Jobs Growth For German Engineers

From the FT this morning:

Growth in jobs rises for German engineers
By Hugh Williamson in Berlin

Published: March 26 2008 01:25 | Last updated: March 26 2008 01:25

Employment in Germany’s engineering industry is expanding at its fastest rate in 40 years, highlighting the strength of Europe’s largest economy as global financial storms intensify.

Jobs in the sector – the backbone of Germany’s manufacturing industry – rose by 27,000 in January, the highest monthly increase since the 1960s, according to figures published on Tuesday by Gesamtmetall, the engineering employers’ federation. Some companies reported losing production because they could not fill vacancies quickly enough.

Production in the sector surged by 10 per cent last year, leading to the creation of 120,000 new jobs, according to Thomas Vajna, Gesamtmetall chief economist.

“We’re pleasantly surprised the boom is continuing,” he said, noting however that production growth was likely to be lower this year, but would still reach about 5 per cent. Jobs growth might exceed last year’s total, with Gesamtmetall predicting 147,000 new recruits this year.

He said that about one in eight of the approximately 6,100 engineering companies were having difficulties in recruiting qualified engineers and mechanics, with this in some cases leading to production cutbacks.

“Many companies misjudged how quickly the economy would recover and therefore failed to take on sufficient trainees,” Mr Vajna said. There also remained a shortage of engineering graduates, he added.

Economy-wide skills shortages have become more acute in recent years even though unemployment still stands at more than 3.6m. The shortages cost Germany up to €2bn ($3.1bn) a year, according to economics ministry estimates last year.

Germany’s economy, the biggest in the eurozone, has so far shown little sign of being affected by the crisis emanating from the US subprime mortgage market. Indications of likely future trends will come on Wednesday with the publication of the closely watched Ifo business confidence survey.

Experts said the positive employment news, coming on top of strong engineering industry profits last year, could lead to significant wage increases when negotiations with the IG Metall trade union open in October. Mr Vajna rejected such projections, arguing that the pay settlement would be for 2009, when growth might be tapering off.

Unions have, in recent months, broken out of years of wage restraint to agree pay increases of between 5 per cent and 11 per cent. Jörg Köther, IG Metall spokesman, said he welcomed the “positive news” on engineering employment, and said the union would present “an appropriate wage claim” in October, without elaborating.

Engineering employment has moved in step with Germany’s economic recovery of recent years, expanding by 183,000 since April 2006.