Saturday, July 31, 2010

Full Employment Could Be in Germany's Future

Germany's latest unemployment figures indicate that the country could soon have under 3 million people out of work, a new low. While some media commentators praise the German economic model, which has helped the country ride out the recession, others warn that vital labor market reforms are still required.

Just five years ago, Germany was in the grip of an unemployment crisis with the jobless figure soaring to over 5 million in January 2005, the highest level since the Great Depression of the 1930s. Now, with the industrialized world still reeling from the effects of the financial crisis, Germany is in the fortunate position of seeing its unemployment figures falling steadily and could soon have fewer than 3 million people out of work.

On Thursday, the Federal Employment Agency (BA) released the latest unemployment figures. A total of 3.192 million people were registered as unemployed this month, an increase of 39,000 on June. The unemployment rate was 7.6 percent, up 0.1 percent compared to the previous month. The slight increase is largely due to seasonal factors.
The figure is an improvement on the same period last year when 271,000 more people were without work and the joblessness rate was 8.2 percent. The figures point to the success of the German policy of keeping workers on the job under a short-time work program as the country weathered the global crisis, as well as the fact that the country's exports are increasingly in demand.

The government-subsidized short-time work scheme has helped companies to ride out the crisis. While there are still 481,000 people on such schemes, that is just a third of the figure at the height of the recession.

"Germany's economy is experiencing a recovery, the situation on the labor market has improved further," BA boss Frank-Jürgen Weise said when announcing the figures. Labor Minister Ursula von der Leyen welcomed the figures as "good news," saying that the slight increase is due to the start of the summer vacation period when business activity slows down.

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