“The tone has changed at the monthly presentation of the labour market figures in Nuremberg. At the beginning of the Corona crisis, Detlef Scheele, CEO of the Federal Employment Agency (BA), was still extremely pessimistic about the historic slump in the job market.
At the end of April, he openly admitted that the enormous number of short-time job applications had left him breathless. The uncertainty of what was coming was great. But now the mood is much better. “The board is going into the summer with subdued confidence,” Scheele said.
The labour market remains under severe pressure. Absolute unemployment and short-time working hours are still exceptionally high: 2.85 million people were unemployed in June, an increase of 40,000 compared to May. The unemployment rate rises by one decimal place to 6.2 percent. In April, there were 6.83 million short-time workers, according to projections – the highest level ever reached in the Federal Republic. For May, however, the preliminary estimate is only six million.
In view of the seriousness of the crisis, the German labour market is de facto continuing its strength, which has lasted for years. What is clear is that so far things have not been as bad as they should have been feared.
This is clear from a symbolic value: the threshold of three million unemployed, which experts say could soon have been exceeded, has not yet been reached. “We currently assume that we will not exceed the three million in the summer,” Scheele said. We have to see what happens in winter. At the moment, it looks as if the situation is stabilising at a low level. They are on the right track, but with ongoing uncertainty. Three points would have to be fulfilled: a second wave of pandemics is not needed, the easing measures are continuing, and consumer sentiment is improving. Federal Employment Minister Hubertus Heil (SPD) also spoke of a “very moderate ratio” in international comparison with regard to the rise in unemployment.
“The labour market can hold its own in June,” says Holger Schäfer, who conducts research at the Institute of German Economy (IW). Unemployment is still rising only moderately.
Schäfer still expects that the three million mark could be exceeded this year. And the few newly reported vacancies continued to show that firms are reluctant to hire. But: Despite the crisis, the companies have so far remained unchanged in their employees, says Schäfer. The number of people out of work in June was almost back to the same level as in the same month of the previous year, after being half the same in April.
BA CEO Scheele highlights one figure: from April to June, 400,000 previously unemployed people took up jobs or self-employment. This is much less than in normal times. But given the situation, no one suspected that.
“It’s just not that the labor market has come to a complete standstill,” Scheele said. In particular, there have been recruitments in the areas of transport, tourism, sales, trade and social services. The demand has been met by BA, although many of the employees are currently being used to provide short-time working allowances.
The fact that unemployment does not rise more strongly is largely due to the massive use of short-time working, explained IW expert Schäfer. On the other hand, where this cannot be used, the loss of employment is quite clear: the number of only marginal employees fell by more than eight percent in April compared to the same month of the previous year.
The situation varies widely among those affected by short-time working. For example, a survey of persons by the Institute for Labour Market and Occupational Research at the BA showed that almost a quarter of short-time workers were completely exempt from work in May.
For just under one in two, the employer increased the short-time working allowance, which at the beginning is between 60 and 67 percent of the net wage. Employees with a net household income of 3,000 euros per month were less likely to work short-time.
The same applies to employees who have had the opportunity to work from home. Compared to workers with a in this course, both those without completed vocational training and those with a university degree were less affected by short-time work. The IAB survey is representative of the working population excluding self-employed persons and civil servants.
Schele’s expectation is that companies with large job loss will work together with the BA to use short-time working to train employees. Anja Piel, a member of the executive board of the German Trade Union Confederation, also called for increased further bidding. The legislator should create the possibility of receiving short-time working allowances for longer, and this extension should “necessarily” be combined with further training opportunities. “Large parts of the economy will continue to suffer the consequences of the pandemic in the coming months and next year, despite easing,” Piel said.
The mechanical engineering association VDMA also called for an extension of the duration of the short-time working allowance. “Even if there is light here and there at the end of the tunnel, the tunnel is long,” explained VDMA Chief Economist Ralph Wiechers. More than half of mechanical engineering companies therefore do not expect a return to pre-Corona sales levels before 2022.
In addition, it takes time for efforts to cope with the multifaceted structural change to bring new growth and secure jobs, Wiechers explained. “An extension of the duration of the short-time working allowance would therefore not only be useful, but urgently necessary.”