German Unemployment: What's happening with jobs in Germany?

Merkel

September saw unemployment rise in Germany with the number of people out of work rising to 10,000.

This figure was calculated on a seasonally adjusted basis, before statistical changes are taken into account, the Nuremberg-based Federal Labor Agency said today. Including the changes, unemployment declined by 12,000 to 3.46 million. The agency said there is "no turnaround" in the labor market and the economic crisis continues to affect joblessness.

Despite other sectors in Germany suffering with job losses, German auto-makers haven't so far. The recession has caused a huge dent in global auto sales, yet German auto-makers have avoided mass layoffs. This is due, in part, to the fact that the German government subsidizes workers whose hours have been trimmed through a program called Kurzarbeit, or "short work." A successful cash-for-clunkers program, which has just finished, has also protected the industry.

Yet if demand doesn't return soon to pre-recession levels, then German auto-makers are going to have to start making large layoffs. Analysts are predicting that if this does happen, it could be up to 10 percent of the workforce which lose their jobs.

"Employment in the auto industry in Germany has peaked," says Ferdinand Dudenhöffer, director of the Center for Automotive Research at the University of Duisburg-Essen. "[Job losses] will come, and workers will have to find possibilities in other industries."

With these latest figures and speculation, it will put pressure on Germany's newly elected centre-right government. It was only a few days ago that Chancellor AngelaMerkel won the national elections, and will now form a coalition with the pro-business Free Democratic Party. This will make it easier for German companies to dismiss workers.

Despite many jobs being protected, many aren't. Dudenhöffer says 2007 marked the high for auto employment in Germany, with about 750,000 jobs split between producers and suppliers. Yet 30,000 jobs have been lost in this industry in the past two years, and a further 70,000 could go by 2015.

"Government support will run out eventually," said Ian Greer, professor of economics at the University of Leeds in Britain to Business Week. "Either the employer starts paying full wages at that point or, more likely without a strong recovery, there will be mass layoffs."

The car industry is effected by changing consumer habits. Because of the global recession, many consumers have made the decision to downgrade their cars to smaller, cheaper, more fuel-efficient ones. This downgrade isn't good for the car industry though, as the more expensive, premium cars, are what drives their profit, which effectively pays their workers.

Germany is long way off being out of the murky water yet. It is estimated on Bloomberg, by Martin Kannegiesser, who is the head of the Gesamtmettal employers' association, the Frankfurter Allgemeine Zeitung newspaper, that Germany will lose 20,000 engineering jobs a month as long as the economic crisis lasts.

In an attempt to help the German economy, Merkel's 85 billion euros of stimulus measures include subsidizing social insurance payments to persuade companies to keep workers on shortened shifts when orders are slack.

If measures are being put in place, let's hope that jobs can be saved in all the industries, not just the auto industry.

30/09/2009

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