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ECONOMY

Analysts: German downturn won’t last

German's economy has begun to feel the effects of the cold winds of recession blowing elsewhere in the region, said a government report released on Friday, but analysts say any downturn it suffers will prove only temporary.

Analysts: German downturn won't last
Photo: DPA

For a long time, Germany managed to remain immune to the economic difficulties plaguing many of its closest neighbours thanks to the deep and painful structural reforms it undertook years earlier.

But it, too, has started to feel the pain from the crisis, according to a whole range of different data published in the later months of last year.

“The difficult international environment was a noticeable burden on the German economy,” the Economy Ministry wrote in its latest monthly report on Friday, citing “substantial uncertainty arising from the euro area debt crisis” as well as other factors such as budget problems in the United States.

“Together with weakening demand for German exports, this is also hurting companies’ investment plans. As a result, the growth momentum has slowed over the course of the year. Available indicators point to a noticeable contraction in economic output in the final quarter of 2012,” the ministry said.

“Germany is an open and integrated economy so it is not surprising that a slowdown in the rest of the euro area has an impact here,” European Central Bank chief Mario Draghi said in November.

German growth has indeed been slowing throughout last year: from 0.5 percent in the first three months to 0.3 percent in the second quarter and 0.2 percent in the third.

Official fourth-quarter gross domestic product (GDP) data are scheduled for release on Tuesday. And economists are pencilling in a contraction from anywhere between 0.2-1.0 percent.

Economy Minister Philipp Rösler has already begun to prepare the markets for a contraction, warning of “weaker-than-expected” output and overall annual growth of 0.75 percent for the whole of 2012.

That is a long way from the buoyant growth of 4.2 percent and 3.0 percent that Germany notched up in 2010 and 2011 respectively. But it is also equally far from the 5.1-percent contraction seen in 2009.

Traditionally, German exports have been the main driver of growth, but they have also made the economy vulnerable to downturns in neighbouring eurozone countries.

In November, the value of German exports amounted to €94.1 billion, down from €98.4 billion in October.

ING Belgium economist Carsten Brzeski said it would “take a miracle” for Germany to avoid posting a GDP contraction in the fourth quarter of 2012.

Nevertheless, economists are confident that such a contraction would not be repeated in the first quarter of 2013, meaning Germany would successfully skirt a recession, which is technically defined as two consecutive quarters of declining GDP.

“The outlook will quickly brighten again,” said the DIW research institute. The Economy Ministry thought so, too.” Overall, the German economy is still very competitive and in good health,” it said, pointing out that unemployment which is still close to historical lows will help buoy domestic demand.

Furthermore, with German-made goods still in demand outside the euro area, exports are unlikely to collapse completely.

“Given favourable sales prospects, companies will start to invest again, not least because of the very attractive level of interest rates at present,” said DIW economist Simon Junker.

UniCredit analyst Andreas Rees was similarly confident that the outlook for 2013 was “considerably brighter.”

The government, for its part, is pencilling in growth of around 1.0 percent for the current year.

AFP/jlb

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TOURISM

Why Italian resorts are struggling to fill jobs this summer

Italy's tourist season is expected to be back in full swing this year - but will there be enough workers to meet the demand?

Why Italian resorts are struggling to fill jobs this summer

Italy’s tourist numbers are booming, sparking hopes that the industry could see a return to something not far off pre-pandemic levels by the summer.

There’s just one catch: there aren’t nearly enough workers signing up for seasonal jobs this year to supply all that demand.

READ ALSO: Will tourism in Italy return to pre-pandemic levels this year?

“There’s a 20 percent staff shortage, the situation is dramatic,” Fulvio Griffa, president of the Italian tourist operators federation Fiepet Confesercenti, told the Repubblica news daily.

Estimates for how many workers Italy is missing this season range from 70,000 (the figure given by the small and medium enterprise federation Conflavoro PMI) to 300-350,000 (the most recent estimate from Tourism Minister Massimo Garavaglia, who last month quoted 250,000).

Whatever the exact number is, everyone agrees: it’s a big problem.

