Guide to living and working in Germany

Germany

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Country Overview

 

Population

82.7m

Unemployment Rate

8.4% (12/07)

Average annual unemployment rate 1995 – 2004

9.1%

GDP

€2,247bn / $3,332bn

GDP per head

€22,790 / $33,800

Capital

Berlin

Major language

German

Life Expectancy (UN)

76 years (men)

81 years (women)

Monetary unit

1 euro = 100 cents

Internet domain

.de

International dialing code

+49

 

Germany's rich and technologically advanced economy - the fifth largest in the world in PPP terms - showed considerable improvement in 2007 with 2.6% growth. 2001-05 was  a period of stagnation with an average growth rate of 0.7% in and chronically high unemployment. Reforms and cyclical up-trend meant stronger growth and a considerable fall in unemployment by the end of 2007. The modernisation of the Eastern German economy continues to be a costly long-term process, with annual transfers from west to east amounting to about $80 billion.

The current government led by Chancellor Merkel has initiated positive labour reform measures, such as a gradual increase in the mandatory retirement age from 65 to 67 and measures to increase female participation in the labour market. Germany's aging population, combined with high unemployment, has pushed social security expenditure to a level exceeding contributions. Nevertheless, higher government revenues from the cyclical upturn in 2006-07 and a 3% rise in the value-added tax has pushed Germany's budget deficit well below the EU's 3% debt limit.

 

The Economy

 


Industries include: iron, steel, coal, cement, chemicals, machinery, vehicles, machine tools, electronics, food and beverages, shipbuilding and textiles.

 

Pay

 

 

Human development Index

Ranking:  22nd
Index value:  0.935

 

 

The Human Development Index combines statistics on GDP, adult literacy, average years of schooling and life expectancy to provide an indicator of human development. The HDI shown here gives the ranking of 24 countries among 177. See http://hdr.undp.org/en/ for more information.

 

Getting a job

Overview of the labour market:

The economic upturn of 2007 had a positive effect on the German labour market. Unemployment fell, while the number of employees liable for compulsory social insurance contributions is rising; as well as the number of job vacancies.

Most employees in Germany work in the service sector. The three service sectors with the most employees are public and private services, commerce, and business services. The manufacturing industry is the second largest employer in Germany. The most important sectors in terms of the number of companies and employees are the manufacture of basic metals and fabricated metal products, mechanical engineering, computer equipment, electronics, precision engineering, the food industry and tobacco processing.

Germany’s largest companies include Allianz, Deutsche Bank, E.ON, Daimler AG, Deutsche Telekom, Siemens, RWE, Münchener Rück, Deutsche Post, BASF, BMW, Volkswagen, Commerzbank and the pharmaceuticals firm Bayer.

The best employment prospects exist in the following sectors: business services, health and social services, tourism, hotel/restaurant trade and leisure/sport. The demand for staff is also growing in the manufacturing sector, especially for graduates and unskilled staff, and for seasonal workers in agriculture. Specialist workers are in great demand, e.g. shipping companies are seeking skilled managerial staff (deck officers and engineering officers). In addition, there is a shortage of medical consultants and engineers as well as IT experts (software developers, IT project managers and consultants).


Applying for a job:

A written application normally consists of a covering letter, a cover for other documents, a curriculum vitae with a photograph and copies of qualifications, certificates and evidence of practical work. An application by email is possible only where an electronic application is expressly requested.

The covering letter is the first and most important part of your application which will be read by the recipient. It should not run to more than one side of A4. The tabular curriculum vitae runs to a maximum of two pages, is set out in a strictly chronological order and provides information on your personal and professional development.

You can send your documents to an enterprise even when no vacancy is advertised (‘unsolicited application’). Many human resources departments collect such applications and use them when required. They often make a first selection from these unsolicited applications before advertising a vacancy or contacting an employment agency.

 

Conditions and rights

Employment law:

German employment law is not consolidated into a single labour code. It is based instead on the service contract provisions of the German Civil Code and several individual statutes. Collective agreements have full legal status and collective labour law is one of the few areas where judicial precedent has helped to develop a systematic body of rights.

Working hours:

Working hours and breaks are governed by the Arbeitszeitgesetz (Law on working hours), collective wage agreements and company agreements, or are arranged on an individual basis.

Standard hours: The working week varies between 38 and 40 hours, depending on the collective wage agreement. Normally, the working day does not to exceed eight hours. Employees cannot normally be required to work on Sundays and/or public holidays. There are exemptions for a large number of activities.

Over 28% of all employees now work ‘flexi-time’. With ‘flexi-time’ there are core hours during which all employees must be present at work. Employees are given the opportunity to work more or fewer hours within fixed limits.

