Berlin, Dec 20 (IANS): Companies in Germany are scaling back workforce plans in response to a stagnant economy and sluggish demand across most sectors, according to a monthly survey released by the ifo Institute for Economic Research.
The survey released on Thursday revealed that the employment sentiment barometer dropped to 92.4 points in December, down from 93.3 in the previous month, reports Xinhua news agency.
Among the four sub-sectors analysed, manufacturing and trade indicators remained at subdued levels, while services and construction also reported negative readings.
"Fewer companies are expanding their workforce," said Klaus Wohlrabe, head of surveys at the Munich-based think tank. Layoffs are being considered particularly in almost all manufacturing sectors, with the metal and automotive industries among the hardest hit.
A separate annual report on skilled workers, released Thursday by the German Chamber of Commerce and Industry (DIHK), echoed similar concerns. The report noted that economic weakness in Germany is driving down demand for staff among the 23,000 companies surveyed, raising the risk of rising unemployment.
Despite this, 43 per cent of firms reported experiencing a shortage of skilled workers, even as the pool of potential jobless individuals grows. "Companies looking to hire are prioritising qualified candidates over those merely available," the report highlighted, describing this issue as a "mismatch problem."
High energy costs, economic policy uncertainties affecting investment decisions, and intense international competition continue to pose major challenges for companies in Europe's largest economy, which have, in turn, dampened the demand for labour. These structural problems, combined with the skilled worker shortage, act as a "double brake on growth," German Chamber of Commerce and Industry's Deputy Managing Director Achim Dercks said.
Additionally, the use of artificial intelligence (AI) is gaining momentum in Germany, with 20 per cent of companies now incorporating the technology -- a notable increase from 12 per cent in 2022 and 11 per cent in 2021.
According to the Federal Statistical Office last month, large companies are leading the way, with nearly half of those employing 250 or more workers using AI. In contrast, adoption rates are lower among medium-sized enterprises (28 per cent) with 50 to 249 employees and small businesses (17 per cent) with 10 to 49 employees.
Among companies using AI, the most common applications are written language analysis and speech recognition. These technologies are primarily utilised in marketing and sales.
However, many businesses still remain hesitant to adopt AI. The primary reasons cited include a lack of knowledge about the technology, reported by 71 per cent of respondents, as well as concerns over legal implications and data protection, at 58 per cent and 53 per cent, respectively.