It has now become a ritual. Month after month, Labor Minister Hubertus Heil announces in a press release: “The labor market is stable” – despite “economic weakness.” The unemployment rate is proof of this; it currently stands at 5.8 percent. However, the laxity with which Heil brushes aside the deep-seated problems on the labor market could soon take its toll.
The following sentence is something to savor. “Except during the Covid-19 pandemic, each individual has never worked so little, but together we have never worked so much.” It comes from Enzo Weber, an economist at the Institute for Employment Research. This is the institution that supplies Heil’s ministry with data. And it doesn’t look good.
Because Germany has become a part-time republic. The corresponding rate is now 39.1 percent and has reached a record. Full-time employment, on the other hand, has fallen for the first time since Corona. The result: Working hours per employed person have fallen by 0.8 percent to 344.5 hours compared to the same quarter last year. Hourly productivity has also declined, by 0.4 percent compared to the previous year.
But didn’t Heil recently announce that people in Germany were working more than ever before? What is statistically correct has a simple background – and turns out to be a smokescreen from the minister.
The record number of hours worked is primarily due to the fact that the population and thus the number of employed people has grown significantly, mainly due to migration. The second reason: today, significantly more mothers work than a few years ago, but mostly part-time.
One thing is certain, however: because subsequent generations and immigrants are unable to fill the gap caused by the high number of people entering retirement, the number of people in employment will fall significantly in a few years – the record that is currently being celebrated will soon collapse. The fact that the total volume of working hours will fall is therefore demographically inevitable and is now irreversible thanks to Heil’s pension package.
But if the trend towards shorter working hours – the four-day week – and part-time work becomes more established, the economy and the labor market will have a multiple problem: less growth, higher costs for unemployment and less income for the state and the social systems. To compensate for this, the contributors are at risk of being charged even more.
Instead of presenting immediate solutions, Heil and his traffic light colleagues are dragging the problems out into the future. More part-time work, a soon-to-be-shrinking workforce and too many people retiring are further exacerbating the staff shortage.
Instead, more jobs in childcare are needed to make the extension of working hours more attractive and easier, especially for mothers – according to the Bertelsmann Foundation, there is already a shortage of 430,000 daycare places. A reform of the transfer withdrawal rates for those receiving top-ups in the citizen’s allowance (most of whom also work part-time) would also make a difference. A new calculation could increase employment by 136,000 people or 145,000 full-time jobs, as the ifo Institute has calculated.
And the part-time trap is by no means the only problem. In addition, unemployment figures have risen for the second year in a row and the number of people receiving citizen’s allowance is increasing. In addition, despite the labor shortage, the country now has 2.9 million young people without vocational qualifications.
The whole thing is topped off by a “job boost” that has so far had little effect but is nevertheless overwhelming the authorities, coupled with paralysing bureaucracy and an industrial policy that is taking its toll on many companies.
The situation is therefore not nearly as “stable” as is suggested. It is time for a detailed assessment of the labor market. Then real reforms will be possible.