Overtime: can be built up to a limited degree. Electronic time recording systems and working time accounts have been set up in many businesses to record the hours of work performed by each individual.

Holidays and leave:

Collective agreements provide leave of 30 working days for most employees. As the working days are Monday to Friday, this amounts to six weeks. A person’s salary continues to be paid in full during this period. Anyone who consistently performs heavy or harmful work will normally receive additional leave. Full entitlement to leave is acquired only after the employment relationship has been in existence for six months.

Sick leave: In the event of illness an employee must inform the employer as soon as possible. In the case of illness lasting longer than three days, an employee must submit a doctor’s certificate no later than the following working day.
Parental leave: During parental leave the employer exempts parents from work without pay to look after their new-born child. The employment elationship is thus suspended during parental leave. However, ‘parental leave’ also gives male and female employees the opportunity to work part-time so they can look after their child while continuing with their job. Each parent is entitled to parental leave until their child reaches the age of three.
Educational leave: Employees can take educational leave for further training. You can use this for your own political education, language courses or for further vocational training.
Public holidays:1 January, 6 January, 21 March, 24 March, 1 May, 12 May, 22 May, 15 August, 3 October, 31 October, 1 November, 19 November, and 25-26 December.

 

Contracts

Types of employment:

The minimum age for regular employment in a business is 15. The majority of blue-collar workers, white-collar workers and civil servants in Germany (58%) have a fixed-term full-time employment contract with a working week of around 40 hours. However, part-time work is widespread and now accounts for over one third of employment in Germany. In addition to ‘regular’ part-time work subject to social security insurance, there are also so-called ‘mini jobs’ in which it is possible to earn a maximum of €400 a month. Around 6.5 million people are currently employed in ‘mini jobs’, primarily in the fields of cleaning, health, catering and in the retail trade. The overall number of temporary contracts is also on the increase. Around 12% of employees work on a fixed-term full-time or part-time contract. The temporary agency sector has also being growing rapidly in Germany and now provides just under 500 000 people with a job. Other forms of self-employment have also gained in importance in recent years and account for around 10% of those employed.

Employment contracts:

An employment contract may be entered into orally or in writing. It is advisable to have a written copy in the event of any legal disputes. The contract contains the name and address of the employer and the employee, the start date, the fixed term of the employment, the trial period and the duration of the trial period, the place of employment, the nature of the activity involved, the amount of pay and agreed working hours, the length of annual leave and the periods of notice for termination of employment. Where no written employment contract is signed, the employer is required to give the employee a written record of the essential terms of the employment contract within one month of the start of the employment relationship.

 

Visas and work permits

Visas:

EU and EEA (European Economic Area) nationals: EU nationals do not require a visa to enter the Federal Republic of Germany.

Non-EU and non-EEA (European Economic Area) nationals: Generally speaking, all other foreigners require a visa for stays in Germany. A visa is not required for semi-annual visits of up to three months for nationals of those countries for which the European Community has abolished the visa requirement.

Passport holders from the following countries require a visa to visit Germany:
Afghanistan, Albania, Algeria, Angola, Antigua, Barbuda, Armenia, Azerbaijan, Bahamas, Bahrain, Bangladesh, Barbados, Belarus, Belize, Benin, Bhutan, Bosnia, Botswana, British Virgin Islands, Burkina, Burundi, Cambodia, Cameroon, Cape Verde, Cayman Islands, Central African Republic, Chad, China, Colombia, Comoros, Congo, Côte d'Ivoire, Cuba, Djibouti, Dominica, Dominican Republic, Egypt, Equatorial Guinea, Eritrea, Ethiopia, Falkland Islands, Fiji, Gabon, Gambia, Georgia, Ghana, Grenada, Guinea, Guinea-Bissau, Guyana, Haiti, India, Indonesia, Iran, Iraq, Jamaica, Jordan, Kazakhstan, Kenya, Kiribati, Korea, Kuwait, Kyrgyzstan, Laos, Lebanon, Lesotho, Liberia, Libya, Macedonia, Madagascar, Malawi, Maldives, Mali, Marshall Islands, Mauritania, Mauritius, Micronesia, Midway Islands, Moldova, Mongolia, Montserrat, Morocco, Mozambique, Myanmar, Namibia, Nauru, Nepal, Niger Nigeria North Korea Northern Mariana Islands (Federated States of Micronesia, Mariana, Islands, Caroline Islands, Palau Islands, Oman, Pakistan, Panama, Papua, New Guinea, Peru, Philippines, Pitcairn, Qatar, Russia, Rwanda, Saint Christopher, Saint Lucia, Saint Vincent and the Grenadines, Samoa, Saudi Arabia, Senegal, Seychelles, Sierra Leone, Solomon Islands, Somalia, South Africa, Sri Lanka, Sudan, Suriname, Swaziland, Syria, Taiwan, Tajikistan, Tanzania, Thailand, Togo, Tonga, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Uganda, Ukraine, United Arab Emirates, Uzbekistan, Vanuatu, Viet Nam, Western Samoa, Belarus, Yemen, Yugoslavia, Zaire, Zambia and Zimbabwe.

