium economist Carsten Brzeski noted that joblessness varied from sector to sector. In the export industries, for example, unemployment has started to increase as companies revise down their recruitment plans significantly.

“At the same time, companies operating in domestic sectors, such as the construction sector and health services, still have a strong demand for labour,” he said.

This effect could be magnified in the coming months. But “on balance… it looks as if total unemployment should remain relatively stable throughout 2013,” he said.

“Today’s numbers confirm that the German job miracle has lost some of its magic. However, even without being miraculous, the labour market should remain growth-supportive,” he concluded.

AFP/mry

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

WORKING IN GERMANY

7 tips for how to survive as a freelancer in Germany

Taking the decision to go it alone and freelance in Germany can be a daunting prospect. But, if you do it right, it can be an exciting and liberating path. Here are some of our top tips on how to survive.

7 tips for how to survive as a freelancer in Germany

1. Get a tax advisor

The German tax system is complicated, even for Germans. All the associated paperwork uses the Amtsprache (authority language) which is more like legalese than ‘normal’ German, and mistakes when filling out tax forms can cause you, at best, a massive headache and, at worst, a costly fine. So it’s best that you employ someone who knows what they’re doing to help you out.

That person is called a Steuerberater (tax advisor) in Germany. They will help you register with the tax office, correspond with them and submit your tax declarations.

Be aware that, in Germany, different deadlines apply for tax returns depending on whether you employ an official tax advisor or not. If you are doing the tax return on your own, the deadline for submitting your annual tax return is earlier than if you use a tax advisor’s services. 

READ ALSO: What NOT to do when you’re freelancing in Germany

When looking for a tax advisor, a top tip is to use your network to get recommendations. Ideally, you want someone who will do more than just fill in the forms for you, but who will actually advise you on how best to manage your business finances so that you can make tax savings.

2. Keep your accounting in order

The better you keep your own accounts in order, the easier it will be for your tax advisor to compile your tax declarations and therefore the cheaper their services will be.

As a freelancer, there are a lot of costs you can deduct from your taxes – from train tickets, working materials, to meals out – so it’s best to keep hold of all your receipts and to keep them in good order.

2 euros and 50 cents lie on a receipt in a beer garden. Photo: picture alliance/dpa | Peter Kneffel

In Germany, you’re obliged to keep hold of receipts for two years, in case of a tax inspection, so it’s a good idea to photocopy the type of machine-printed receipts you get from restaurants so that they stay legible for a long time.

There are also a few things to be aware of when writing your own invoices. Firstly, make sure that you include your tax number. This isn’t the 11-digit Steueridentifikationsnummer that everyone gets when registering in Germany, but the 10-digit Steuernummer you get from the Finanzamt after registering yourself as a freelancer. 

Most companies won’t pay you if you don’t have this on your invoices so make sure you include it.

You should also make sure that you number your invoices properly – ideally in ascending order so that you can easily keep track of them. You are not allowed to issue two invoices with the same number and if you do so and the finance office notices, you could face an inspection of your whole accounting system.

There are numerous great accounting software programmes you can use to help you, such as Lexoffice and Sevdesk and, even if you have to pay for them, the costs will be tax deductible!

3. Find out if you’re eligible for financial support

In Germany, there are several opportunities for freelancers to gain financial support and to cut their outgoings, and its worth finding out if you’re eligible for them.

If you’re claiming unemployment benefits under ALG 1 and are thinking about becoming a freelancer, the employment office offers a special type of financial support to help you to get your freelance business off the ground.

Called the Grundungszuschuss (“foundation grant”) the payment is a six-month grant equalling your monthly entitlement under ALG 1 plus €300 towards your insurance costs can be applied for those in receipt of this unemployment benefit.

READ ALSO: Will freelancers benefit from Germany’s €300 energy allowance?

If you are engaged in some form of artistic profession in Germany – which can include journalism to pottery – you may be entitled to membership to the Kunstlersozialkasse (artists’ social insurance).

Being a member of the KSK means you only have to pay half of your health insurance and pension contributions, and the KSK will pay the rest.

4. Work out how much you think you will earn

As with starting any business, you need to have some idea of your expected earnings from the outset.

If you’re just starting out as a freelancer, or have some freelance gigs on the side of an employment position, then it might be worth considering registering yourself as a Kleinunternehmer (“small business”).

As a Kleinunternehmer, you can currently earn up to €22.000 per year without having to charge VAT and having to submit only yearly tax declarations. 

An income tax declaration form lies on a table. Photo: picture alliance/dpa/dpa-Zentralbild | Hans-Jürgen Wiedl

Be aware that if you are registered as this kind of freelancer, you must include the following sentence in your invoices: ‘Gemäß § 19 UStG wird keine Umsatzsteuer berechnet’ which means ‘In accordance with Paragrah19 of the German VAT law, no VAT has been added to this invoice.’

READ ALSO: Everything you need to know about your German tax return in 2022

If you think you will earn more than €22.000 per year, you will need to pay Umsatzsteuer (VAT) and will have to submit tax declarations in advance and more often. Depending on how much you earn, this could be every month or every quarter. 

5. Get your insurance in order

In Germany, it’s a legal requirement to have health insurance.

If you’ve just made the move from employment to being a freelancer and want to keep the same health insurer, you should get in contact with your health insurance provider straight away to tell them about your change of circumstances. They will ask you to re-register and to tell them your projected freelance earnings for the year, so they can amend your monthly fees.

If you don’t keep your health insurer provider updated, you could continue to be charged the higher rate that you had from your previous salary.

The insurance cards of the health insurance companies DAK, AOK, Barmer and Techniker-Krankenkasse TK lie with euro notes under a stethoscope. Photo: picture alliance / dpa | Daniel Karmann

It’s not just health insurance you need to think about as a freelancer. It’s also wise to think about protecting yourself from any sort of claims that could arise as a result of any working mishaps. 

If, for example, you lose your laptop which contains confidential client information, you need to be protected against claims.

That’s why it’s good to have both Betriebshaftversicherung (business liability insurance) and Rechtschutzversicherung (legal protection insurance).

6. Plan your time wisely

All of these bureaucratic obligations take time. So it’s really important that you take account of that when planning your time. For example, planning half a day a week to deal with your invoices, filing, emails to clients, and conversations with authorities can be really beneficial when scheduling your working time. 

7. Grow your network

As a freelancer, networking is absolutely crucial to success. 

Keep an up-to-date profile on websites like LinkedIn and German equivalent XING and keep in contact with anyone you’ve ever worked with, no matter how brief the contact was. 

Having a network is not only about getting more clients, but also about building a support network in your field to exchange advice, tips and generally for your own enrichment. 

Participating in workshops related to your field, going to seminars, and meet-ups, can be great ways of broadening your network. 

SHOW COMMENTS