DI don’t think he has unemployment statistics. This is a sentence that has been heard more frequently in Germany for several months. While the Federal Employment Agency continues to report low rates of job seekers, many people experience the reality on the ground very differently. You hear about job cuts and short-time working, know someone who is affected by it or even have to fear that it will affect them themselves.
A closer look at reality reveals the paradox, although not necessarily to reassure local workers. Because while the number of people looking for a job has actually decreased further, the situation is completely different in some areas: The number of counties and cities increases with unemployment.
“The German job market deteriorated more sharply at the end of the year than the stable unemployment rate across Germany suggests,” says Felix Hüfner, chief economist at the major Swiss bank UBS, His evaluation shows that the proportion of people looking for a job in December was higher in 45 percent of the 400 German counties than a year earlier. In almost half of the country’s territory, there can be no talk of relaxation.
Number of short-time workers rose to 113,000 in January
The analysis suggests that the mood of the German job miracle could change in the eleventh year. In fact, the number of counties with increasing unemployment is higher than it has been since 2013.
The underlying deterioration in the situation is underlined by the growing number of short-time workers. In January, the number of people affected by short-time work across Germany jumped to 113,000, the experts at the Federal Employment Agency estimate. That would be the highest level since the European crisis year 2011. “The risk that the overall German unemployment rate will increase in the next few months has increased,” explains Hüfner. Historically, this has always been the case when 60 percent of the circles report a higher number of people looking for a job. The economist examined the data for samples back to the 1980s.
The unemployment figures reveal a very large discrepancy between the regions, and it is precisely the industrially strong federal states that show the worst development. In the industrialized country of Baden-Württemberg, home of automobile manufacturers and suppliers, three quarters of the circles have recently reported higher unemployment over the year.
The total number of people looking for a job in Mannheim, Baden-Wuerttemberg, was 29 percent higher in December than at the end of 2018. Unemployment in Tuttlingen in the south of the state has increased just as drastically. Bavaria also has a significantly worse trend than the rest of the republic. “There is still a high correlation between rising unemployment and industry dependency,” says Hüfner.
What are the causes of the kink? The researchers at the Ifo Institute linked the job crisis to the upheavals in German automobile production, which had become a burden for the entire German economy. “Structural change is now leaving its mark on the job market,” says Ifo economic chief Timo Wollmershäuser.
The economist calculates that the number of people employed in motor vehicle construction fell by a seasonally adjusted 1.3 percent in 2019, much more than in the rest of the manufacturing sector, where the minus was only 0.2 percent. He estimates that the auto weakness could have dampened the rise in economic output in 2019 by almost 0.8 percentage points.
In the automotive industry, a particularly large number of employees are on short-time work. According to an Ifo survey, 14 percent of companies recently used this subsidized labor reduction tool. Kurzarbeitergeld can be obtained for a maximum of twelve months if the company experiences a “significant loss of work” for economic reasons. The Federal Employment Agency is responsible for the services.