The number of people in employment is stabilizing in Germany

by Thorsten Koch

The proportion of people in employment in Germany has stabilized and, in June 2020, was only 1.3 percent lower than during the same period in the previous year – despite the Corona pandemic. According to the Federal Statistical Office, around 44.7 million people were in work. In May of 2020 compared to the period in 2019, there had been a minus of 1.3 percent. The decrease was only 1.4 percent when you put the number of people in employment in June 2020 in relation to February 2020, when the Corona pandemic broke out. Seasonally adjusted, the number fell by only 1.4 percent in June compared to May, i.e. by 655,000 people. Looking at the second quarter of 2020, according to preliminary figures, 44.7 million people residing in Germany were gainfully employed, 1.4 percent or 618,000 fewer than in the first quarter. The number of unemployed increased by 635,000 to 2.910 million in July 2020, compared to the same period in the previous year. This figure was published by the Federal Employment Agency. Compared to June 2020, the unemployment rate rose by 0.1 percent to 6.3 percent. According to figures from the Institute for Employment Research (IAB), the volume of working hours in the first quarter of 2020 fell by 10 percent to 13.3 billion hours, compared to the first quarter of 2019 due to short-time working. The individual employee thus worked 297.3 hours, which means a decrease of 8.8 percent.

The service industry – mainly trade, transport, the hospitality industry and service providers such as temporary employment agencies – recorded a 1.1 percent lower number of employees in June 2020 with 369,000 fewer people than in the same period of the previous year. In contrast, there was an increase in employment in the area of ​​public service providers, health and education. As usual, people on short-time work were treated as employees in the figures. The number of self-employed fell by 3.4 percent to 4.02 million people. In spring, according to the Federal Statistical Office, the gross monthly earnings of employees in Germany fell by 2.2 percent compared to spring 2019. Due to short-time work, the weekly paid working hours decreased by 4.7 percent, which means that the short-time allowance largely balanced out the net losses. The gross earnings per hour worked per employer in the second quarter of 2020 were, on average, 2.6 percent higher than in the same period in 2019.

No wave of layoffs expected, labor market thawing

The President of the Federal Employment Agency, Scheele, is currently ruling out a large wave of layoffs. Seasonally adjusted, 370,000 more people were registered as unemployed in April, 240,000 in May and only 70,000 in June. The trend towards less increase in unemployment continued in July. Scheele commented: “We will probably not reach 3 million unemployed this summer.” He justified this by saying that 250,000 people found a new job in April and May: “The labor market, which was frozen at the beginning of this crisis, is thawing again.”

The number of 450-Euro mini jobs in trade increased again for the first time by the end of June, as can be deduced from figures from the Deutsche Rentenversicherung Knappschaft-Bahn-See (KBS). Nationwide, 5.9 million mini jobs were registered in the second quarter, which was an increase of 3.5 percent – amounting to 200,000 jobs more than at the end of May. Nevertheless, at the beginning of the Corona pandemic at the beginning of March, there were still 0.5 million more mini jobs. Between March and May, jobs fell mainly in the catering and hotel industry, in the arts, entertainment and recreation, while the number of harvest workers and employees in the construction industry remained stable. In the private sector, the number of mini-jobs rose by 2.4 percent or 7,252 people to around 297,000, for example in domestic help, in care and childcare. However, in March 2020 there were around 3.4 percent fewer employees in private households than in the same period of the previous year. According to KBS, women make up the largest proportion of mini jobbers.

According to the Central Association of the German Construction Industry (ZDB), the number of trainees in the construction industry has continued to rise. “Considered over all four years of apprenticeship, the number of trainees rose by three percent compared to the previous year”, as ZDB chief executive Felix Pakleppa explained. In the old Federal States, the number of apprenticeships increased by 2 percent to 31,254 and in the new Federal States by 9.2 percent to 5,606. A total of 36,800 people were trained in a construction company. The number of training companies remained constant overall. It rose by 3.3 percent in the new Federal States.

Need for improvement in training

Small businesses less offered fewer training positions than before the Corona pandemic, but a trend by some firms towards leaving dual training was already apparent, as the Federal Institute for Vocational Education and Training (BIBB) announced. Of the companies with fewer than 20 employees, 29 percent fewer took one or more trainees. This can be explained by difficulties in finding suitable candidates. 59 percent of the small businesses with fewer than 10 employees were unable to fill all of the vacant training positions.

According to the German Trade Union Federation (DGB), “young people especially, who have at most a secondary school diploma or come from immigrant families … often fail to make the leap from school to training – despite a growing number of vacant training positions”. The Institute for Employment Research (IAB) explained: “Unfortunately, the Corona crisis has had a very bad impact on the employment of refugees: they are the group in the labor market that is most severely affected by layoffs”. The reasons are fixed-term employment contracts and the fact that refugees often cannot switch to the home office if, for example, they worked in the catering or security services. Nevertheless, “after five years … around half of those who fled to us from 2013 to 2016 have a job,” according to the IAB.

According to a press report, employees in East Germany work almost eight days a year more than employees in the West and receive an average of more than 6,000 Euros less. The annual gross wage in the new Federal States in 2019 was 1389 working hours at 31,161 Euros, while western German employees earned an average of 37,457 Euros at 1,327 hours. One factor that contributed to this is the fact that the low-wage sector is larger in the new Federal States.

Poverty, social security contributions could rise without reforms

The risk of poverty has increased in Germany. In 2019, every sixth citizen lived on the poverty line. More precisely, 15.9 percent of citizens were at risk of poverty. That’s an increase of 0.4 percent since 2018. According to the Federal Statistical Office, the poverty threshold is 1,074 euros for single people, which means 60 percent of an average household income. Citizens with less income are considered to be at risk of poverty. Those who cannot meet their basic needs, such as the homeless, are absolutely poor. The risk of poverty was highest in Bremen and lowest in Bavaria and Baden-Württemberg. The unemployed were most likely to be affected by poverty, with a share of 57.9 percent among that group. This was followed by single parents (42.7), migrants (35.2) and families with three or more children (30.9). Poverty had already worsened before the Corona crisis, analyzed the social association VdK.

According to the Confederation of German Employers’ Associations, the burden of social security contributions for German households is likely to rise – due to demographic change. By 2040, taxes are expected to rise to almost 50 percent of gross wages. The rate could only be limited to below 40 percent if targeted reform measures were implemented. For example, the working life could be extended, and the deductions for early retirement could be increased.

In the care industry in particular, positions often remain unfilled. As part of the immediate care program, 13,000 positions were advertised, and 2,631 new positions had been created in geriatric care alone. Overall, after 1.5 years, only 20 percent of the positions in the immediate program have been filled. Here, too, the main reason is a shortage of skilled workers, according to the National Association of Health Insurance Funds.

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