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reUnemployment has fallen for the first time since the start of the Crown crisis. The number of unemployed fell to a good 2.85 million in September, 108,000 less than in August. This was reflected in the unemployment rate, which was 6.2 percent. A decline is common in September. This time it was a bit stronger than in previous years, but unemployment is also significantly higher.
Despite this positive news in the midst of the crisis, Daniel Terzenbach, a board member of the Federal Employment Agency (BA), was quite cautiously optimistic when the announcement was made. There were “slight signs of improvement,” he said. In addition to unemployment, the number of short-time workers continued to decline; For July, the BA currently assumes that 4.24 million people will receive short-term work benefits.
However, significant problems remain. Unemployment is still significantly higher than before the crisis; the number of affected increased by 613,000 in September compared to 2019. The same applies to short-time work. “The effects of the corona pandemic on the labor market are still clearly visible,” Terzenbach said. For core risks, he put into play the formula of the “four I’s”, which are one of the decisive factors for the future of the German labor market.
On the one hand, it’s about Bankruptcies. It’s an uncertainty “that we can hardly quantify,” Terzenbach said. Bankruptcies are expected to occur. However, only time will tell how many there are.
Until now, companies that were experiencing financial difficulties due to the pandemic were exempt from the obligation to appear before the courts and initiate an orderly process. That changes as of Thursday, however, for the insolvent; then again they are required to submit an application.
Bankruptcies are likely to occur in tourism, travel agencies, gastronomy, and the trade show and event industry. “That can also be reflected in unemployment,” Terzenbach said.
Second, it’s about international risks. Terzenbach referred to Great Britain; an unregulated exit from the European Union “would be no less likely.” The outcome of the US elections will also affect companies and employees. Foreign trade with both the UK and the US continues to deteriorate year after year.
However, in general, the situation is improving. The world economy is on the path of recovery and the economies of the major trading partners are expected to grow again in the third quarter, according to the BA’s monthly report.
Closely related to this is the third self; is Infection process. “The number of corona infections is increasing again not only in Germany, but also abroad,” the report said. This carries risks for domestic demand and foreign trade.
Fourth, they play Investments plays an important role in the development of the labor market. The BA expects them to rise again in the third quarter.
Sales by producers of capital goods continued to increase. However, they still rated the current situation negatively. In the construction industry, there could be signs of a slowdown in the construction industry. This could also reduce the need for personnel.
Short-term work: switch to the “usual suspects”
There are clear shifts in the short-term work of wonder drugs, which many have hailed as the most important anchor of stability in recent months. Almost 40 percent of short-term workers recently come from the manufacturing sector.
According to the BA, it was only 25 percent at first. On the contrary, the proportion affected by the service industries fell. Terzenbach spoke of a “switch to the usual suspects.”
Short-time work is an instrument to save the crisis, but it should not save companies that are already sick with outdated business models. “This bridge is finite,” emphasized the BA board.
Federal Labor Minister Hubertus Heil (SPD) said with concern that the consequences of structural change in the industry were becoming clearer. He sees continuing education as the key to keeping Germany competitive. In particular, a short-term job can be used for this.
However, experts see a need for improvement here. The research director of the Institute for the Future of Work, Holger Bonin, proposes a new instrument: the so-called short-time allowance. Anyone who works short-time for many months should be able to get more training outside their own company or do secondary jobs.
The figures presented by Christiane Schönefeld, member of the board of BA, Christiane Schönefeld, are extraordinarily high the costs of this instrument: by the end of the year 19,000 million euros will be spent on short-time work benefits. In 2019, the expense was only 157 million euros.
The BA’s total spending this year will be 62 billion euros. Before the pandemic, it had been estimated at 37 billion. Schoenefeld said that not even that much had been invested in the era of mass unemployment in the 1990s.
In this situation, it is “worth gold” that the BA has been able to accumulate a reserve of almost 26,000 million euros. Sometimes they had to be defended very hard, Schönefeld said. But with this cushion, the BA could partially cope with this great crisis.
The reservation will not be enough. The deficit will amount to 27.1 billion euros, next year it is expected to be 9.4 billion euros. The reserve will be depleted by the end of 2021 and the BA will need federal funding of about 10 billion euros.
