Employment agency expects slight rise in unemployment

Brace Yourself for a Slight Uptick in Saxony-Anhalt Unemployment

Predicting a modest bump in joblessness, the Institute for Employment Research (IAB) anticipates an increase of 0.5% in the unemployment rate for Saxony-Anhalt in the coming year. This projection, announced Monday, aligns with their expectation of a 2.1% rise in unemployment across Germany as a whole.

Markus Behrens, IAB's Regional Directorate Chairman, attributes the forecast's uncertainty to geopolitical circumstances. Despite the difficulties ahead, Behrens emphasizes the persisting challenges of reducing unemployment. These challenges extend beyond economic risks, as the scarcity of skilled workers adds to the hurdles.

The IAB predicts a slight dip in overall employment in Saxony-Anhalt by 0.2%, while anticipating a national uptick. This projected decline in employment for Saxony-Anhalt could intensify challenges in the local labor market, making it tougher to combat the upcoming unemployment surge.

Drivers & Impacts

The upcoming increase in unemployment in Saxony-Anhalt can be attributed to several factors, each carrying significant implications:

Potential Causes

1. Demographic Factors:
2. Population Decline: Saxony-Anhalt has witnessed a substantial drop in its working-age population, with a decrease of around 200,000 individuals (12.6%) between 2010 and 2022[1][4].
3. Population Forecasts: The working-age population is projected to decrease further by an annual 1.2% on average until 2030, detracting from potential growth[1].
4. Economic Performance:
5. Modest Growth: Germany's economy, including Saxony-Anhalt, is forecasted to experience sluggish growth of just 0.1% in 2025[1][2][4].
6. Industry Struggles: Saxony-Anhalt's industry sector, particularly energy-intensive industries, has lagged, mirroring broader German economic trends[2].
7. Labor Market Dynamics:
8. Elevated Unemployment Rate: Saxony-Anhalt's unemployment rate stood at 7.5% in November 2024, exceeding pre-pandemic levels and ranking among the highest unemployment rates among German states[1].

Predicted Impacts

1. Labor Market Stability:
2. Despite a robust labor market in Saxony-Anhalt, the rising unemployment rate signifies a slowdown in the regional labor market[1].
3. Economic Resilience:
4. Saxony-Anhalt's economic growth potential is projected to be lower than Germany's average, at 0.2% until 2030, primarily due to demographic challenges[1].
5. Regional Development:
6. The deferral of Intel's planned construction of a large chip manufacturing plant in Saxony-Anhalt has cast doubt on the state's economic prospects, exacerbating existing challenges[1].

In summary, the drivers of the projected increase in unemployment in Saxony-Anhalt include adverse demographic trends, sluggish economic growth, and industry weakness. The anticipated impacts include a less stable labor market, reduced economic growth potential, and difficulties with regional development.