Germany to face 5Mln understaffing by 2030: Union chief

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Germany might be against the ropes by 2030, facing a massive understaffing of five million, and it will not be able to make up for the deficit due to the expected decrease in taxes, the head of the Confederation of German Employers' Associations, Rainer Dulger, said on Saturday.

"The number of employees would reduce by 5 million people by 2030," Dulger told the Welt am Sonntag newspaper.

According to the union chief, Germany will not be able to "secure the prosperity" that Germans have grown accustomed to since the government would receive fewer taxes and payments from citizens, ultimately resulting in inefficient compensatory mechanisms.

This comes at a time when concerns are on the rise in Europe regarding the US Inflation Reduction Act, which is expected to lead to a subsidy race between the two allies at each end of the Atlantic at a time when they need to have a united front in light of the Ukraine war.

US President Joe Biden's Inflation Reduction Act (IRA) has certainly been a source of fear for European officials who are forecasting a possible trade war ahead of the bill. 

The IRA, which was signed into law by US President Joe Biden in August 2022, commits $300 billion to deficit reduction, as well as approximately $370 billion in funding for energy security, including tax credits for US-made electric vehicles and consumer subsidies, and $80 billion to increase Internal Revenue Service tax enforcement and operations.

"Given the actions of the US and China, we see the real danger of deindustrialization and disinvestment," a senior European Commission official told Politico on Monday.

The newspaper reported that the EU has begun to sense the signs of a process of de-industrialization due to high energy prices.

Some of Europe's crucial manufacturing sectors affected by the crisis include glass, chemicals, metals, fertilizer, pulp and paper, ceramics, and cement sectors. 

The report states that EU officials have raised concerns over the possibility of manufacturers relocating toward more cost-effective production spaces such as the US - where green subsidy programs have enabled access to subsidies for producers who deploy green technologies for production.

And with ever-growing competition from China, competitiveness within the European continent is starting to fade out to levels so low that they may be hinting to initial signs of deindustrialization. 

Last month, European statistics revealed that gas consumption for manufacturing purposes was slashed by 15% continent-wide.

With gas prices four times that of the US and six times higher than they were before, several industries are considering the option of relocating abroad for cheaper energy prices. 

Back in October, German Chancellor Olaf Scholz and French President Emmanuel Macron agreed that American subsidy plans will end up distorting the market, as they intend to sway companies to shift production to the US.