Looking ahead, the tentative signs of a bottoming out of the labour market have given way to a more pessimistic outlook. At least in the short run. After some improvements in the spring, recruitment plans in both industry and services have moved sideways, and the number of vacancies is still dropping. However, a few indicators, like the labour agency’s own sentiment indicator and social media hiring indicators, do at least point to some bottoming out. At the same time, ongoing announcements of potential cost-cutting measures in the automotive and other industries, and the continuing increase in the number of bankruptcies, suggest that things could get worse before they get better.
To be clear, the demographic impact on the labour market and ongoing labour shortages should prevent a sharp worsening, and the market remains far from revisiting the symbolic – and once alarming – milestone of five million unemployed, a figure that triggered the economic reform agenda of the early 2000s. Still, even if the increase in the number of unemployed remains gradual, the risk of an underlying loss in disposable income and broader economic prosperity is high.