Munich as a business location is doing well. Extremely well. Both local and regional businesses and associations anticipate stable economic growth. The choke points usually associated with a boom are becoming more and more apparent: depending on the respective job sector, the labour market is struggling to find skilled workers, living and working space becoming increasingly scarce.

Munich's population has been growing steadily for more than 15 years. So far so good. This wasn’t always the case, though. Munich's demographic development has also gone through stages of stagnation and decline, for instance during the 1980s and also toward the end of the 1990s. However, since 2013, the population has been growing by approx. 30,000 inhabitants per year. Munich is becoming increasingly cosmopolitan and diversified. In addition, the share of young people is also growing.

The boom Munich has been experiencing in recent years has resulted in choke points and shortages, especially with regard to housing and commercial space. The great demand on rental housing market has led to continued rent and property price hikes, both in the city’s centre and in the surrounding area. According to forecasts, the strong population growth will continue in the future and exacerbate the demand further.

Metropoles like Munich are preferred places of arrival for immigrants. The high immigration influx to Munich comes from the overlapping of migration flows from various areas: the countries of the eastern EU enlargement, the Mediterranean EU countries, also due to the euro crisis, and the immigrants from the Middle East and Africa. The migration gains are constantly increasing the number of inhabitants, which in turn also results in higher birth rates.

Labour market action field

The future challenges are already apparent on the labour market: the shortage of skilled workers is leading to a supply-side burden on the labour markets. Thus, retaining junior staff at the location is essential, as is ensuring their loyalty to the location and taking the measures that are necessary to guarantee that this location remains attractive for specialists who are new to the area. However, this demand for skilled labour does not necessarily lead to a reduction in unemployment to the same extent. Much rather, an expansion of the labour market, i.e. continued unemployment with an increasing shortage of skilled workers, is to be avoided. Therefore, the endogenous potential in the local labour market needs to be exploited to an even greater extent: unemployed or low-skilled persons must continue to receive appropriate training or further education that will place them in a position to find permanent employment on the labour market. The Munich Employment and Qualification Programme (MBQ) has been the municipal politicians’ response to this challenge for many years.

In 2016, the unemployment rate reached the lowest level in the whole of Germany and in Munich. This rate dropped from 2013 to 2017 for Germans and migrants. Between 2013 and 2017, the number of foreign unemployed in Munich dropped from 9.2% to 8.0%, to a total of 14,727 persons. Nevertheless, migrants are still more strongly affected by unemployment, as can be seen when considering the share of all unemployed. This figure rose to 45.0% in 2017. When looking at the unemployment rate according to selected target groups, and differentiating the groups more precisely, it is noticed that nationality has a more detrimental effect than gender and age.

A concept for diversity

Despite all these challenges, Munich succeeds at maintaining a good overall climate. In 2008, the city adopted an intercultural integration concept. Since then, this has represented the basis for an urban integration policy and the overall steering of integration and participation. It applies to all core areas of urban society, aligns urban actions and creates the commitment that is needed for this. What is more, it also provides a basic understanding of "shaping diversity" that involves all groups and actors and defines integration as a joint task.