The labour market in the Federal Republic of Germany in 1998 and 1999

Abstract

"The prospects for economic development in 1999 are not bad. There is, however, an unusually large degree of uncertainty concerning the future development of the economy and the labour market. In view of this we are basing our alternative projection on a broad range of variation in the assumptions for real economic growth: it rules out neither the possibility of a slight setback in economic activity (gross domestic product: +1 %) nor a continuation of the economic upturn with further strong growth (+3 %). Today we consider the middle variant (+2 %) to be most likely to occur, however. Even this variant casts more of a shadow than light on the labour market in Germany, since employment will then no longer continue to develop in the same direction as so far, but will fall once more in the course of the year. Nevertheless the number of registered unemployed continues to fall because the drop in the labour force potential by about 0.2 million persons relieves the labour market balance on the supply side. In the annual average we then expect just under 4.1 million unemployed, some 200,000 less than the previous year. A pessimistic scenario forms the basis of Variant I. The assumed annual average economic growth of 1 % results from the favourable development of the previous year alone: if the production in the economy as a whole (seasonally adjusted) first fell slightly and then increased again, the result would be this slight increase in the annual average. This is therefore not a marked crisis scenario. For the labour market, however, this would be a painful setback as it would be necessary to reckon with a strong decline in employment (-0.3 % or 100,000 in the annual average). Although the relief on the supply side of the labour market balance would compensate for this, no further fall in the unemployment figure - apart from seasonal fluctuations - could be expected in the annual average. The drop in the annual average calculation (by about -120,000 to just under 4.2 million) would then result from the relatively low position at the beginning of the year alone. Variant III is based on an optimistic scenario: if export demand proved to be robust and tended to be weak only temporarily, then - seen for the whole year - an economic upturn could become established on a broad basis (GDP: + 3%). Under such favourable conditions we expect an increase in employment of 0.5 % or 160,000 to 34.1 million persons in the annual average for 1999. The unemployment figure could fall by almost 0.3 million to just under 4 million. The drop in the labour force potential contributes to this relief." (Author's abstract, IAB-Doku) ((en))

Cite article

Bach, H., Kohler, H., Magvas, E., Pusse, L. & Spitznagel, E. (1999): Der Arbeitsmarkt in der Bundesrepublik Deutschland in den Jahren 1998 und 1999. In: Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Vol. 32, No. 1, p. 5-40.