Jobs, jobs, jobs?

2021-04-26T19:15:08.682Z

Germany and other western countries can look back on a spectacular employment boom. It is questionable whether we can build on this after the pandemic is over.

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Employees at the VW plant in Wolfsburg: Requirements for employees are changing rapidly

Photo: Swen Pförtner / picture alliance / dpa

It wasn't that long ago that the fear of unemployment dominated the mood in Germany.

Ten years ago, the lack of jobs was considered the biggest social problem.

An insecure nation feared that the market economy would get by with fewer and fewer people - and that many citizens would no longer be able to lead a self-determined working life.

Within a decade the mood has changed completely. In the meantime, there is an almost unbreakable job optimism. Even the Corona crisis, after all the deepest recession in generations, did little to change that. The German citizens may be frustrated by the never-ending pandemic. But they are in good spirits when it comes to the labor market.

Most of them no longer see unemployment as a pressing problem, unlike climate change or the obvious deficiencies in the health and education systems.

Two thirds of Germans are personally satisfied with their work, 82 percent with their financial situation, as the current Eurobarometer survey shows.

Remarkably hopeful results - after more than a year of pandemic, recurring shutdowns, home office and home schooling stress, vaccination and test mismanagement.

To the author

Photo:

Institute for Journalism, TU Dortmund

Henrik Müller

is professor for economic journalism at the Technical University of Dortmund.

Before that, the graduate economist worked as deputy editor-in-chief of manager magazin.

In addition, Müller is the author of numerous books on economic and monetary policy topics.

Every week he gives a pointed outlook on the most important economic events of the week for SPIEGEL.

It must be permissible to ask whether the Germans are not under a collective illusion.

Official unemployment rates may still be low.

But: Around 2.7 million people are still on short-time work.

The insolvency rules, which have since been suspended, could only have delayed a wave of bankruptcies, which at some point may be inevitable.

In addition, there is accelerated technological change: Around half of all jobs in Germany are in danger of disappearing or are at least exposed to profound changes, warns the OECD, the club of market democracies.

Are there going to be upheavals on the labor market that we are currently completely underestimating?

The mother of all uncertainty

There will be some new insights into the job outlook for the week ahead.

On Monday

, the Munich Ifo Institute will provide information about the mood in companies.

On Thursday

, the Federal Employment Agency presented new figures on labor market developments.

On “Labor Day” (

Saturday

) the unions will speak up, even if major rallies have to be canceled this year.

The signals are currently pointing to an upswing.

The industry benefits from exports to China and the USA, the construction sector from the still very low interest rates.

Retail, hospitality and event industries are still down, but should experience a boom after a successful vaccination campaign (at some point), as experience from other countries shows.

The uncertainty is still great. Bottlenecks in vaccination and the appearance of new, more aggressive mutants of the corona virus could bring the economic recovery to a standstill. This is one of the reasons why the labor market lags behind economic development. The number of layoffs has normalized, but companies are still reluctant to hire new employees, observes the Institute for Employment Research (IAB). "Corona," the researchers write, "was a severe blow for the job market, but it could have been worse."

This is not an understatement. The Covid crisis is the greatest uncertainty shock that has affected the German economy in recent economic history, as a study by our research center DoCMA shows. And he revealed serious weaknesses in the state and administration, which in turn could impair companies' willingness to invest in the long term.

But uncertainty shocks affect the economy in very different ways, depending on which direction they come from.

The financial crisis cast a long shadow because it came from the economic system itself: the financing conditions remained difficult for years, companies hardly invested, and unemployment remained at a high level in many countries.

The Covid shock, however, comes from outside the system.

This suggests that a swift return to normal could be possible once the pandemic has subsided and contact restrictions are relaxed.

In fact, the development of the labor markets before the Corona crisis was quite spectacular, not only in Germany.

Can we build on this after the pandemic is over?

Looking back: an amazing decade

Between 2010 and 2019, around three million additional jobs were created in the Federal Republic of Germany, most of them regular employment relationships subject to social insurance.

Germany was by no means an isolated case: before the Corona crisis brought life to a standstill, many wealthy countries experienced an employment boom that accelerated from the mid-2010s onwards.

In the US and the EU, around 10 million additional jobs each were created in the past decade.

At the same time, unemployment fell.

In 2019, Germany was the country with the lowest rate of job seekers among the OECD countries (after Japan).

More and more people got a chance.

Long-term unemployment fell: in the Federal Republic of Germany it halved in the 2010s, in Great Britain it fell to a third and in the USA to a fifth.

The positive development improved the earning potential.