READ ALSO: Dining outdoors and hiking: How visitors plan to holiday in Italy this summer

Italy isn’t the only European country facing this issue. France is also short an estimated 300,000 seasonal workers this year. Spain is down 50,000 waiters, and Austria is missing 15,000 hired hands across its food and tourism sectors.

Italy’s economy, however, is particularly dependent on tourism. If the job vacancies can’t be filled and resorts are unable to meet the demand anticipated this summer, the country stands to lose an estimated  €6.5 billion.

Italy's tourism businesses are missing an estimated 20 percent of workers.
Italy’s tourism businesses are missing an estimated 20 percent of workers. Photo: Alberto Pizzoli/AFP

“After two years of pandemic, it would be a sensational joke to miss out on a summer season that is expected to recover strongly due to the absence of workers,” said Vittorio Messina, president of the Assoturismo Confesercenti tourist association.

Different political factions disagree as to exactly what (and who) is to blame for the lack of interest from applicants.

READ ALSO: Travel in Italy and Covid rules this summer: what to expect

Italy’s tourism minister Massimo Garavaglia, a member of the right wing League party, has singled out the reddito di cittadinanza, or ‘citizen’s income’ social security benefit introduced by the populist Five Star Movement in 2019 for making unemployment preferable to insecure, underpaid seasonal work.

Bernabò Bocca, the president of the hoteliers association Federalberghi, agrees with him – along with large numbers of small business owners.

“What’s going to make an unemployed person come to me for 1,300 euros a month if he can stay sprawled on the beach and live off the damned citizenship income?” complained an anonymous restauranteur interviewed by the Corriere della Sera news daily.

“Before Covid, I had a stack of resumes this high on my desk in April. Now I’m forced to check emails every ten minutes hoping someone will come forward. Nothing like this had ever happened to me.” 

READ ALSO: MAP: The best Italian villages to visit this year

Italy is experiencing a dire shortage of workers this tourist season.
Italy is experiencing a dire shortage of workers this tourist season. Photo: Andrea Pattaro / AFP.

Five Star MPs, however, argue that the focus on the unemployment benefit is a distraction from the real issues of job insecurity and irregular contracts.

There appears to be some merit to that theory. A recent survey of 1,650 seasonal workers found that only 3 percent of the people who didn’t work in the 2021 tourist season opted out due to the reddito di cittadinza.

In fact the majority (75 percent) of respondents who ended up not working over the 2021 season said they had searched for jobs but couldn’t find any openings because the Covid situation had made it too uncertain for companies to hire in advance.

READ ALSO: MAP: Which regions of Italy have the most Blue Flag beaches?

Others said the most of jobs that were advertised were only for a 2-3 month duration, half the length of the season (again, due to Covid uncertainty), making it not worth their while to relocate.

Giancarlo Banchieri, a hotelier who is also president of the Confesercenti business federation, agrees that Covid has been the main factor in pushing workers away from the industry, highlighting “the sense of precariousness that this job has taken on in the last two years: many people have abandoned it for fear of the uncertainty of a sector that has experienced a terrible time.”

The instability brought about by two years of Covid restrictions has pushed many workers away from the tourism sector.
The instability brought about by two years of Covid restrictions has pushed many workers away from the tourism sector. Photo: Andrea Pattaro / AFP.

“I said goodbye to at least seven employees, and none of them are sitting at home on the citizen’s income,” Banchieri told Repubblica. “They have all reinvented themselves elsewhere; some are plumbers, others work in the municipality.”

READ ALSO: OPINION: Mass tourism is back in Italy – but the way we travel is changing

To counteract the problem, Garavaglia has proposed three measures: increasing the numbers of visas available for seasonal workers coming from abroad; allowing people to work in summer jobs while continuing to receive 50 percent of their citizen’s income; and reintroducing a voucher system that allows casual workers to receive the same kinds of welfare and social security benefits as those on more formal contracts.

Whether these will be enough to save Italy’s 2022 tourist season remains to be seen, but at this stage industry operators will take whatever fixes are offered.

“The sector is in such a dire situation that any common sense proposals much be welcomed,” the Federalberghi president Bocca told journalists.

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