Revved up German jobs motor only idling in some areas

The German jobs motor is turbo-charged these days but stark regional differences point up the potential and pitfalls in Europe's biggest economy.

Revved up German jobs motor only idling in some areas
Workers at a solar glass factory in Brandenburg. Photo: DPA

The town of Neubrandenburg, a two-hour drive north of Berlin in the former communist east, had an unemployment rate of 13.8 percent in November according to figures published this week, twice as high as the national average.

But Heiko Mirass, head of the local labour agency office, insists: “The time of mass unemployment (of more than 20 percent) is behind us.”

However the lower jobless rate in this city of 70,000, where a handful of medieval buildings stand in the shadows of rundown housing blocks, is not the product of a recovery but rather of its ageing and shrinking population.

In the 20 years since national reunification, the city has lost one-third of its citizens due to a falling birth-rate and an exodus to the west in search of jobs.

Many of those who remain are no longer of working age and thus no longer counted as unemployed.

There is little sign of the “jobs miracle” frequently evoked by Chancellor Angela Merkel’s government in this notch of the East German rust belt.

More than one-third of those without work are over the age of 50 and more than one-quarter are long-term unemployed.

“We are witnessing a certain fossilisation of unemployment,” with little mobility for those trapped in joblessness, Mirass said.

Nearly 700 kilometres to the south, the wealthy Munich suburb Freising seems a world away with more demand for labour than available employees.

The jobless rate was 2.3 percent in November, the lowest in the country. It has held that title for more than a decade, said Karin Weber, Mirass’ counterpart in Freising.

She said Freising’s proximity to the international airport, Munich and the city of Ingolstadt, home of automaker Audi, as well as a network of booming small- and medium-sized companies kept the want-ad pages full.

Anyone who is registered as unemployed is truly “between jobs,” says Weber. Last month 1,500 people went on the dole while 1,800 found employment.

The labour market now looks stronger than before the economic crisis, which sparked Germany’s worst post-war recession with a contraction of nearly five percent last year.

“But that does not mean we have nothing to do,” said Michael Schmidt, operations director at the labour agency.

Challenges include getting older and handicapped workers into viable employment but Schmidt said it was possible that the jobless rate could sink even lower than 2.3 percent.

In Neubrandenburg, the labour agency does what it can to get older Germans working again.

At the training centre, seated in front of a blackboard, Elke Rödel scribbles in her notebook.

At 49, she aims to become a caregiver for the elderly. “It is difficult going back to school,” she sighs, confiding that her “dream” would be a permanent work contract.

Jens Junghaeel, out of work since March, has a better chance of getting back into the labour market than Rödel.

Wearing a blue shirt and a focused expression, the young man types away at a computer in his machine-tools programming class.

“I have worked for nine years, with interruptions. But always in the west. What I want is to work here,” he said.

In the area, the unemployment rate among 15 to 25 year olds has fallen steadily and is now at about 10 percent — ” a figure they could dream about in Spain,” Mirass said, where the jobless rate is hovering around 20 percent.


Member comments

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


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.