After decades of falling or stagnating wage shares, the values have risen again noticeably in many countries in recent years.

The increasing shortage of labor drove the price of labor.

Rising minimum wages, which, contrary to what many economists feared, were barely able to slow the growth in employment, may also have helped.

About the end of work - and its future

The numbers of the past few years contradict the once common claim that we are running out of work.

Digitization, robotization and globalization do not seem to lead to jobless growth, but on the contrary to a kind of job miracle.

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In any case, as recently as the mid-2000s, hardly anyone thought such an employment boom was possible. An IAB study at the time came to the result that the number of regular jobs (full-time, subject to social insurance) in Germany had fallen by almost 20 percent between 1991 and 2004: minus 3.5 million jobs in industry, minus 836,000 in construction, minus 363,000 in agriculture, minus 344,000 in service providers and the state. A total of five million fewer normal jobs. As in Germany, unemployment had also solidified in other EU countries. In a study, economists Richard Freeman and William Rodgers attested the USA a "surprising inability to create jobs."

Such was the situation in the mid-noughties.

The future of work seemed correspondingly bleak at the time.

Some researchers even predicted that Germany and other Western countries would become “Brazilianized”: large parts of the population would drift into precarious, informal working conditions.

Fortunately, it did not come to that.

In the 2010s the trend was reversed.

Can we trust that this will continue after the pandemic is over?

German weaknesses

For the near future we are faced with two opposing developments.

On the one hand, the demographic development is causing a decline in people of working age.

As early as 2023, the working population in Germany will begin to shrink - unless the pace of immigration suddenly picked up again, or the next federal government would quickly push ahead with the liberalization of the retirement age as part of an Agenda 2030.

Because other western countries as well as China are experiencing similar age shifts, the economists Charles Goodhart and Manoj Pradhan predict a "great demographic change".

Because labor is now chronically scarce, instead of jobs, they predict in their book "The Great Demographic Reversal" rising wages, less inequality and increasing inflationary pressure.

Accelerated change

On the other hand, however, the demands on employees are changing rapidly.

And Corona has accelerated some of those shifts.

An OECD study in 2020 showed the changed qualification needs using the example of several Anglo-Saxon countries.

One result: Technical knowledge is increasingly in demand, but also »transversal skills«, ie people who enable other people to work together through reliability, communication and teamwork skills.

Other talents, on the other hand, are becoming less important, such as the persuasiveness of sales women, which may be extremely important in stationary retail, but is hardly needed in a consumer world of algorithm-controlled digital shopping.

Anyone who specializes in the manufacture of combustion engines cannot build electric cars overnight.

The German labor market was already in motion before the pandemic "due to digitization, the aging of society and the transition to a low-carbon economy," according to the OECD. Now you have to adjust to an accelerated pace of change. Germany is prepared for this insofar as the level of education is high across society. However, in this country there is a lack of a targeted system of further training throughout working life.

Labor may become increasingly scarce, but that doesn't mean that every job seeker can be placed.

Anyone who has lost their job in the wake of the Corona crisis will find it all the more difficult to cope with the increased pace of change.

The number of long-term unemployed has already risen significantly again.

Many younger employees are also getting off to a bad start, which threatens to have a negative impact on their working life for many years, as various studies show.

In order for the ongoing job optimism to be justified, it will still take some effort - on the part of companies, economic policy and employees.

The main economic events of the week ahead

Open assembly area

Munich -

German mood

- The Ifo Institute publishes the current business climate index.

Brussels -

Europe's Strategy

- EU Trade Policy Day 2021: The EU, the world's largest trading power, discusses its new approach.

With: Commission Vice-President Dombrovskis, WTO Director General Okonjo-Iweala and EU Director General Weyand.

Stockholm -

Under Arms

- The peace research institute Sipri publishes its report on world military spending.

Reporting season I

- Business figures from Philips, Michelin, Kuehne & Nagel, Tesla.

Expand Tuesday area

Tokyo -

full throttle in the Far East

- The Bank of Japan announces its decision on monetary policy.

Reporting Season II

- Business Figures from Schneider Electric, UBS, Novartis, ABB, BP, HSBC, Mondelez, Microsoft, Alphabet, UPS, Visa, General Electric, Eli Lilly, Amgen, 3M.

Expand Wednesday area

Reporting season III

- business figures from Deutsche Bank, Beiersdorf, Symrise, Reckitt Benckiser, Banco Santander, Delivery Hero, Kion, Covestro, Sanofi, Dassault, Spotify, Electrolux, Lloyds, GlaxoSmithKline, Apple, Facebook, Boeing, Ford, Ebay.