If your country isn't listed above you do not need a visa to enter Germany.

 

Residence and work permits:

Foreign nationals, as a general rule, need a residence permit to take up employment in Germany. If you intend to work in Germany you have to apply for such a permit from the competent German diplomatic mission abroad (typically the German consulate in your country of residence) before entering Germany.

Nationals of Australia, Canada, Israel, Japan, New Zealand, South Korea and the United States may apply for the necessary permit after arriving in Germany.

‘Old’ EU citizens: as well as citizens of Iceland, Liechtenstein, Norway and Switzerland citizens have the right to live and work in Germany. The only requirement on arriving is to register your residence with the appropriate office of the town hall.

‘New’ EU citizens: Nationals of the states which joined the EU on 1 May 2004 and 1 January 2007 (except for citizens of Cyprus and Malta) must register their future place of residence in Germany at the registration office (Bürgeramt/Einwohnermeldeamt) and must apply at the Employment Agency for a work permit.

 

Tax, social security and healthcare

Taxation system:

Germany's individual tax rates are progressive. Income taxes have been reduced recently, and the maximum marginal rate is 45%. By law, employees pay "as they earn" a compulsory fee of approximately 20-21% of their salary for their individual social security. The same amount is paid by the employer.

In Germany, for tax purposes you are either be a resident or a non-resident. If you have been present in Germany for over 183 days, you are generally considered to be a resident for tax purposes. The 183 day rule is not the only consideration for tax residence. If you are a non-resident for tax purposes, you will generally still be liable to pay tax on German-sourced income. The rate may vary; tax and double taxation agreements may alter it. There are 6 tax classes that you may fall into, each one with varying rates:

  1. Those single or separated, but not falling into either categories 2 or 3.
  2. Single and separated, with a child, entitling them to a child's allowance.
  3. Married, or widowed employees who are within the first year of a spouse's death.
  4. Married employees both receiving income.
  5. Married persons who would normally fall into category 4, but whose spouse is in tax class 3.
  6. Employees who receive income from other employment on one or more different tax cards.


As well as this, you may either be a salaried employee or a Freiberufler (independent (free) professional: e.g. doctors, architects or contractors). For salaried employees, tax and social insurance are deducted by the employer. Contractors must pay the tax department their tax obligations regularly throughout the year.

 

Social security system:

The German social security system is based on five pillars and provides financial protection against major risks in life and their consequences:

  • statutory unemployment insurance ensures a minimum standard of living in the event of unemployment,
  • statutory pension insurance provides security for members in their old age and in the event of incapacity for work and, in the event of their death, security for their survivors,
  • statutory health insurance helps safeguard and restore health and alleviates the consequences of illness,
  • statutory accidence insurance restores capacity for work in the event of an accident at work,
  • statutory care insurance provides financial support for people reliant on permanent care.


In Germany, access to the social security system is via health insurance funds. Full-time self-employed people have the choice between voluntary, statutory or private health insurance. In the case of blue-collar and white-collar workers the employer assumes responsibility for registration with the chosen health insurance fund. Employees are thus automatically registered for care insurance. The health insurance fund also assumes responsibility for registration for unemployment and pension insurance.

Social security in Germany is funded predominantly by contributions from employees and employers and in principle those contributions are paid in equal measure by both sides. The employer deducts the employee’s contribution from his gross pay and transfers it to the various insurance funds on the employee’s behalf. The employer pays his share directly to the insurance funds.

Health system:

As soon as you sign an employment contract, you must take out health insurance as an employee. The statutory health insurance funds cover their members and their families in the event of illness, so non-working spouses and children are also included in the insurance. Citizens of the European Economic Area (EEC) only require a European Health Insurance Card (EHIC) in order to receive medical treatment if they fall ill during a temporary stay in another member state.

 

Lifestyle

As Europe’s most industrialised and populous nation, Germany offers a high standard of living with sophisticated and highly developed education and healthcare.  The cost of living is high, but this is compensated by the high quality of services available.

 

Report complied: 2008
Copyright © 2008 Exposure Jobs