causes for the fall of german unemployment and the role of minijobs
DESCRIPTION
German unemployment rates declined substantially in the last 10 years. What are the causes? It is not because a very high economic growth or demographic influences, but institutions (Kurzarbeit and Zeitsparkonten) and the reforms/wage moderation which might have been effective.TRANSCRIPT
Michel van [email protected] Employment Service – The Netherlands
Causes for the fall of German unemployment- The role of Mini-jobs?
What’s a Mini-job?
Maximum € 450 a month In most cases 15 to 20 hours a
week No taxes No contributions for social security
by employees From 1-1-2013 there is a choice to
join pension (21% does)
Unemployment rate 2004-2014 (eurostat)
0
2
4
6
8
10
12
14
2004
M02
2004
M05
2004
M08
2004
M11
2005
M02
2005
M05
2005
M08
2005
M11
2006
M02
2006
M05
2006
M08
2006
M11
2007
M02
2007
M05
2007
M08
2007
M11
2008
M02
2008
M05
2008
M08
2008
M11
2009
M02
2009
M05
2009
M08
2009
M11
2010
M02
2010
M05
2010
M08
2010
M11
2011
M02
2011
M05
2011
M08
2011
M11
2012
M02
2012
M05
2012
M08
2012
M11
2013
M06
2013
M09
2013
M12
Netherlands Germany EU28 France Belgium United Kingdom
Relationship between economic growth (X) and growth unemployment rate (Y), 2003-2013
Actual and forecasted unemployment rate in Germany by the Law of Okun
Not economic growth but
something else explains the
positive development
Relationship between economic growth (X) and growth unemployment rate (Y), 2003-2013
JapanTurkey
UK
Finland
Slovakia
Slovenia
Romania
Portugal
Poland
Austria
Netherlands
Malta
Hungary
Luxembourg
Lithuania
Cyprus
Italy
Spain
Greece
Ireland
Estonia
Germany
Denmark
Czech Republic BulgariaBelgium
EU28
-15
-10
-5
0
5
10
15
20
-1 0 1 2 3 4 5 6
Average economic growth 2003-2013
Grow
th U
nem
ploy
men
t rat
e 20
03-2
013
Seletion of countries with almost the same
economic growth
A demographic cause?(Countries with almost the same economic growth 2003-2013)
-5%
-1%
-1%
0%
2%
2%
3%
3%
3%
4%
15%
7%
3%
14%
12%
6%
7%
9%
6%
-6%
5%
16%
-10% -5% 0% 5% 10% 15% 20%
Germany
Finland
Norway
Belgium
France
EU28
United Kingdom
Netherlands
Croatia
Hungary
Spain
Growth unemployment rate 2003-2013 Active population 2003-2013
Germany has the same growth of the active
population as Hungary, France, UK and the Netherlands but a
much better development of the unemployment rate
The real reason: German’s labour market reforms
Hartz I, II, III (2003-2004): Introduction Job Centres Mini-jobs allowed for more than 15 hours a
week Training vouchers Deregulation temporary work Restricted access to unemployment benefit
Hartz IV (2005) Shorter duration unemployment benefits Low social assistance Ein-euro-Jobs, Ich-AG
Other measures Age for pensioning from 60 to 67 Kurzarbeit during 2008/2009 Zeitsparkonten
How many mini-jobs?
From 4 million in 2002 to about 7,5 million in 2013 20% of the active population Especially in catering (48%), retail (30%), other business
service (30%), culture, recreation and other service (45%), agriculture (25%), transport & storage (23%).
An increasing share of elderly employees with a mini-job (27% between 50-65; 12% 65 or older)
62% female
Critiques
Very low wages, working poor Exploitation: less vacation,
unpaid extra work, unpaid trial days etc.
No social security/no pension Only one out of seven will get a
real job after the minijob Displacement of real fulltime
jobs
Effect mini-jobs on unemployment
Not that big: The growth of mini-jobs was mainly under the Nebenjobs (now
2,8 million) Displacement of former fulltime jobs
But: All reforms together had a huge influence Especially:
- Kurzarbeit en Zeitsparkonten in 2008/2009- The lack of a minimum wage, wage moderation
German job miracle
Current situation German labour market
Strong export position, growth world economy New: growing inland consumer demand But:
Legal Minimum wage 8,50 euro > 1-1-2015 When 63 years old and 45 working years you can retire
without deduction Declining population 15-65 years
Labour market shortages can stop economic growth
Dankeschön!!