The labour market in the Federal Republic of Germany in 1997 and 1998

Abstract

"The strong external demand, combined with favourable supply conditions in Germany, has set in motion an economic recovery. There is reason to believe that the upswing will become stronger and more widespread in 1998. For this reason in the middle Variant II of the IAB alterna-tive calculations of labour market development a real growth of 2 3/4 % was assumed. In 1998 the economic development is gradually spreading to the demand for labour and is beginning, at least in western Germany, to have an effect on employment. The season-related strong increase in annual working time is, however, temporarily pushing up the current employment threshold. Nonetheless, in the middle variant of the IAB alternative calculations the employment figures in Germany as a whole will be lower than in the previous year in the annual average, with 165,000 fewer persons (-0.5%). The employment losses of 1997 constitute a handicap for 1998. The decrease is concentrated in the new federal Länder, where economic development is again lagging behind western Germany, as it was in 1997. Nevertheless the fundamental imbalance of labour supply and labour demand is not increa-sing further in western Germany because the labour force potential is decreasing at roughly the same level (-170,000) and is easing the strain on the labour market. Shifts within the labour market balance, however, - from concealed to open underemployment - result in a new peak of registered unemployment: in the annual average for 1998 we reckon with 4.46 million unemployed in the middle variant. This increase by 75,000 is a burden resulting from the poor de-velopment in the previous year, which has yet to be gradually levelled off. Over the course of the year we reckon with a turnaround in registered unemployment. Towards the end of the year the level could fall some 90,000 below that recorded last year. It is necessary, however, to take into consideration risks which are for example inherent in ex-ternal trade development. Thus, with a weaker economic growth (+2 1/4 %) we would have to reckon with a further increase in unemployment (Variant I: 4.52 million in the annual average). Opportunities are also opening up, however. Under particularly favourable conditions a real economic growth of 3 3/4 % would be conceivable (Variant III*). This growth impulse could - supported by additional employment and training measures - bring about an early turnaround and a stronger increase in employment in the course of the year. Then we can expect there to be some 200,000 more jobs and some 300,000 fewer unemployed people at the end of the year. In view of the continuing job deficit, however, it would be premature to see this so soon as a breakthrough on the labour market. This report also deals with the thesis of a disassociation of economic and labour market development and reaches the conclusion that the connection between economic growth and the employment trend has not changed fundamentally.This refutes the widely held ideas of the de-velopment of production and employment becoming disassociated. In addition to this, selected aspects of the labour market development (employment in the construction industry and the service sector; the extent, structure and development of overtime and of work lost due to sickness) are dealt with in more detail. The study was carried out at the IAB." (Author's abstract, IAB-Doku) ((en))

Cite article

Bach, H., Kohler, H., Magvas, E. & Spitznagel, E. (1998): Der Arbeitsmarkt in der Bundesrepublik Deutschland in den Jahren 1997 und 1998. In: Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Vol. 31, No. 1, p. 5-57.