The labour market in the Federal Republic of Germany in 2003 and 2004

Abstract

"After looking back at the development of the economy and the labour market over the past few years, a prediction regarding the trends in 2003 and 2004 is made based on alternative assumptions of overall economic growth. After this, selected topics are dealt with in more detail (foreign trade developments, labour market dynamics and labour market policy in Germany). The continuing weakness of the global economy since 2001 has placed a burden on the German economy because of its close external links. In spite of that, the relatively stable development of exports has prevented an even weaker overall economic result. So far, a self-sustaining momentum of the German domestic economy has not developed. At present, any substantial economic impetus of the global economy can be expected almost only from the US economy. The prospects for the German labour market in 2003 have not brightened up after two years of economic stagnation. A fast and strong economic recovery cannot be reckoned with at the moment. Employment will tend to decline further and underemployment rise again significantly. It is true that the traditional measures of employment promotion provided by the Federal Employment Services avoid open unemployment and thus ease the burden on the labour market to a considerable extent, but with a declining tendency. On the other hand the measures aimed at direct integration into the primary labour market are increasing considerably. But considering the prevailing economic conditions, their effectiveness could be modest. Finally, important steps aimed at reforming the labour market have been taken. However, noticeable effects can only be expected gradually. Stabilisation on the labour market can only be reckoned with towards the end of 2003, even if the economy recovers in the second half of 2003 and grows by 0.5 per cent in 2003. In the annual average, 4.4 million unemployed would be recorded, that is 340,000 more than in the previous year. The analysis shows that even in times of high and rising underemployment, there are considerable movements on the labour market, especially between employment and unemployment. This proves the fundamental functionality of the labour market. In 2004, a considerable improvement on the labour market could be expected resulting from a recovery in foreign trade combined with the labour market reforms. Even if the economy grows by 2 per cent, however, 4.35 million unemployed in the annual average will have to be reckoned with from today's standpoint." (Author's abstract, IAB-Doku) ((en))

Cite article

Bach, H., Koch, S., Magvas, E., Pusse, L., Rothe, T. & Spitznagel, E. (2003): Der Arbeitsmarkt in der Bundesrepublik Deutschland in den Jahren 2003 und 2004. In: Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Vol. 36, No. 1, p. 7-45.